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Sony CFO insists AAA game quality ‘will deteriorate’ if it adopts Game Pass-style strategy

sam winchester yawn GIF


They should get this guy some new material. LOL

Basically Sony doesn't have the confidence to think that they can maintain monthly subscribers on a GP competitor, that's all the guy is really saying with this. There would be no limits to budgets on projects with a successful subscription. Using the tired Netflix example, they have billions to spend on content and can allocate that as they see fit. They have movie projects with budgets that rival Hollywood. A successful $10mo. sub can quickly generate quite a bit of revenue to work with on a yearly basis. They've already announced a catalog service that is being offered for basically $40 a year, that would leave quite a bit of that $120 sub revenue for first-party development.
Just imagine what Sony could do if they had a successful $10 gaming subscription service.
 

StreetsofBeige

Gold Member
sam winchester yawn GIF


They should get this guy some new material. LOL

Basically Sony doesn't have the confidence to think that they can maintain monthly subscribers on a GP competitor, that's all the guy is really saying with this. There would be no limits to budgets on projects with a successful subscription. Using the tired Netflix example, they have billions to spend on content and can allocate that as they see fit. They have movie projects with budgets that rival Hollywood. A successful $10mo. sub can quickly generate quite a bit of revenue to work with on a yearly basis. They've already announced a catalog service that is being offered for basically $40 a year, that would leave quite a bit of that $120 sub revenue for first-party development.
I wouldnt have confidence either. Looking at the financial charts in the Sony Earnings thread, their number of PS+ users is flat vs their fiscal Q3 2020 quarter which was 5 quarters ago. Compared to last quarter their PS+ subs actually dropped.
 

StreetsofBeige

Gold Member
Just imagine what Sony could do if they had a successful $10 gaming subscription service.
First thing you got to do is have good games on it. PS Now focuses on old games and probably 1/3rd of them are stream only. If you play it on PC, it's 100% streaming.

PS Now is 10/mth or $60/yr and it only had 3.2 million subs as of May 2021 (7 years after launch). Right now, they probably got 4M tops in 8 years.
 
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Varteras

Gold Member
I mean, whatever Sony has been doing is working for them and looks to continue working. Their revenue is expected to increase by 34% this fiscal year and PS5 is expected to ship (and thus sell) 56% more consoles. If their live service ambitions pan out, which they would only need a few successful entries to make a big splash (or one Fortnite-esque success), then it's only going to embolden them to stay the course they've laid out. They're probably looking at their current struggles on getting more than half of their userbase to subscribe to PS Plus, despite it being necessary for online play and offering free games every month. My guess is they ran the numbers and even an optimistic scenario for additional subscribers and current ones paying more isn't good enough for them compared to what they think they could potentially lose by offering their blockbusters Day 1 on PS Extra. I do, however, fully expect them to release some of their smaller projects on the service Day 1 or not long after. Like if Pixelopus made a Concrete Genie 2, I could totally see Sony just opting to put that on PS Extra from the jump if pre-orders look weak. We've already seen Sony put Shadow Warriors 3 on PS Now at Day 1. They've already tested the waters with third parties. Sony may not follow Microsoft on this one to a T, but they're certainly going to wade into the shallow end of those waters.
 

JohnnyFootball

GerAlt-Right. Ciriously.
I dont actually disagree at all with this. MS is heavily subsidizing Gamepass, but eventually investors are going to expect this thing to make a profit and something will have to give somewhere. My main fear of Gamepass has been that the quality of the titles will drop as studios will be pushed to churn out quantity and not quality.

ANother big issue that MS faces is how long will they be able to suck people in at $14.99 a month. Many subscribers are still on the $1 a month conversion. This is a HUGE issue as the competition for subscription services is drastically increasing. Netflix and DIsney plus are losing subscribers left and right.

Gamepass gives a solid value and this idea that people will keep paying is not as strong as it used to be. The pay and forget subscription model is not as robust.

To be clear, MS still has a HUGE advantage as being the only AAA subscription service.
 
Amazing how fans of sonys main rival in the console market, which is a distant third and who sony has consistently run rings around in that market for the last 21 years, think that sony should adopt the business model of said competitor.
Sony knows how to run their business, they've been by far the most successful manufacturer in the console market for 27 years now.
And xbox fans think they should change completely, and adopt the xbox model, a console that has been dead last going on nine years now, and has been chasing sony in the market since 2001...lmfao! 😅😅😅
 

Menzies

Member
Amazing how fans of sonys main rival in the console market, which is a distant third and who sony has consistently run rings around in that market for the last 21 years, think that sony should adopt the business model of said competitor.
Sony knows how to run their business, they've been by far the most successful manufacturer in the console market for 27 years now.
And xbox fans think they should change completely, and adopt the xbox model, a console that has been dead last going on nine years now, and has been chasing sony in the market since 2001...lmfao! 😅😅😅
You think it’s Xbox fans asking Sony’s CFO these questions at a Sony investor call?
 

Varteras

Gold Member
They can't afford to do it any other way so of course they will say their only option is the best way.
They're already spending money on their big titles. So does putting them Day 1 on the service actually cause them to lose money? Because the argument seems to be that this model is sustainable, which means you get sufficient returns on it at least. Does that mean Microsoft is losing money on GamePass?
 
I think it's fair to say they've looked into it and likely for them... as it stands, it wouldn't be sustainable in terms of both revenue and output. They don't have a bigger brother to cover those losses, like Xbox does. Playstation has no one to catch them if they stumble. Now, this isn't to say that they couldn't do it in the future but they'd have to see real good growth/numbers in both revenue and output of games. There is a really good reason why Xbox is buying up studios. They need all those studios for output. They need to keep subscribers busy, they need a reason to come back. Xbox will have big AAA games released throughout the year but you need games in between those big ones to fill the gaps. Every release can't be a AAA title, they take too long and are too expensive so you need smaller titles too. A smaller AA game never hurt no body!
 

DarkMage619

Member
Look at this tweet below, made today. Some of these people are in the loony bin.
I did say serious. I only care about what the platform holder is doing. MS has made no comments about going streaming only. If they did it would be worse than the TV TV TV focus of the X1. Pretty sure they are not interested in reliving that.
 

Hendrick's

Member
They're already spending money on their big titles. So does putting them Day 1 on the service actually cause them to lose money? Because the argument seems to be that this model is sustainable, which means you get sufficient returns on it at least. Does that mean Microsoft is losing money on GamePass?
Microsoft is losing money on their first party games for sure, but not on the service as a whole. Sony relies too much on their first party to pull this off.
 

Varteras

Gold Member
Microsoft is losing money on their first party games for sure, but not on the service as a whole. Sony relies too much on their first party to pull this off.
I don't know man. Looking at their financials it seems third party games make up a ton of their revenue. Especially additional digital purchases.
 

yurinka

Member
Microsoft is losing money on their first party games for sure, but not on the service as a whole. Sony relies too much on their first party to pull this off.
Sony simply wants to keep having a profitable business and to keep having the most successful strategy. They are the market leaders and have a profitable, winning, selfsustainable strategy that also helps them grow.

They don't have any reason to move to an unprofitable, worse performing strategy that would block their grow. It would be dumb.
 

adamsapple

Gold Member
I wouldnt have confidence either. Looking at the financial charts in the Sony Earnings thread, their number of PS+ users is flat vs their fiscal Q3 2020 quarter which was 5 quarters ago. Compared to last quarter their PS+ subs actually dropped.

I mean there's your answer why they needed the massive rebrand, as their existing services were stagnant.


Microsoft is losing money on their first party games for sure, but not on the service as a whole. Sony relies too much on their first party to pull this off.

Over budgeted development messes like Halo, sure I can buy that.

But I don't believe that's the case for all of them. Example, FH5 is a game built on an existing engine and tech, and it ended up doing 1 millio plus paid customers who paid for the $100 version or $45 upgrade to game pass version before it even officially launched.

So that's anywhere between $45m and $100m (or higher) before even it's release date. This game seems like it'd have easily made a very nice profit for MS till now.

 

peter42O

Member
As much as I would love to get Sony's exclusives day one on PS+ (even if it's the $18 tier), im not expecting this to happen until the start of next generation. For the current generation, I see Sony putting their exclusives day one on PC by the halfway point as well as having more multi-player and co-op focused/oriented games.

As for the quality decreasing if their games were on a subscription service, that's hilarious. If anything, the quality would be better and the investment would increase because Sony as a company would be making more money due to getting even more recurring revenue on a monthly basis.

Since the start of the current generation, Microsoft has released 7 games with an average score of 86.8 while Sony has released 10 games with an average score of 82.5. All based on their respective Open Critic scores.

Gears Tactics - 83
Flight Simulator - 92
Psychonauts 2 - 89
Deathloop - 88 (will be the same rating when it releases on Xbox Series X/S and Game Pass this Fall)
Forza Horizon 5 - 92
Halo Infinite - 87
Ghostwire Tokyo - 77 (will also be the same rating when it releases on Xbox Series X/S and Game Pass in April 2023)

The lowest rated Microsoft released game is Ghostwire Tokyo thus far with a 77 rating on Open Critic which at the very least is still a good score.

Demon's Souls - 92
Marvel's Spider Man: Miles Morales - 85
Sackboy: A Big Adventure - 81
Destruction All Stars - 62
MLB The Show 21 - 78
Returnal - 86
Ratchet & Clank: Rift Apart - 89
Horizon Forbidden West - 88
Gran Turismo 7 - 87
MLB The Show 22 - 77

Sony's lowest released game is Destruction All Stars (I still don't know what they were thinking funding and publishing this game) followed by their yearly MLB sports game.

The entire idea that the quality would decline is simply fucking bullshit. Sony simply doesn't want to do it right now which is perfectly fine but they should just say so instead of bullshitting everyone. Looking at Xbox this generation compared to last generation, they're better this generation BY FAR. While im sure that there will be an AA dud here and there similar to that of Destruction All Stars and a few AAA games similar to Ghostwire Tokyo, the vast majority of Microsoft's released games this generation will easily be 80+ on Open Critic.
Oh well. 18 months into the generation and it's already been one hell of a ride. Can't wait to see how the rest of the generation plays out on both sides.
 

dvdvideo

Member
Wouldn't you think Sony would take parts of what makes Gamepass good and incorporate that into their business model before their user base is eroded?

Based on thier words and actions so far, they seem to be missing the point that drives people to gamepass - day and date 1st party games. Without that, it's not competing with gamepass.
 

yurinka

Member
I wouldnt have confidence either. Looking at the financial charts in the Sony Earnings thread, their number of PS+ users is flat vs their fiscal Q3 2020 quarter which was 5 quarters ago. Compared to last quarter their PS+ subs actually dropped.




During this FY Q1, Q2 and Q3 were up YoY but Q4 was slightly down. But their revenue from game subs this quarter and FY had a good growth YoY (409.4B Yen vs 383B Yen). Why? Pretty likely because during Q4 many people got PS Now instead of PS Plus to get PS+ Premium for a cheaper price.

Compared to their direct competition they sell more games, get more money from subscriptions, have a bigger active userbase, have more subscribers, their games sell better than ever, their game division makes more revenue. For sure they must be confident, if they would be desperate for attention they would give away all their AAA games almost for free.

Wouldn't you think Sony would take parts of what makes Gamepass good and incorporate that into their business model before their user base is eroded?
Like everyone else, Sony copies the things that they think would improve their business, not the ones that would damage it.

PS Plus adds some ideas from GP like the intermediate tier with the big library of downloadable games available worldwide but without cloud gaming, to bundle the basic sub into the top tier or to double down on adding games from previous generations.

Regarding new games, instead of to give you a few new complete games they give you 2 hour trials of all the new AAA games. A somewhat similar idea but different to don't damage their and the publishers' business model that is focused on game sales.

It doesn't make sense to think it would erode Sony's userbase. If they aren't breaking console sales historical records right now it's because of the lack of chips. Their game subs performs way better than the one of the competition and with the new PS+ will work way better. Why would a less performing game sub would erode its userbase? And well, if this would change in the future (nothing leads to think it may happen) they'd take the actions required.

And Halo of the year, with Phil man of the year. It’s a tri factor of greatness!!!
Don't forget the cookbook of the year, the nail polish of the year and the furry gamepad of the year.
 
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He is telling the truth. Financially it just doesn’t make sense with big budget titles. A game with a $50,000,000 budget having to primarily rely on a presumably cheap subscription service is a recipe for disaster. Subscription services are generally better suited to indie games, experimental titles, some AA games and even certain older titles that flopped or already made their money already.
 

Gone

Member
What a stupid thing to say.

Aren't Sony the "4ThePlayer$" company and the savior of gaming? They should take the financial hit and "lose" couple hundred million dollars for the sake of gaming.
 

Elog

Member
Gamepass is not being subsidized, according to the CEO of Microsoft Gaming.
He is technically correct since the development costs for MS games are not accounted for as costs for Gamepass in that statement and hence given for 'free' in the internal accounting. Would be very surprised if Gamepass is still not subsidised in reality.
 

Baki

Member
Sony sold 43M first party titles last year. Assuming an ASP of $30, that translates to $1.3B.

Sony currently has 47M PS+ subscribers. If they could convert 30M of them to a super high tier of Plus that costs an additional $130 a year, that would translate to $3.9B of new revenue. The problem is that Sony would also need to supplement this service with a ton of 3rd party deals, or AA first party games. Subscription services are all about quantity and they would need to make sure there’s a steady stream of content to keep people subscribed.
 
He is technically correct since the development costs for MS games are not accounted for as costs for Gamepass in that statement and hence given for 'free' in the internal accounting. Would be very surprised if Gamepass is still not subsidised in reality.
They should be accounted for. Maybe not 100% because the games still sell a certain amount of copies despite being day one on Gamepass.
 

Snake29

Member
Amazing how fans of sonys main rival in the console market, which is a distant third and who sony has consistently run rings around in that market for the last 21 years, think that sony should adopt the business model of said competitor.
Sony knows how to run their business, they've been by far the most successful manufacturer in the console market for 27 years now.
And xbox fans think they should change completely, and adopt the xbox model, a console that has been dead last going on nine years now, and has been chasing sony in the market since 2001...lmfao! 😅😅😅

Because they want to say "See See, a rental service is better then buying games". As long as Sony isn't following MS completely it makes them a little insecure and nervous.

They want that confirmation that Gamepass is the only thing in gaming for gamers and nothing else.
 
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Because they want to say "See See, a rental service is better then buying games". As long as Sony isn't following MS completely it makes them a little insecure and nervous.

They want that confirmation that Gamepass is the only thing in gaming for gamers and nothing else.
Not only has nobody here said that only subscriptions should be available and nothing else, but nobody even said that Sony has to follow Microsofts footsteps on this. It's weird when people make up narratives in their heads and then fight against them.
 

JohnnyFootball

GerAlt-Right. Ciriously.
He is telling the truth. Financially it just doesn’t make sense with big budget titles. A game with a $50,000,000 budget having to primarily rely on a presumably cheap subscription service is a recipe for disaster. Subscription services are generally better suited to indie games, experimental titles, some AA games and even certain older titles that flopped or already made their money already.
$50000000 is cheap for development these days!
 

Clear

Gold Member
Gamepass is not being subsidized, according to the CEO of Microsoft Gaming.

I believe the actual quote was: “I know there’s a lot of people that like to write [that] we’re burning cash right now for some future pot of gold at the end. No. Game Pass is very, very sustainable right now as it sits. And it continues to grow.”

Which is a very carefully worded statement, because sustainability is not the same as profitability, and if the service is not profitable then at best its around break-even. Which in conjunction with the fact that its a subscription service and thus prone to temporal fluctuation means that they are banking on its future growth to pay off past sunken-cost.

The reality is that you won't find too many, if any, analysts who don't believe MS are subsidizing Gamepass through its growth phase, because that's normal for a service of this type.

I'd also add that GP profitability and sustainability are kinda vague definitions, because you can't really unlink its performance from Xbox as a whole. And if you look at Xbox holistically their market-share has improved, but not that greatly, while their investment into development, acquisitions etc. has sky-rocketed.
 

JohnnyFootball

GerAlt-Right. Ciriously.
He is technically correct since the development costs for MS games are not accounted for as costs for Gamepass in that statement and hence given for 'free' in the internal accounting. Would be very surprised if Gamepass is still not subsidised in reality.
There is simply no way it isn’t being subsidized. Like I said in the earlier post, the subscription market is not getting bigger and companies are now in that place of losing subscribers, not gaining them. Will that affect Gamepass remains to be seen, but subscription cancelling are money saving techniques in a recession.
 

oldergamer

Member
I think the sony cfo is wrong on this and anyone still thinking the older model of making and selling games only at retail, is the only way to do it, is living in the past. People keep saying its not profitable without seeing how xbox overall has drastically improved its position since they changed the model they operate with on both pc and console.

First you need the right type of games that can provide additional services or online gaming to extend the life of the game. Xbox has always had this since xbox live. Sony doesn't have this yet but realizes they need to create these games going forward and have dedicated budget to GASS. Right now i could see GT being gass for sony with a fee other outliers.

For shorter single player only games, those arent the type of games that keep people signed up to a service for a long time. You do need games like this mixed in with longer games. Also another reason why MS bought so many rpg studios. Games that can keep people playing for extended periods.

So bottom line is you need the right type of games. However the cfo saying it would effect quality of games is a bullshit excuse designed to downplay something they don't want to offer. You can both sell subscriptions and sell games at retail. Saying you can only do one or the other is nothing but short sighted thinking.
 
I think the sony cfo is wrong on this and anyone still thinking the older model of making and selling games only at retail, is the only way to do it, is living in the past. People keep saying its not profitable without seeing how xbox overall has drastically improved its position since they changed the model they operate with on both pc and console.

First you need the right type of games that can provide additional services or online gaming to extend the life of the game. Xbox has always had this since xbox live. Sony doesn't have this yet but realizes they need to create these games going forward and have dedicated budget to GASS. Right now i could see GT being gass for sony with a fee other outliers.

For shorter single player only games, those arent the type of games that keep people signed up to a service for a long time. You do need games like this mixed in with longer games. Also another reason why MS bought so many rpg studios. Games that can keep people playing for extended periods.

So bottom line is you need the right type of games. However the cfo saying it would effect quality of games is a bullshit excuse designed to downplay something they don't want to offer. You can both sell subscriptions and sell games at retail. Saying you can only do one or the other is nothing but short sighted thinking.
Xbox hasn't drastically improved it's position, the Series S/X sells slightly better than the Xbox One apparently (but has a $300 model already), Gamepass still only has about 25m subscribers over PC/Xbox/Cloud (according to the recent update).

The only way Xbox has actually improved it's position (despite having little to show for it so far) is in terms of how big they became as a publisher after spending ~$80B in acquisitions. But with all that investment comes a lot more pressure to actually start showing massive subscription growth, the bigger they get as a publisher more subscribers are needed to pay for all that. It's going to be really interesting to see what happens if Gamepass fails to reach the very ambitious targets MS seems to have.
 
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What baffles me in these threads, you have people claiming in some that Sony is broke can't afford this and that but at same time get mad because Sony is trying to do business that makes sense for them.
The subscription plans you have to pay for a bunch of 3rd parties plus the development costs from their own internal studios, and for some reason some people think that is remotely sustainable, it might be sustainable for a trillion dollar company but that doesn't apply to Sony for obvious reasons.
Microsoft can afford having xbox making no money at all for as long as they want, xbox is only 9% of their revenue. Cash flow at lost still lost. The best you can hope is being on black but investors don't like that because you have to show potential growth. Is like Netflix struggle doesn't teach people anything, even with their budget stuff they are crying because is not enough and how many subscribers they have? also TV shows doesn't take 5 years or more to make.
Also how hbo backtrack with their day and date movies release?
I mean there is like a ton of evidence but let's ignore that
That isn't how budgets work...
 
sam winchester yawn GIF


They should get this guy some new material. LOL

Basically Sony doesn't have the confidence to think that they can maintain monthly subscribers on a GP competitor, that's all the guy is really saying with this. There would be no limits to budgets on projects with a successful subscription. Using the tired Netflix example, they have billions to spend on content and can allocate that as they see fit. They have movie projects with budgets that rival Hollywood. A successful $10mo. sub can quickly generate quite a bit of revenue to work with on a yearly basis. They've already announced a catalog service that is being offered for basically $40 a year, that would leave quite a bit of that $120 sub revenue for first-party development.

Or maybe they just acknowledge the fact that they can't pay $150-$300 million dollars per first party title and then give it away on a service where someone can pay for a single months subscription, complete it and cancel it. On top of paying all their third party partners for hundreds of games on their service. As well as paying companies who might not have used their property in years to add it to their backwards compatibility catalogue, that has a cost.

The cost goes up and up and up.

Microsoft have money to burn. Gamepass is just buying your love. Game sales are affected by the service whether you want to believe it out not. That's why big titles that have come to gamepass that are multiplat are selling a portion of the PlayStation ports. Microsoft can't continue to give them away for free at that price. You'd have to pay £30 a month like a cheap phone contract to make that enough money.

I feel like Sony have got it right. Play the two hour trial, like it? Buy it. Here's a huge library of games to play. It might not be the latest on the market but they're well worth playing. Love retro games? Pay a bit more and you can have those too. Cool.

But that's more sustainable than giving away new games for free. Some games might make more sense on a service like GamePass, maybe the developer is self publishing and doesn't have millions for marketing. But for big games like Halo, like Forza, like Star Field is going to be, the biggest and best opportunity to get a maximised ROI is at release after being well marketed. Assuming you haven't been stupid and released alongside another major title or similar title.

It makes more sense releasing on a game pass style service when your game sales are becoming insignificant. But you can't be predictable enough that those who would wait to pay it on a subscription service just wait to play it on there.

You'd rather sell a £60 product than hope the customer continues to subscribe at £10 a month. Even if you pay £120 a year, you've paid for two full price games. That's it. I play far more than that in a year.
 

DaGwaphics

Gold Member
Or maybe they just acknowledge the fact that they can't pay $150-$300 million dollars per first party title and then give it away on a service where someone can pay for a single months subscription, complete it and cancel it. On top of paying all their third party partners for hundreds of games on their service. As well as paying companies who might not have used their property in years to add it to their backwards compatibility catalogue, that has a cost.

Netflix could do the same, limit their content spending to a tenth of what it is because they worry about users subscribing for a month and then cancelling. Which I'm sure does happen a limited amount. But, they are confident enough in their offering to believe that they can maintain X number of sustained monthly subscribers and they produce content based on that budget. Basically, it's a confidence issue. With gaming they are stilling getting games sales and MTX revenue on top of the sub fees. Really should be easier to make that work rather than harder. There is also a lot less pressure regarding the amount of content that needs to be provided. 1 AAA a quarter would be a nice flow in the gaming space.

You'd rather sell a £60 product than hope the customer continues to subscribe at £10 a month. Even if you pay £120 a year, you've paid for two full price games. That's it. I play far more than that in a year.

I think you'd be hard pressed to find an example in business where someone says they would rather fight for individual $60 sales over a sustained $10/mo. Recurring revenue is king. Especially when you look at the amount of software sold per console over the course of a generation. But, the $60 option still exists on Xbox and probably always will, everyone is still free to make that choice.

It all comes down to whether or not MS is earning more or less with the sub + sales combo, and only they know that. It's perfectly fine for Sony to go another way, I just find all the grandstanding about quality to be funny. One of those "thou does protest too much" situations.
 
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64bitmodels

Member
If you prefer MS products you'd be happy that Sony is failing.
i mean i perfer MS products but i'm not some console warrior dicksucker who wants sony to fail. They aren't outright evil like nintendo and while am apathetic about their games i'd rather not see them fucking die off. If anything i'd rather see them make a gamepass service since sony has more of the fighting game on their side thanks to being very japanese
 

64bitmodels

Member
When a CoD killer comes out (and you don't need to take CoD to 0% market share to kill it, even a 25% drop in market share is a killer) what is the value of activision?
even with that, what COD killer WILL come out? MS basically owns every studio responsible for the most popular shooters, excluding epic. That's a pretty low chance of a COD killer even happening IMO.
 
The only people who think Game Pass has/will lower game quality are people who hate Xbox, or people who hate subscription services (or both). There exists no logical argument for why that would occur, there's no evidence that it has started to happen or will happen. If it doesn't make sense for Sony to do it it's because they can't afford (or don't want to risk) the loss leading strategy that every subscription service ever does during the first several years, and maybe Sony specifically would have to lower their production costs in order to afford that strategy, but it's not because of any correlation between quality and being on a subscription service, because there exists no correlation.
 
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