• Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.

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

Haggard

Banned
I don`t get phrases like these coming from someone like a CFO....

It´s as if this guy hasn`t understood the subscription model at all. Big games/movies in subscription models aren`t meant to make back their money immediately, they are bait for people to subscribe and hopefully stay subscribed so they pay more in the long run.
That´s the bet every single subscription based model has to make. Get big enough to be sustainable or slowly die due to heavy losses.
If that bet works for MS or if they`ll have to cut down investments at some point no one knows.
I can understand that a corporation like Sony which doesn´t have pockets quite as deep as MS wouldn`t want to make such a bet though.
 
Last edited:

Topher

Gold Member
The latest estimate of Gamepass revenue is $2.2B a year, if I remember correctly. And Uncle Phil said Gamepass is not burning any money, so apparently that's the bare minimum you gotta make.

So that is the revenue to be around the break even point as Game Pass exists today, but that revenue is going to need grow to include everything Microsoft will be publishing in the future, I would think. The fact that Microsoft is targeting 3 billion gamers is telling.
 
So that is the revenue to be around the break even point as Game Pass exists today, but that revenue is going to need grow to include everything Microsoft will be publishing in the future, I would think. The fact that Microsoft is targeting 3 billion gamers is telling.
Of course once ABK has been bought, the revenue has to increase, and it probably will. That 3b gamers target isn't for viability, it sounds more like an ideal.
 

Topher

Gold Member
Of course once ABK has been bought, the revenue has to increase, and it probably will. That 3b gamers target isn't for viability, it sounds more like an ideal.

Sure, but that target gives Layden's 500 million some credibility. Although I think it should be noted that Layden was probably thinking in terms of PlayStation's studios and the way they operate. Different business models.
 
I don`t get phrases like these coming from someone like a CFO....

It´s as if this guy hasn`t understood the subscription model at all. Big games/movies in subscription models aren`t meant to make back their money immediately, they are bait for people to subscribe and hopefully stay subscribed so they pay more in the long run.
That´s the bet every single subscription based model has to make. Get big enough to be sustainable or slowly die due to heavy losses.
If that bet works for MS or if they`ll have to cut down investments at some point no one knows.
I can understand that a corporation like Sony which doesn´t have pockets quite as deep as MS wouldn`t want to make such a bet though.
The great thing about gaming subscriptions compared to something like Netflix is that you can make additional revenue. For example, MS spent solid money on getting MLB on the service day one. They'll recoup the cost not only with Gamepass subscriptions, but also by selling DLC. That's the core component that services like Netflix or Spotify don't really have.
 
I don`t get phrases like these coming from someone like a CFO....

It´s as if this guy hasn`t understood the subscription model at all. Big games/movies in subscription models aren`t meant to make back their money immediately, they are bait for people to subscribe and hopefully stay subscribed so they pay more in the long run.
That´s the bet every single subscription based model has to make. Get big enough to be sustainable or slowly die due to heavy losses.
If that bet works for MS or if they`ll have to cut down investments at some point no one knows.
I can understand that a corporation like Sony which doesn´t have pockets quite as deep as MS wouldn`t want to make such a bet though.
Sounds like a terrible plan once every publisher get into doing this, a lot like what happened with studios and streaming services.

One way or the other, there ain't no future where you pay $15 a month and get to play all the games you want, unless all the games you want to play happen to be made by MS.

Netflix value was great at some point, now it's pretty shit to be honest. Everything is spread out over multiple services. I would never subscribe to it on my own and I go months without watching anything on it now because I got better things to watch (I got a 3 months free Trial of the Apple one from LG, I got HBO and Disney for half the price for like one year). All shared with my family.

I used to go to the movies every week a few years ago, now I haven't gone once in 2 years. TV series are good still but possibly getting worse and movies are worse than ever. Definitely not the direction I want games to go.

MS and their fans projections of Gamepass making Netflix numbers are absolutely delirious and will never happen.
 
Last edited:

adamsapple

Or is it just one of Phil's balls in my throat?
You guys can like Gamepass all you want but please stop with the proselytizing that Gamepass is the only way forward. To this day, Gamepass hasn't proved anything in terms of being a dominant business model for the game market. All people can hang on to are projections of how things will be in the future if X and Y happens.


Literally not a single person has done that here.
 
Sure, but that target gives Layden's 500 million some credibility. Although I think it should be noted that Layden was probably thinking in terms of PlayStation's studios and the way they operate. Different business models.
That number is still ridiculous imo. Even if we assume one AAA game per month, that's roughly $150m for the game and... $4.85b for marketing, overhead (servers?) and 3rd party deals? Still makes zero sense.
 

SoraNoKuni

Member
Stating the obvious, it's still weird how people can't really comprehend that GP business model can't sustain big productions.

Movie/Show streaming services have already verified this, a lot of mediocre productions and just a few big productions to attract people in, the thing is that games... are diferrent(monetization is completely different and it's not just ads and subscription revenues).

I am pretty sure the whole thing will get sorted by us, the consumers, if people are ok with mediocre productions and gaas, then that's the future, BUT I am hopeful because Nintendo and Sony who have not really adopted that system, are the market leaders, and I doubt this will stop.

tl;dr I believe the subscription model will be complementary to the usual traditional method of buying/playing games.
 
Last edited:

yurinka

Member
The latest estimate of Gamepass revenue is $2.2B a year, if I remember correctly. And Uncle Phil said Gamepass is not burning any money, so apparently that's the bare minimum you gotta make.
This estimation must be totally wrong.

The real number must be way lower because with around the double of subs, higher price and way less free subs and $1 deals FY Sony's game subs revenue (+ PS Video if still exist somewhere) grew from 383,012M ($2,94B) to 409,355M yen ($3,14B).

I don`t get phrases like these coming from someone like a CFO....

It´s as if this guy hasn`t understood the subscription model at all. Big games/movies in subscription models aren`t meant to make back their money immediately, they are bait for people to subscribe and hopefully stay subscribed so they pay more in the long run.
That´s the bet every single subscription based model has to make. Get big enough to be sustainable or slowly die due to heavy losses.
If that bet works for MS or if they`ll have to cut down investments at some point no one knows.
I can understand that a corporation like Sony which doesn´t have pockets quite as deep as MS wouldn`t want to make such a bet though.
He's the CHIEF OF FINANTIALS Operations of one of the biggest and most successful companies in the world. His game division generates more revenue than any other console maker in gaming history and has a huge profit and growth.

Over half a dozen of his AAA sold over 15M copies this gen and their exclusives dominated the goty awards in the last decade. His AAA game subscription is the biggest known one in term of revenue and game subs. Unlike you he knows a thing or two about finantials of AAA games and game subs.

MS has to prove that to invest almost $100B on acquisitions and to almost give away their AAA games day one has some kind of finantial sense and that they can turn that into a profit. Sony instead has a profitable business, generates way more revenue than MS in both their game division and game subs without needing to invest almost $100B and without having to give away their games.

In fact, during the fiscal year MS added Halo Infinite, Forza 5, Psychonauts 2 and a lot of Bethesda stuff to GP and announced Activision Blizzard King acquisition and addition to GP, the Sony game subs revenue grew to $3,14B (from $2,94B in the previous year) and Sony's game division revenue grew to $21B from ($20,4B in the previous year) and its profit grew to $2,7B from $2,6B. Not sure if I converted the numbers properly to USD using google but the point is all these key metrics grew so they aren't worried with what MS does with GP at all because doesn't affects them.
 
Last edited:
This estimation must be totally wrong.

The real number must be way lower because with around the double of subs, higher price and way less free subs and $1 deals FY Sony's game subs revenue (+ PS Video if still exist somewhere) grew from 383,012M ($2,94B) to 409,355M yen ($3,14B).
Yen got dumpstered, you can't use today's exchange rate for the calculations. Sony made around $3.6B with subscriptions last year.
 
They already have a subscription service that has close to 50m subscribers on their platform, like it or not. I really don't understand where people are coming from thinking that somehow Gamepass is a massive money maker at $15 (at most, since that's the price of Ultimate) but somehow what Sony has can't compete.

Sony games keep selling better than ever, their hardware keeps selling out, their subscription service keeps selling (and now they'll attempt to get more people to move to the higher tier to make an extra $5/$7).

I think you're mistaking a few things.

I don't think anyone is ignoring PS+ it just isn't a driving point for the console, and at the moment, Sony doesn't need to drive console sales.

Game Pass on the other hand is certainly a driver and one that works well with the platform agnosticism that Microsoft is pushing.

In that sense it is a massive money maker since it is making them money they otherwise wouldn't really have.

I do think Sony has missed an opportunity to bundle Crunchy Roll with PS+ Premium, which would have driven subscriptions and brought over anime fans uniformly with PlayStation.
 
The great thing about gaming subscriptions compared to something like Netflix is that you can make additional revenue. For example, MS spent solid money on getting MLB on the service day one. They'll recoup the cost not only with Gamepass subscriptions, but also by selling DLC. That's the core component that services like Netflix or Spotify don't really have.
Let's stop acting like streaming movies don't generate a ton of money from being in theaters or home releases... Netflix doesn't really push that model for their own business, but most streaming services, particularly the ones that have historically made their own content, absolutely do.

Spotify is different because they've successfully changed the entire way people consume music, where people don't really even buy digital albums much anymore.
 
I think you're mistaking a few things.

I don't think anyone is ignoring PS+ it just isn't a driving point for the console, and at the moment, Sony doesn't need to drive console sales.

Game Pass on the other hand is certainly a driver and one that works well with the platform agnosticism that Microsoft is pushing.

In that sense it is a massive money maker since it is making them money they otherwise wouldn't really have.

I do think Sony has missed an opportunity to bundle Crunchy Roll with PS+ Premium, which would have driven subscriptions and brought over anime fans uniformly with PlayStation.
Don't you get that even even without it being a driving point for the console the console is still selling great anyway? So what is Sony losing exactly?

Crunchyroll? How many people currently paying PS+ you think would value Crunchyroll? You know who had Crunchyroll on their sub? MS, they use to give 1 month trials for Crunchy Roll as perks on Gamepass, most people don't even know about it or even what it is, that shows how much value it added to them.

You want Crunchy Roll? Pay for it, it's 8$.

Also, you don't think that Crunchyroll subscribers (however many there are) aren't already extremely more likely to be on PlayStation or Nintendo systems anyway? This whole Crunchyroll angle never made sense to me.
 
Last edited:
Let's stop acting like streaming movies don't generate a ton of money from being in theaters or home releases... Netflix doesn't really push that model for their own business, but most streaming services, particularly the ones that have historically made their own content, absolutely do.
Gamepass always gets compared to Netflix, that's why I singled it out. I personally think Prime, Disney+ etc. are much better business models than Netflix, at least long term.
 

StreetsofBeige

Gold Member
If Gamepass is making all that money at $15 at most and 25m subscribers and all the effort put into Gamepass then we must assume that Sony is making bank with close to 50m subscribers paying $10 and close to zero effort from Sony's part.

We'll see how many people Sony can convince to pay an extra $5 or $7 bucks now that it seems they'll make an effort to provide more value in their sub.

You guys can like Gamepass all you want but please stop with the proselytizing that Gamepass is the only way forward. To this day, Gamepass hasn't proved anything in terms of being a dominant business model for the game market. All people can hang on to are projections of how things will be in the future if X and Y happens.
Nobody ever said a GP model is the only sub plan model to do on Earth.

Then maybe stop dumping on GP (which someone like you is a total MS basher going by your post history). GP is cheap, has an awesome promo deal you can stack, day one games, and lots of recent third party games. It even has bonus discount deals of 10-20% off games sometimes (I forget what the timing is for those). GPU also includes EA Play. It's also an optional service too. So nobody is forced to to do it if they are a traditional gamer who likes buying their games one by one.

No platform gaming sub service on console or PC offers this much.

Maybe instead of "don't compare it to GP" mantra, you could get a lot more gaming for cheap if you wanted other sub plan companies to ante up. They got the money. Dont pretend Sony or Nintendo dont make billions of profit to help perk up services. All the big gaming companies are at record profits the past few years. Someone just posted a Capcom thread saying even they hit record money.

But if you want to be a corporate supporter wanting the business model that makes the most money, instead of best value for gamers go ahead.

It's not like everyone even cares about sub plans anyway. GP is at 25M out of 50M+ Xbox gamers. So at most it's 50% of the user base after 5 years. And thats with big promos too. SO again, let's not pretend here that a sub plan is going to convert all gamers to a Netflix payment system.
 
Last edited:

DeepEnigma

Gold Member
Gamepass always gets compared to Netflix, that's why I singled it out. I personally think Prime, Disney+ etc. are much better business models than Netflix, at least long term.
And what did Disney do recently?

Withheld the new Doctor Strange from day 1 compared to the past because they did not want to lose money. Scarjo also sued them, and won, for the very same reason.
 

Markio128

Member
That number is still ridiculous imo. Even if we assume one AAA game per month, that's roughly $150m for the game and... $4.85b for marketing, overhead (servers?) and 3rd party deals? Still makes zero sense.
Didn’t Halo Infinite cost 500 mil? I doubt Starfield will be much cheaper, when you consider Skyrim cost 100 mil yonks ago; the cost of developing AAA games is only going to go up.
 

Astral Dog

Member
And they are right, why sell a subscription service when your company can sell a subscription service AND millions of AAA games day one?
 

sncvsrtoip

Member
quality deteriorate also when releasing most games as crossgen and in futures also on pc keeping same amount of devs and qa
 

adamsapple

Or is it just one of Phil's balls in my throat?
And they are right, why sell a subscription service when your company can sell a subscription service AND millions of AAA games day one?

This applies to both Sony and MS tho. People can, and do, buy games outside of Game Pass on Xbox just like Sony. But they're not shy of putting their first party on the service day 1, that's the biggest differentiator.
 
Last edited:

DeepEnigma

Gold Member
Microsoft is still selling games. In some cases a lot of them, too.

How does this apply to Gamepass?
You are the one that just compared this to Disney service. Disney sells DVDs, a lot of them too. They have more subscribers than all three console makers combined, yet they still held off day to date, because they ran their numbers over the years and saw they were going to lose out on a big banger release that had a high budget production.
 
Last edited:

Clear

CliffyB's Cock Holster
Ironically "smaller" games don't actually take that much less time to create on average.
Typically all it means is they allocate fewer staff and resources for the same time-frame. Now considering the impetus behind this change to approach is to ensure that there is a steady rolling cadence of product on Gamepass all year round, I'm not entirely sold on this panning out the way that people expect.

This talk about the devs being liberated to work on whatever they want is pretty deceptive, because it implies that performance is irrelevant -and as we know Netflix cancels shows all the time regardless of their operational model.
 

StreetsofBeige

Gold Member
This applies to both Sony and MS tho. People can, and do, buy games outside of Game Pass on Xbox just like Sony. But they're not shy of putting their first party on the service day 1, that's the biggest differentiator.
Yup.

And the whole "if a game goes sub plan first it'll stink because it'll get shitty budgets". LOL.

MS's recent first party games (which all go to GP) have got great scores. So great, they got Metacritic's publisher of the year award.

If anything, sub plan games are getting better scores. Of course, I'm just jesting there, but to be fair facts are facts. But it goes to show just because first party games go day one sub plan it doesn't mean it gets bombed to indie budgets.
 

Putonahappyface

Gold Member
fW7MkCm.jpg
 

Gamerguy84

Member
I appreciate the current effort of combining PS+ and NOW, giving us more value for our money and adding PS5 games.

I hope they keep their current trajectory with high quality exclusives because it's the whole reason I game.

I believe them what they say about it not being feasible.

MS is playing the long game by giving away an unknown amount dollars worth of product and services to gain marketshare back. What they do isn't sustainable to turn a profit.

Also don't believe it's Sony players convinced we need an identical gamepass model. It seems to be other fans trying to convince everyone Sony needs a GP equivalent, which as they said, would drop quality.

Just like BC the last few years. Such a huge deal was made out of a feature PS gamers didn't have. Sony is about to provide that with PS1, 2, and PSP downloads and PS3 streaming. I guess we'll find out how important it really was when it levels out.
 
Ironically "smaller" games don't actually take that much less time to create on average.
Typically all it means is they allocate fewer staff and resources for the same time-frame. Now considering the impetus behind this change to approach is to ensure that there is a steady rolling cadence of product on Gamepass all year round, I'm not entirely sold on this panning out the way that people expect.

This talk about the devs being liberated to work on whatever they want is pretty deceptive, because it implies that performance is irrelevant -and as we know Netflix cancels shows all the time regardless of their operational model.
That is great in theory, that was Valve line of thinking when they planed Episodes for Half-Life 2. That went really well, Episode 3 is just taking a little longer. Please show me examples of a studio that was able to pull this off.

Ninja Theory whole thing was smaller games with AAA games production value, that is how they promoted Hellblade. Then they released Hellblade in 2017, that awful Bleeding Edge game (that was more like a small side project) and to this day Hellblade 2 doesn't even have a release date.

Studios aren't taking 5+ years to put out a game because they couldn't figure out that they could split their games and release smaller games instead, that's just not how it works at all.
 
Last edited:

yurinka

Member
Yen got dumpstered, you can't use today's exchange rate for the calculations. Sony made around $3.6B with subscriptions last year.
True, sorry. I just realized it, just converted to USD the Sony game division revenue and profits and felt too weird when compared to the numbers we had from previous years. I assumed something happened with the yen or dollar during this year (I never cared about exchange rates, so didn't know it).
 
Last edited:

DeepEnigma

Gold Member
Not really. I compared Netflix to Disney. It's obvious that comparing Gamepass to Disney+ isn't perfectly doable, they're in very different businesses after all.
How do you compare Netflix to Disney and MS wants to compare themselves to Netflix, and still try and stretch the goalposts after an example of Disney, who also sells DVDs, a lot of them, has more subs than all 3 console makers combined (higher revenue to profit bracket)... and still did not day to date a banger which broke away from the usual pattern... because? They did not want to lose money on it.
 
Last edited:

adamsapple

Or is it just one of Phil's balls in my throat?
Yup.

And the whole "if a game goes sub plan first it'll stink because it'll get shitty budgets". LOL.

MS's recent first party games (which all go to GP) have got great scores. So great, they got Metacritic's publisher of the year award.

The only reason Shawn Layden and this CFO gentleman are saying this is because this is not the model Sony are currently following with PS software.

Once that changes, all the statements will change to boot.
 

Roxkis_ii

Member
Literally not a single person has done that here.

If that is the case, then they need to shove their game sales on the face of those investors and media. And just tell them, our games sell that much copies. We don't need subscription service to sell our games.

The longer this saga prolonges, the longer Sony is digging their grave.

There is only 1 end game to these persistent questions, and it will end up ugly for Sony, if they do the thing they said will hurt their game quality.

Hmmmm
 
How do you compare Netflix to Disney and MS wants to compare themselves to Netflix, and still try and stretch the goalposts after an example of Disney, who also sells DVDs, a lot of them, has more subs than all 3 console makers combined (higher revenue to profit bracket)... and still did not day to date a banger which broke away from the usual pattern... because? They did not want to lose money on it.
Idk what your point is. Are you implying that Disney+ isn't profitable?
 

DeepEnigma

Gold Member
Idk what your point is. Are you implying that Disney+ isn't profitable?
I am implying that day to date doesn't always work, even when you have over 129m subs like Disney+, hence they held back the new Doctor Strange from day 1.

I am sure its budget had something to do with it. So either production budget suffers, or one waits. Even on a 129m sub service.

Pretty in line with the CFO in the OP.
 
Last edited:
I am implying that day to date doesn't always work, even when you have over 129m subs like Disney+, hence they held back the new Doctor Strange from day 1.

I am sure its budget had something to do with it. So either production budget suffers, or one waits. Even on a 129m sub service.
Or Disney realized they can make more money by preventing day 1 for that specific movie. It likely has nothing to do with viablity.
 

Andodalf

Banned
The only reason Shawn Layden and this CFO gentleman are saying this is because this is not the model Sony are currently following with PS software.

Once that changes, all the statements will change to boot.
Strong "we believe in generations" vibes.

They also know they don't have enough studios to match the content schedule MS will be putting out after it's shopping spree, and so it will always look bad in those comparisons. They are basically going to position themselves as the boutique gaming system.
 

SLB1904

Banned
"It's very hard to launch a $120m game on a subscription service charging $9.99 a month. You pencil it out, you're going to have to have 500 million subscribers before you start to recoup your investment. That's why right now you need to take a loss-leading position to try to grow that base. But still, if you have only 250 million consoles out there, you're not going to get to half a billion subscribers. So how do you circle that square? Nobody has figured that out yet."

That's the full quote from layden

Sounds crazy doesnt it?

Bernd Lauert Bernd Lauert ManaByte ManaByte

Now hypotheticaly you'll have 15bil revenue quarterly (3 months)

What was the playstation last quarter revenue again?

Do you get it why none of you is a CEO?
 
Top Bottom