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Subscription services reportedly account for 4% of North American and European game markets (VGC)

So, uh, I did some further numbers to try and figure what revenue GamePass might be bringing in. Thanks to having both Sony and Nintendo's numbers, plus the numbers from this article (which as Heisenberg007 Heisenberg007 pointed out, is sloppily written to begin with), I think I finally have a solid number and it's...well, it's something.

So to recap, the entire gaming market generated ~ $81 billion. Sub services accounted for 4% of that. The $3.7 billion quoted figure is already a bit too high because that's 4% of $92.5 billion, and if the market generated $92.5 billion, the article would've just outright stated that no? Anyway, we'll just pretend that the $3.7 billion is accurate (it's not) and go with that, because that isn't the main point.

Sony stated that they had generated around $2.5 billion from PS+ subscriptions, which already shows how the Axios figures don't line up, because their numbers for GamePass percentages are referring to a subset of that $3.7 billion...a subset we don't know yet. $2.5 billion off a userbase of 48 million is $52 per year per user on average, over $4.33/month per user. The averaged total of 48 million PS+ subscribers paying an average of $10/month and $5/month (annual pay) would be $7.5. So the actual annual revenue per user is just 73.2% of the average.

Nintendo reported back in November they had 32 million NSO subscribers. IIRC, they did not report revenue figures for this (if they did, please share), but their recent Digital Revenue was $963 million. An average NSO account is $4 for one month, but I assume most Switch users pay for the full year in advance, or $20. Let's just say that's about 75% of all NSO users, or $480 million a year. That's about close to the 73.8% you get from PS+ monthly breakdowns compared to the monthly & annual PS+ revenue average ($4.33/mo vs. $7.50/mo). We'll also roll off another 20% for people who might be paying NSO Expansion, which is basically closer to a GP-style service than regular NSO, leaving $384 million a year.

So that is already $2.884 billion...of $3.7 billion, and we haven't even done XBL Gold yet. I'm actually going to leave that out, because if I included that in before focusing exclusively on GP/PS Now/Stadia/Luna/NSO Expansion, you'd see just how small this share of the market actually is in terms of revenue. And either the following numbers are close to something tangible in terms of actual financial numbers, or the Axios article is even more poorly composed than it already seems like it is.

Anyway, with $816 million remaining, if GamePass constitutes 60% of that market, then annual GamePass revenue is...$489.6 million. That's for the whole year. And again, that isn't accounting for Xbox Live Gold subscribers, because the actual number is actually smaller. Off a base of 25 million, that's $19.58 a year on average from each GamePass subscriber, or $1.63 per month per subscriber on average. Considering a pure average per month based on the plans should be $12.50, that's a difference of the actual monthly average being 7.69x smaller. Another way of framing it, is that roughly less than 1/8th of the 25 million subscribers are paying in full for GamePass over the course of the year, or about 3.26 million users out of 25 million.

If each of those 3.26 million users were to buy a single full-priced $60 AAA game, they'd generate $195.618 million. They would have to buy just 2.5 $60 AAA games a year to match through game purchases, what they theoretically generate in GamePass revenue. I'm not going to sit here and say if this is good or bad; if Microsoft has metrics that GamePass subscribers spend a certain percentage more on games than "others", then at least we can look at some numbers here and figure logically-speaking how that could come about, seeing what the likely revenue off GamePass subscription figures themselves are.

However, if these numbers are pointing in the right direction (and again, that's assuming the "GamePass accounting for 60%" figure is based on a subset of the $3.7 billion figure that state in the article...but the article itself is already faulty on several other grounds so you never know 🤷‍♂️ ), then they do provide some solid grounds for arguments that question the financial success of services like GamePass, as well. Perhaps quite more so than arguments in support of the model, at least as it currently exists. But really, I just wanted to try figuring out some actual numbers here, on a metric I think everyone can understand: money.
 
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EDMIX

Member
Norway has less than 1% the number of cars in the US. I didn't cherrypick anything, I posted data on one of the more relevant markets for the car industry.... You cherrypicked a tiny country that has the highest HDI in the planet.

Analysts also predicted subscriptions would've taken the gaming industry by storm by now... Which clearly isn't the case.

Well...yes and no.

The data you are saying is relevant to the United States, its not relevant to the rest of the world which is adopting Electric cars at a faster rate

https://www.mordorintelligence.com/...ts about 40% of,electric vehicle (BEV) market.

China right now is on track to be the world leader in electric cars. Its literally too late for the US to even combat what China already has going in that market, those Giga factories being built by Tesla in Ohio and Texas will help a lot, but I believe its too late for the US to gain that marketshare and China will be the leader in that industry for some time.

So its 1% now, it will be by default 98% if not more by 2035 or so. (or likely a bit after when the used market dries up)


Easily one of the biggest news stories last year regarding this subject, yet people are still sleeping on whats going to happen


So this is an inevitable thing. Its already happening.... when the biggest automakers in the world start telling you they are going EV only by a certain date, it means that percentage will raise by default of a gas option no longer being available to buy, keep in mind...by 2035, I don't even believe the majority on the will still be using gas anyway, they will continue to see all those electric trims and see for themselves before we even get to some cut off date.


How this ties in to games....

Sony, MS nor Nintendo have ever stated by some date they will be subscription only or something, yet clearly those companies have stated they will be electric only by a certain date. When and if either company makes that comment about subscriptions, you will see that percentage raise as all it takes is 1 publisher to go that route only to make a significate jump. That being said, those of you sleeping on that EV subject might want to read up current events.

Thats not a if topic, thats a when. Its already happening and that transition is already started a while ago for several companies. (start buying them stocks) lol
 
EDMIX EDMIX I didn't know any of this about the EV market so it's some pretty interesting insight...that said the gaming market is a different beast, you already know that. But it's even deeper: car companies outside of the boutique brands (supercar makers mainly like Ferrari and Lamborghini) are going EV-only because governments and other organizations are trying their damnedest to cut down on carbon emissions ASAP. By their research, vehicle fossil fuel emissions are a significant contributor to carbon emissions, so the majority of vehicle manufacturers across the world have basically agreed to switch to alternative power sources, and electric is the big one.

It's a lot different in the world of consumer tech. Almost all the companies have already taken many steps to reduce power consumption of their electronic devices on the market, and the average television or computer contributes nowhere near as much an effect on greenhouse gasses as fossil fuel-powered cars. If there's a driving factor to push the gaming industry to a subscription-only model, it's not going to come out of saving on energy bill costs or reducing the carbon footprint to make the world a better place, because the majority of consumer electronics are already accomplishing that.

That driving factor is probably going to come mainly from corporate fiscal goals to drive more profit by cutting out as many of the middlemen as possible: brick & mortar chains, digital storefronts and, if we're talking about a massive third-party or just massive publisher in general pushing for sub-only model, console platform holders would also be seen as the "middlemen" to get cut from the picture.

Which is why it's both interesting and somewhat pressing to see Microsoft's position in the market here. Because if they really wanted to, they could let things get to a point where Xbox consoles are seen as redundant, and brick & mortar chains are seen as redundant as well. Even storefronts like Steam could be seen as redundant, so maybe they just experiment with a couple games here and there as GamePass-only releases, see what they draw in, and if it's strong enough they gradually transition everything to that. Considering they're about to own some of the other biggest IPs in the industry (they already have Minecraft), if they did this with say a new mainline COD, there's a small chance it could be the thing to push people towards going wholesale into that subscription-style model.

But I say "small chance" because if the GamePass revenue I tried to calculate is anywhere near close to being true (and assuming the Axios report is accurate enough to where the GamePass percentage was based on a subset of the $3.7 billion figure they quote for subscription service revenue in the fiscal year), then MS have almost no financial incentive to even bother going all-in on subscription gaming. The revenue simply isn't there, compared to the pool of subscribers, anyway. But the other hurdle is...even if let's say the wider gaming audience is ready for it, and a massive publisher is ready to push a sub-only model...will ISPs be ready? A publisher can have the best streaming infrastructure in the world, but if a large segment of potential customers have shitty internet due to crappy ISPs in their locations, that's a lot of missed sub revenue anyway.

So ISP providers, carrier networks, supporting infrastructure they provide (cable, fiber, wireless) would need to be up to par, reliably, and also loosen up on data caps (or get rid of them altogether). How long is that gonna take? Because that'd be the biggest bottleneck preventing a sizable chunk of the gaming market ready for a subscription gaming model, potentially....

...or maybe Apple just decides they go sub-only and the model blows up. They have a lot of people who'd support anything they do, after all.
 
So, uh, I did some further numbers to try and figure what revenue GamePass might be bringing in. Thanks to having both Sony and Nintendo's numbers, plus the numbers from this article (which as Heisenberg007 Heisenberg007 pointed out, is sloppily written to begin with), I think I finally have a solid number and it's...well, it's something.

So to recap, the entire gaming market generated ~ $81 billion. Sub services accounted for 4% of that. The $3.7 billion quoted figure is already a bit too high because that's 4% of $85 billion, and if the market generated $92.5 billion, the article would've just outright stated that no? Anyway, we'll just pretend that the $3.7 billion is accurate (it's not) and go with that, because that isn't the main point.

Sony stated that they had generated around $2.5 billion from PS+ subscriptions, which already shows how the Axios figures don't line up, because their numbers for GamePass percentages are referring to a subset of that $3.7 billion...a subset we don't know yet. $2.5 billion off a userbase of 48 million is $52 per year per user on average, over $4.33/month per user. The averaged total of 48 million PS+ subscribers paying an average of $10/month and $5/month (annual pay) would be $7.5. So the actual annual revenue per user is just 73.2% of the average.

Nintendo reported back in November they had 32 million NSO subscribers. IIRC, they did not report revenue figures for this (if they did, please share), but their recent Digital Revenue was $963 million. An average NSO account is $4 for one month, but I assume most Switch users pay for the full year in advance, or $20. Let's just say that's about 75% of all NSO users, or $480 million a year. That's about close to the 73.8% you get from PS+ monthly breakdowns compared to the monthly & annual PS+ revenue average ($4.33/mo vs. $7.50/mo). We'll also roll off another 20% for people who might be paying NSO Expansion, which is basically closer to a GP-style service than regular NSO, leaving $384 million a year.

So that is already $2.884 billion...of $3.7 billion, and we haven't even done XBL Gold yet. I'm actually going to leave that out, because if I included that in before focusing exclusively on GP/PS Now/Stadia/Luna/NSO Expansion, you'd see just how small this share of the market actually is in terms of revenue. And either the following numbers are close to something tangible in terms of actual financial numbers, or the Axios article is even more poorly composed than it already seems like it is.

Anyway, with $816 million remaining, if GamePass constitutes 60% of that market, then annual GamePass revenue is...$489.6 million. That's for the whole year. And again, that isn't accounting for Xbox Live Gold subscribers, because the actual number is actually smaller. Off a base of 25 million, that's $19.58 a year on average from each GamePass subscriber, or $1.63 per month per subscriber on average. Considering a pure average per month based on the plans should be $12.50, that's a difference of the actual monthly average being 7.69x smaller. Another way of framing it, is that roughly less than 1/8th of the 25 million subscribers are paying in full for GamePass over the course of the year, or about 3.26 million users out of 25 million.

If each of those 3.26 million users were to buy a single full-priced $60 AAA game, they'd generate $195.618 million. They would have to buy just 2.5 $60 AAA games a year to match through game purchases, what they theoretically generate in GamePass revenue. I'm not going to sit here and say if this is good or bad; if Microsoft has metrics that GamePass subscribers spend a certain percentage more on games than "others", then at least we can look at some numbers here and figure logically-speaking how that could come about, seeing what the likely revenue off GamePass subscription figures themselves are.

However, if these numbers are pointing in the right direction (and again, that's assuming the "GamePass accounting for 60%" figure is based on a subset of the $3.7 billion figure that state in the article...but the article itself is already faulty on several other grounds so you never know 🤷‍♂️ ), then they do provide some solid grounds for arguments that question the financial success of services like GamePass, as well. Perhaps quite more so than arguments in support of the model, at least as it currently exists. But really, I just wanted to try figuring out some actual numbers here, on a metric I think everyone can understand: money.
Just want to say that I love posts like these.

We may be wrong, we may be right -- one can never know without official data that companies rarely share nowadays. But at least posts like these are original and contribute something meaningful to the conversation and to this forum. Great job!
 
Just want to say that I love posts like these.

We may be wrong, we may be right -- one can never know without official data that companies rarely share nowadays. But at least posts like these are original and contribute something meaningful to the conversation and to this forum. Great job!

Thanks man, I appreciate it. For sure the numbers could be off by some degree, I didn't include XBL Gold revenue in any of this (not that it'd be easy to figure out), and a lot of this is hinged off a frankly sketchy article to begin with, as you pointed out days back.

But if we wanna try to know what the actual numbers could be, at least there are enough sources for cross-referencing and checking against each other. I do miss when industry numbers were more freely provided, but at least some companies and analytics organizations provide enough to work some things out.

Would be super interested if more official hard numbers came out in the future but that's a pipe dream for now.
 

EDMIX

Member
EDMIX EDMIX I didn't know any of this about the EV market so it's some pretty interesting insight...that said the gaming market is a different beast, you already know that. But it's even deeper: car companies outside of the boutique brands (supercar makers mainly like Ferrari and Lamborghini) are going EV-only because governments and other organizations are trying their damnedest to cut down on carbon emissions ASAP. By their research, vehicle fossil fuel emissions are a significant contributor to carbon emissions, so the majority of vehicle manufacturers across the world have basically agreed to switch to alternative power sources, and electric is the big one.

It's a lot different in the world of consumer tech. Almost all the companies have already taken many steps to reduce power consumption of their electronic devices on the market, and the average television or computer contributes nowhere near as much an effect on greenhouse gasses as fossil fuel-powered cars. If there's a driving factor to push the gaming industry to a subscription-only model, it's not going to come out of saving on energy bill costs or reducing the carbon footprint to make the world a better place, because the majority of consumer electronics are already accomplishing that.

That driving factor is probably going to come mainly from corporate fiscal goals to drive more profit by cutting out as many of the middlemen as possible: brick & mortar chains, digital storefronts and, if we're talking about a massive third-party or just massive publisher in general pushing for sub-only model, console platform holders would also be seen as the "middlemen" to get cut from the picture.

Which is why it's both interesting and somewhat pressing to see Microsoft's position in the market here. Because if they really wanted to, they could let things get to a point where Xbox consoles are seen as redundant, and brick & mortar chains are seen as redundant as well. Even storefronts like Steam could be seen as redundant, so maybe they just experiment with a couple games here and there as GamePass-only releases, see what they draw in, and if it's strong enough they gradually transition everything to that. Considering they're about to own some of the other biggest IPs in the industry (they already have Minecraft), if they did this with say a new mainline COD, there's a small chance it could be the thing to push people towards going wholesale into that subscription-style model.

But I say "small chance" because if the GamePass revenue I tried to calculate is anywhere near close to being true (and assuming the Axios report is accurate enough to where the GamePass percentage was based on a subset of the $3.7 billion figure they quote for subscription service revenue in the fiscal year), then MS have almost no financial incentive to even bother going all-in on subscription gaming. The revenue simply isn't there, compared to the pool of subscribers, anyway. But the other hurdle is...even if let's say the wider gaming audience is ready for it, and a massive publisher is ready to push a sub-only model...will ISPs be ready? A publisher can have the best streaming infrastructure in the world, but if a large segment of potential customers have shitty internet due to crappy ISPs in their locations, that's a lot of missed sub revenue anyway.

So ISP providers, carrier networks, supporting infrastructure they provide (cable, fiber, wireless) would need to be up to par, reliably, and also loosen up on data caps (or get rid of them altogether). How long is that gonna take? Because that'd be the biggest bottleneck preventing a sizable chunk of the gaming market ready for a subscription gaming model, potentially....

...or maybe Apple just decides they go sub-only and the model blows up. They have a lot of people who'd support anything they do, after all.

Agreed and well put post

I believe a massive push would be needed to really get gaming in a subscription model only by any publisher. ISP imho might be one of the biggest barriers. Any cost savings to the consumer with a subscription model is irrelevant if ISPs keep jacking up the price, soon they'll start adding on a subscription tax, be like "oh so you have that Gamepass, PS Plus Max Ultra, HBO Go, Fox Slow set up.....you can ONLY have this speed for that" lol

Only way I really see such a concept working and pushing the industry to that direction.

1. Some Free Internet law, no different then what was done with public television, radio etc as a form of needed communication and data transfer. As in, a minimum is free and any company wanting to charge for the luxury of anything faster, different features can still exist as we still have public radio, didn't stop Sirius XM.

2. A law for consumers that protects their purchase. I have nothing against the EULA, but it needs to be updated to make sense for a digital age. How can anyone feel ok spending online, if their purchase is not protected and a title can be removed from the store with no way for the consumer to get it back or something? So we'd need something in place for any of that to make sense to build that trust or something.

Until then, we'll always see the demand for physical of us older gamers that value owning our shit lol Those games this gen will keep getting bigger and bigger and we haven't even seen any full next gen only open world game as of yet, who is trying to download and stream that much data without running into some cap or paying for more speed, just to play some rental? So a lot needs to change before we see it even come close to being a sub only market.
 

Zeroing

Banned
Agreed and well put post

I believe a massive push would be needed to really get gaming in a subscription model only by any publisher. ISP imho might be one of the biggest barriers. Any cost savings to the consumer with a subscription model is irrelevant if ISPs keep jacking up the price, soon they'll start adding on a subscription tax, be like "oh so you have that Gamepass, PS Plus Max Ultra, HBO Go, Fox Slow set up.....you can ONLY have this speed for that" lol

Only way I really see such a concept working and pushing the industry to that direction.

1. Some Free Internet law, no different then what was done with public television, radio etc as a form of needed communication and data transfer. As in, a minimum is free and any company wanting to charge for the luxury of anything faster, different features can still exist as we still have public radio, didn't stop Sirius XM.

2. A law for consumers that protects their purchase. I have nothing against the EULA, but it needs to be updated to make sense for a digital age. How can anyone feel ok spending online, if their purchase is not protected and a title can be removed from the store with no way for the consumer to get it back or something? So we'd need something in place for any of that to make sense to build that trust or something.

Until then, we'll always see the demand for physical of us older gamers that value owning our shit lol Those games this gen will keep getting bigger and bigger and we haven't even seen any full next gen only open world game as of yet, who is trying to download and stream that much data without running into some cap or paying for more speed, just to play some rental? So a lot needs to change before we see it even come close to being a sub only market.
We in Portugal are already starting to do that, a free Wi-Fi for those who live on rural areas. Cheaper internet that guarantee a minimum decent speed and we do not have upload or download limits.

We have the 4 ISP competing to each other so ferocious that times, they do crazy offers if you just renovate your contract like free Apple TV, iPhone, Samsung tv…they even did with PS5.
 

EDMIX

Member
We in Portugal are already starting to do that, a free Wi-Fi for those who live on rural areas. Cheaper internet that guarantee a minimum decent speed and we do not have upload or download limits.

We have the 4 ISP competing to each other so ferocious that times, they do crazy offers if you just renovate your contract like free Apple TV, iPhone, Samsung tv…they even did with PS5.

Respect. Thats great to hear. I hope one day that is a world wide thing, at least the minimum.

Caps should fucking be illegal in general lol
 

Zeroing

Banned
Respect. Thats great to hear. I hope one day that is a world wide thing, at least the minimum.

Caps should fucking be illegal in general lol
I agree specially since now everyone uses 4K content. Even our cable tv channels are not even cable, it’s streaming at very high internet speeds. Damn I am starting to think my country is weird.
 

arvfab

Member
if we're talking about a massive third-party or just massive publisher in general pushing for sub-only model, console platform holders would also be seen as the "middlemen" to get cut from the picture.

And this is something pro-sub-services never consider, although we have already seen how it evolved with video streaming services.

Once it's all digital and all streaming (and that's the obvious course it will take, if people continue with supporting this shit), every major publisher will want to have an own service, with exclusive content, all with relatively high prices.
 
That driving factor is probably going to come mainly from corporate fiscal goals to drive more profit by cutting out as many of the middlemen as possible: brick & mortar chains, digital storefronts and, if we're talking about a massive third-party or just massive publisher in general pushing for sub-only model, console platform holders would also be seen as the "middlemen" to get cut from the picture.
And this is something pro-sub-services never consider, although we have already seen how it evolved with video streaming services.

Once it's all digital and all streaming (and that's the obvious course it will take, if people continue with supporting this shit), every major publisher will want to have an own service, with exclusive content, all with relatively high prices.
This reminds me that I was recently listening to a podcast where a Ubisoft developer was describing subscription services and their negative impact in terms of revenue these subs generate for developers. IIRC, he described it exactly like this and used the term "middlemen" to get a cut.

It was a very insightful podcast and had lots of good info. He even mentioned that these games even have contract clauses that if a dev doesn't finish a game within a certain budget or time frame, the company that owns the sub will get the rights of the gaming IP as compensation. That was a shocker. I didn't share that podcast here for ... obvious reasons, but it was pretty cool.
 

Ozriel

Member
This reminds me that I was recently listening to a podcast where a Ubisoft developer was describing subscription services and their negative impact in terms of revenue these subs generate for developers. IIRC, he described it exactly like this and used the term "middlemen" to get a cut.

It was a very insightful podcast and had lots of good info. He even mentioned that these games even have contract clauses that if a dev doesn't finish a game within a certain budget or time frame, the company that owns the sub will get the rights of the gaming IP as compensation. That was a shocker. I didn't share that podcast here for ... obvious reasons, but it was pretty cool.


I’m not sure I understand this, because most times it’s the publishers who put the games on sub services, after the devs have been paid. And there are a lot of devs who seem happy to put their games on subscription services.


I also don’t believe there are many instances of devs giving up IP ownership of games don’t meet budget or time limits. There are usual financial penalties that are applied in such cases.

Ubisoft has their own subscription service, so it’s difficult to imagine a developer working there being excessively negative about subscription services.
 

Shmunter

Member
I’m not sure I understand this, because most times it’s the publishers who put the games on sub services, after the devs have been paid. And there are a lot of devs who seem happy to put their games on subscription services.


I also don’t believe there are many instances of devs giving up IP ownership of games don’t meet budget or time limits. There are usual financial penalties that are applied in such cases.

Ubisoft has their own subscription service, so it’s difficult to imagine a developer working there being excessively negative about subscription services.
Devs may have residuals based on future sales like in other media such as movies etc. e.g. Scarlett Johansen suing Disney for streaming black widow on Disney plus and her missing out on cinema takings.
 
I believe a massive push would be needed to really get gaming in a subscription model only by any publisher. ISP imho might be one of the biggest barriers. Any cost savings to the consumer with a subscription model is irrelevant if ISPs keep jacking up the price, soon they'll start adding on a subscription tax, be like "oh so you have that Gamepass, PS Plus Max Ultra, HBO Go, Fox Slow set up.....you can ONLY have this speed for that" lol

I think they already do this xD. At least here (dunno if you're American or not) in the US they tried passing legislation where ISP providers could give preferential speeds for websites willing to pay more, while other smaller websites would go slower from the server end (or I guess the midpoint as that's what the ISP is acting as, between the client accessing website and the server hosting the actual website).

Did not follow that too closely and don't know if it passed, but I wouldn't be surprised if it did. Throttling is already a thing; you don't even have to exceed your data cap limit. With Cox for example, you can be punished with throttling if too many of your neighbors are using the network heavily...or at least that's a rumor. I don't think it's ever been proven and it sounds so ridiculous but it wouldn't surprise me.

Only way I really see such a concept working and pushing the industry to that direction.

1. Some Free Internet law, no different then what was done with public television, radio etc as a form of needed communication and data transfer. As in, a minimum is free and any company wanting to charge for the luxury of anything faster, different features can still exist as we still have public radio, didn't stop Sirius XM.

2. A law for consumers that protects their purchase. I have nothing against the EULA, but it needs to be updated to make sense for a digital age. How can anyone feel ok spending online, if their purchase is not protected and a title can be removed from the store with no way for the consumer to get it back or something? So we'd need something in place for any of that to make sense to build that trust or something.

Until then, we'll always see the demand for physical of us older gamers that value owning our shit lol Those games this gen will keep getting bigger and bigger and we haven't even seen any full next gen only open world game as of yet, who is trying to download and stream that much data without running into some cap or paying for more speed, just to play some rental? So a lot needs to change before we see it even come close to being a sub only market.

There's a way for free internet, technically, but at least here in the States you have to be eligible via some form of government assistance. I'm guessing that's housing-related, also probably related to having a disability claim or the suchlike. Most of the ISP provide it but for some it just subsidizes a portion of the internet bill. Obviously, only a subset of people are going to qualify and if it's tied to government subsidization, a lot of people are not going to want it anyway, especially if it's tied to financial assistance (tho I guess college students would definitely appreciate it).

The points you bring up though, in general, are just even further roadblocks that will prevent publishers from pushing for a digital-only, subscription model future, where even consoles are seen as redundant or unnecessary, and I can't say I'm too sad about that future being pushed further & further back. Even though I was too young to fully appreciate them (despite being at several of them as a kid) it sucked to see arcades basically disappear once systems like PS2, Gamecube, and Xbox came into the market. We already went through the fear of consoles dying before with mobile at the start of the last decade.

If consoles ever went away, and the only way to consume content was digital subscription through plain, boring, ordinary generic streaming stick devices, I'd pretty much bail out of the hobby aside from retro gaming. Gaming has a culture to it IMO, that's defined by unique hardware, controllers, and the impact those can have on game design. I view game subscription services (ala GamePass, PS Now, Stadia types) as a potential liberation for easier content delivery & distribution, the same way CDs were back when cartridges were the default, or how rental became to purchases might be a better comparison.

But, it in no way can serve as a full replacement for physical, streaming through some generic stick will never impart the same type of culture or drive for game design shifts as dedicated, custom hardware, controllers and the branding to encapsulate them. I don't think we're anywhere near the full evolution (or "adaptation", to phrase it better) of game design because we're still in early stages of VR immersion and haven't even really cracked AR yet, and there's no future for a digital-only, subscription-based, console-agnostic, streaming-centric future until those things happen. And that is probably at least another 20 years if not longer.

I agree specially since now everyone uses 4K content. Even our cable tv channels are not even cable, it’s streaming at very high internet speeds. Damn I am starting to think my country is weird.

No it's not weird; it should be serving as an example tbh.

This reminds me that I was recently listening to a podcast where a Ubisoft developer was describing subscription services and their negative impact in terms of revenue these subs generate for developers. IIRC, he described it exactly like this and used the term "middlemen" to get a cut.

It was a very insightful podcast and had lots of good info. He even mentioned that these games even have contract clauses that if a dev doesn't finish a game within a certain budget or time frame, the company that owns the sub will get the rights of the gaming IP as compensation. That was a shocker. I didn't share that podcast here for ... obvious reasons, but it was pretty cool.

Yeah, we saw this play out with PeopleCanFly and Outriders; the devs claimed they didn't get their bonuses, and it's probably because the bonuses were tied to reaching game sale milestones. Milestones that were most likely affected due to preorders getting cancelled by people who decided to play it through GamePass instead once the news got out.

I definitely blame Square-Enix on that one, though I also heard Outriders was in some bit of dev hell for a while and probably had a lot more money pumped into it than initially forecasted, so I can understand SE for wanting to get back their bread ASAP. If Microsoft's offering them the money, why not take it? But that probably did cut into PCF's bonuses which might've led to the public statements they made.

And if that's so, more publishers will have to be mindful of providing bonus metrics based on metrics tied to subscription services, not just copies of games sold. It also kind of puts a wedge into some of the claims where GamePass boosts game sales: I think it might do that for certain smaller games with reduced exposure before going into GamePass, but it's impossible to claim the idea it doesn't have an impact on larger 3P game sales. Now maybe it could be boosting total revenue for those games because people accessing it through GamePass are saving $60 that could be put towards MTX and DLC, but if they only put that much into those avenues the revenue is just the same but redistributed. There'd have to be an impulse at some point in freeing up the money from outright buying the game for someone to then spend more in MTX and DLC then they would've if they happened to purchase the game, and that's when the revenue increase per user happens.

However we wouldn't know how much additional revenue (not simply revenue worth the normal MSRP redistributed to MTX/DLC) in terms of hard numbers GamePass helps generate for games in the service because those numbers are tied into financial results for the devs and publishers of those games and at most just break it down by platform in general.

Also I'd like to know what that podcast was 😁

Well as long as it's gaming-focused, because if so I could probably guess whose podcast. He is banned on ResetEra, I'd know that much.
 
https://wccftech.com/cloud-gaming-reaches-1-5-billion-in-2021-expected-to-grow-4x-by-2024/

That's according to the link. I think this might be a better article to use for figuring out GamePass revenue since it deals only with cloud gaming and is global; meanwhile the Axios article only focused on NA & Europe markets and (thinking on it now) I believe the claims of cloud subscription service marketshare were based on a subset derived from the total subscription numbers specific to the NA & European regions. However, since that article failed to break down what portion of the $81 billion was from NA and Europe specifically, it made figuring out numbers very difficult.

However with this new article we can have more info to cross-reference. So again, $1.5 billion in 2021 from cloud services. The gaming market as a whole made $81 billion in 2021. There aren't any marketshare figures by country specific to console gaming I could find, but the total market size for Europe is said have been about $26.57 billion in 2020, with console gaming making up 40% of that, or $10.628 billion.

We can just assume the split between console and mobile/non-console gaming is similar in NA, maybe trending a bit higher by 10% in favor of the former actually. NA generated $36.92 billion in 2020, so a 40% split of that for console is $14.768 billion, a 50% split would be $18.46 billion. Now going back to that Axios article, they said subscription services accounted for 4% of revenue in the European and NA markets (for 2021; look I couldn't find 2021 statistics for some of this other stuff xD). 4% coming not just from the console side, but non-console side as well, because some of those subscription services (namely, GamePass) are available via mobile and PC as well. The question is how many of them are; given Microsoft are pushing for chip priority (at least according to rumor), I'd assume consoles are making up the vast majority of GamePass subscription growth, so I'd say at least 80% is on the console side, possibly as high as 90%.

So, if the combined console revenue markets for NA & Europe were a low of $25.396 billion, and a high of $29.088 billion, then 4% of those would be a range of between $1.015 billion - $1.164 billion. Now, the total market revenues for mobile side last year in Europe would've been $15.942 billion, and for NA, between $18.46 billion (mobile is 50% of NA market split) - $22.152 billion (mobile is 60% of NA market split). From these mobile numbers, combined mobile/non-console revenue markets for NA & Europe would be a low of $34.4 billion - $38.094 billion, with 4% figures being between $1.376 billion - $1.524 billion. Combined 4% of both markets would be between $2.391 billion - $2.688 billion.

So in other words, subscription services in general likely generated between $2.391 billion and $2.688 billion between the NA and European markets for 2020 (and for 2021, take 2020 and increase it by whatever the YOY growth percentage was). Now for 2020, I was only able to find gaming market revenues for China, NA, Japan, and most of Europe. Markets like Brazil, South Africa, the Middle East etc., I couldn't find figures for them, but I rounded their totals up to about $10 billion. Anyway, with that extra, it seems the total gaming market generated $133 billion between console, PC, mobile last. China had the largest share, followed closely by America, then Europe, then Japan, then everyone else. However, for what we need to look for going forward, we can actually leave China out of it since console gaming is in a very early infancy in that market, and I doubt the mobile options for mainly console-driven sub services is that big over there, either.

Now we have to do a bit of guesswork. I'm mainly going to go by install base size here, where in Japan, Nintendo dominates. In Europe, Sony dominates, and in NA, it's a much closer three-way between Sony, Nintendo, and Microsoft, but I'd say the former two still share a lead over Microsoft albeit much smaller than the other regions. And for ROTW (aside from China), I would say Sony has a pretty healthy lead followed by Nintendo, and MS behind that. Percentage-wise, I'd break it down as some rough figures of:

-Japan: 85% Nintendo, 13% Sony, 2% Microsoft​
-Europe: 55% Sony, 35% Nintendo, 10% Microsoft​
-NA: 35% Sony, 35% Nintendo, 30% Microsoft​
-ROTW (sans China): 55% Sony, 40% Nintendo, 5% Microsoft​

With that done, I'm gonna go back to some numbers I came up with in my other post and try splitting them in line with the above percentages so we can isolate NA & Europe in particular. Back to the $133 billion gaming revenue figure above, I said China made up the majority of that; in other words they made up roughly 30%. Removing them from that figure brings it down to $92.15 billion. Of THAT amount, NA made up the largest, at around 40%. Europe made up about 29%, and Japan constituting about 20%. That leaves ROTW with 11%.

Sony reported $2.5 billion in revenue off PS+ last year; if we go with the above marketshare percentages we see that NA & Europe would account for 69% (nice!) of that amount, or $1.725 billion. At least, theoretically they would; if we also include the per-platform market split estimates, for those various regions, and assuming subscription service splits mirror the install base and general platform ecosystem marketshare splits, then for both PS+ and NSO we'd get:

-PS+ (take the $2.5 billion, multiply it by the region marketshare total, take that result and multiply it by estimated platform marketshare in region):​
-Japan: $500 million (theoretical); $65 million (actual)​
-ROTW: $275 million (theoretical); $151.25 million (actual)​
-Europe: $725 million (theoretical); $398.75 million (actual)​
-NA: $1 billion (theoretical), $358 million (actual)​

Now some of that might look kind of sus; at the least NA and Europe figures should be flipped, no? Well, this is the best I can do with what info I can find :/ Now time for Nintendo:

-NSO (take $384 million, multiply it by the region marketshare total, take that result and multiply it by the estimated platform marketshare in region):​
-Japan: $76.8 million (theoretical), $65.28 million (actual)​
-ROTW: $42.24 million (theoretical), $16.896 million (actual)​
-Europe: $111.36 million (theoretical), $38.976 million (actual)​
-NA: $153.6 million (theoretical), $53.76 million (actual)​

Again, some of these could probably be flipped, but I think I'll leave it at that for now. So, going back to the Axios article, they said the combined NA & Europe market for game subscriptions was $3.24 billion (they actually cite $3.7 billion but 4% of $81 billion works out to $3.24 billion). Okay then, let's look at Sony & Nintendo's theoretical shares in those markets and subtract them. That's a total of $849.486 million, bringing that total down to $2.39 billion. Now THIS time, I'll try to do XBL Gold as well; if GamePass was reported at 25 million subscribers recently, Xbox consoles are the only MS gaming products where you have to pay for online (i.e pay for XBL Gold), we assume the ratio of Gold subs to XBO/Series owners is roughly equivalent to Sony's (1:2.87 (133.25 million install base vs 48 million subs), then that gives 24 million XBL Gold subscriptions. So now let's do some more numbers!

-XBL Gold (take total sub numbers, multiply by region marketshare total):​
-Europe: 6.96 million (theoretical)​
-NA: 9.6 million (theoretical)​

This gets a bit tricky because as you can see, NA and Europe would account for 69% (nice nice!) of XBL Gold subs...which probably isn't that far off from the truth. In fact, we can probably say as much as up to 85% of all XBL Gold subs come from the NA and European regions, as I doubt very many in Japan or ROTW bother with XBL Gold. So this gives us a sub range of between 16.56 million - 20.4 million XBL Gold subs in the combined NA & Europe regions. I'm almost tempted to say up to 90% of all XBL Gold subs come from these two territories, which would push the total up to 21.6 million across the two.

Now, if we assume the average monthly revenue per XBL Gold user is the same as with PS+, or $4.33, then XBL Gold would be bringing in between $860.457 million - $1.059 billion a year between NA & Europe, with an extreme high-end of $1.122 billion per year. So now, we subtract these from the $2.85 billion above, and get a range for cloud-only/game subscription service marketshare of between $1.286 billion (XBL Gold in both regions is 'extreme high-end' share) - $1.331 billion (typical high-end) - $1.529 billion (XBL Gold in both regions is in the lower end).

Something else you notice is that these numbers almost line up with the report from WCCFTech linked right at the start, so I could've just used that instead of doing all this extra number-crunching. However, it's still important IMO to see if things line up; they just happen to (for the most part) here. I also had to rely on some 2020 numbers here because 2021 numbers were not easy to find if at all, but I tried my best to account for that regardless.

Anyway, we now have three numbers we can use to try guessing what actual GamePass revenue is at. Whichever one we choose, GamePass will account for 60% of it, as per the Axios article. So the first figure (and possibly most realistic, unless you want to assume NA & Europe accounted for 100% of all cloud gaming revenue :S) would put GamePass at an annual share of $771.6 million. The second gives it $798.6 million a year, and the 3rd (which is near 0% probability) is $917.4 million/year for GamePass in NA & European markets.

For sake of realistic outlook though let's just say GamePass is likely between $771.6 million and $798.6 million for NA & Europe (combined). That's a monthly per-user revenue of between $2.57 - $2.66; this also assumes that at least 80% of GamePass subscribers are in NA & Europe (which is certainly possible, and likely). What all this basically gets at is simple: on its own, GamePass isn't really doing "major" numbers. Like I said before, a single AAA game selling $10 million at $60 a pop brings in almost as much revenue on its own as GamePass would the entire year, so it's no wonder we don't see 3P big AAA releases in the service Day 1, and probably won't for a while. In fact, thanks to Sony's strategy of combining PS+ and PS Now, there's a bigger likelihood THEY could get some 3P big AAA releases Day 1 through their revamped PS+, than Microsoft will with GamePass! The main reason being because 3P AAA Day 1 releases won't have to be specifically tied to the PS Now tier.

However, that aside, GamePass still serves a pretty good role for Microsoft right now. It IS added revenue at the end of the day, which combines healthily with their XBL Gold revenue (unless there is more bleeding of Gold subs into GamePass than I'm factoring for here). If Microsoft introduced GamePass as an additional tier in the way similar to how Sony's merging PS Now into PS+, they would be better off, and it's going to be harder for them to converge the services now in light of how they've designed GamePass up to this point. There's also the costs associated from the Zenimax & ABK acquisitions; while I think Microsoft itself has taken on the costs of those rather than simply Xbox division (especially in the case of ABK), the Xbox division, and GamePass in particular, still have to account for recouping some of those billions. This would have to be done through profits; assuming Xbox division makes 10% of the annual revenue of the rest of Microsoft, then it's likely Xbox division profits are expected to account for 10% of the Zenimax & ABK costs over time, or $7.65 billion. We don't get Xbox division profits, only revenue. But assuming they keep the majority of their services revenue as profit, combined with 30% cuts from 3P sales and what they get from 1P software sales Xbox as a division is probably bringing in $1 billion of profit annually, or just a bit shy of that. In other words, for Xbox division to contribute its share in profits, to the acquisition costs of Zenimax & ABK, it'd take them about eight years if 100% of profits were going to that.

Which they aren't, so it will take quite a bit longer. But this is just looking at that side of things from one perspective, and most likely Microsoft aren't strictly looking at Xbox & GamePass profits in that matter when it comes to recouping costs on spending for ABK & Zenimax (or the other purchases too, for that matter). I'll leave off saying that, if we're just talking about 3P Day 1 AAA games in the service, then no, GamePass isn't a viable model for the majority of AAA games. Not unless they rely a metric ton on MTX and DLC content sales, anyway. This also shows Jim Ryan wasn't just huffing & puffing when he claimed that Sony's games are not financially feasible in a GamePass-like service; the numbers outright prove he's correct when you consider the budgets for Sony's typical marquee AAA 1P releases. 1P Day 1 AAA releases for Sony might be more of a possibility in something like PS+, though I would only expect it with a single such game. Most likely, with their service revamp we could get some 1P co-developed AA Day 1 games in the new PS+, I think the structure and revenue size of the service in that regard can support those types of games. Think if something like Shadow of the Colossus remake came out today or a year from now; that would be the sort of Sony game which could potentially see Day 1 in the new PS+, probably at the Essentials and Premium tiers.

OTOH, GamePass I think, IS suitable for smaller indie Day 1 releases, and late 3P AAA additions here and there...which is exactly what it's been serving for the longest time. Even if MS are covering the dev costs for some of these indie games, their budgets are peanuts compared to AAA games, so it doesn't eat that much into revenue from the service. They also seem to choose just specific AAA 3P releases into the service, likely to save on costs, hence we see stuff like the $15 million they paid for GotG into GP lately, some six months after initial launch. It's a potentially good back catalogue for those who happen to have a lot of older games they want to catch up on for the cheap, especially if they are indie and MS 1P content, less so 3P AAA content but you may get a few noteworthy ones every now and then (aside from the sports games, because who honestly plays last year's version of Madden, FIFA or even MLB?).

I guess the big question will be, is GamePass going to be sustainable for the new MS 1P big AAA releases? Will it be able to generate enough revenue to make up for any drop in sales for games like Starfield, Avowed, Hellblade II, Forza Motorsport 8, Perfect Dark etc. going into the service Day 1? Based on what the annual revenue figures seem to be at current, in order to maintain those revenue rates and have additional revenue to make up for lost sales, MS would probably need a few million more active subscribers per game. And if they're talking about having one big AAA game per quarter, take whatever that amount is and multiply it by 4. That's the total amount of new annual subscribers they'd need in addition to what they already have, to potentially make it a sustainable model for their own 1P AAA releases. I personally think there's way too much volatility in this type of business model to make it fully sustainable let alone lucrative for multiple 1P AAA releases, unless you can make sure exactly that the amount of people opting to subscribe for the game isn't more than what you'd lose in sales revenue, without buffing up the total revenue in the subscription side, otherwise that's like a net loss.

But hey, it's ultimately Microsoft's service, ultimately their games. They're the ones who have to try and figure this out and make it work for the long haul, not us 😉
 
https://wccftech.com/cloud-gaming-reaches-1-5-billion-in-2021-expected-to-grow-4x-by-2024/

That's according to the link. I think this might be a better article to use for figuring out GamePass revenue since it deals only with cloud gaming and is global; meanwhile the Axios article only focused on NA & Europe markets and (thinking on it now) I believe the claims of cloud subscription service marketshare were based on a subset derived from the total subscription numbers specific to the NA & European regions. However, since that article failed to break down what portion of the $81 billion was from NA and Europe specifically, it made figuring out numbers very difficult.

However with this new article we can have more info to cross-reference. So again, $1.5 billion in 2021 from cloud services. The gaming market as a whole made $81 billion in 2021. There aren't any marketshare figures by country specific to console gaming I could find, but the total market size for Europe is said have been about $26.57 billion in 2020, with console gaming making up 40% of that, or $10.628 billion.

We can just assume the split between console and mobile/non-console gaming is similar in NA, maybe trending a bit higher by 10% in favor of the former actually. NA generated $36.92 billion in 2020, so a 40% split of that for console is $14.768 billion, a 50% split would be $18.46 billion. Now going back to that Axios article, they said subscription services accounted for 4% of revenue in the European and NA markets (for 2021; look I couldn't find 2021 statistics for some of this other stuff xD). 4% coming not just from the console side, but non-console side as well, because some of those subscription services (namely, GamePass) are available via mobile and PC as well. The question is how many of them are; given Microsoft are pushing for chip priority (at least according to rumor), I'd assume consoles are making up the vast majority of GamePass subscription growth, so I'd say at least 80% is on the console side, possibly as high as 90%.

So, if the combined console revenue markets for NA & Europe were a low of $25.396 billion, and a high of $29.088 billion, then 4% of those would be a range of between $1.015 billion - $1.164 billion. Now, the total market revenues for mobile side last year in Europe would've been $15.942 billion, and for NA, between $18.46 billion (mobile is 50% of NA market split) - $22.152 billion (mobile is 60% of NA market split). From these mobile numbers, combined mobile/non-console revenue markets for NA & Europe would be a low of $34.4 billion - $38.094 billion, with 4% figures being between $1.376 billion - $1.524 billion. Combined 4% of both markets would be between $2.391 billion - $2.688 billion.

So in other words, subscription services in general likely generated between $2.391 billion and $2.688 billion between the NA and European markets for 2020 (and for 2021, take 2020 and increase it by whatever the YOY growth percentage was). Now for 2020, I was only able to find gaming market revenues for China, NA, Japan, and most of Europe. Markets like Brazil, South Africa, the Middle East etc., I couldn't find figures for them, but I rounded their totals up to about $10 billion. Anyway, with that extra, it seems the total gaming market generated $133 billion between console, PC, mobile last. China had the largest share, followed closely by America, then Europe, then Japan, then everyone else. However, for what we need to look for going forward, we can actually leave China out of it since console gaming is in a very early infancy in that market, and I doubt the mobile options for mainly console-driven sub services is that big over there, either.

Now we have to do a bit of guesswork. I'm mainly going to go by install base size here, where in Japan, Nintendo dominates. In Europe, Sony dominates, and in NA, it's a much closer three-way between Sony, Nintendo, and Microsoft, but I'd say the former two still share a lead over Microsoft albeit much smaller than the other regions. And for ROTW (aside from China), I would say Sony has a pretty healthy lead followed by Nintendo, and MS behind that. Percentage-wise, I'd break it down as some rough figures of:

-Japan: 85% Nintendo, 13% Sony, 2% Microsoft​
-Europe: 55% Sony, 35% Nintendo, 10% Microsoft​
-NA: 35% Sony, 35% Nintendo, 30% Microsoft​
-ROTW (sans China): 55% Sony, 40% Nintendo, 5% Microsoft​

With that done, I'm gonna go back to some numbers I came up with in my other post and try splitting them in line with the above percentages so we can isolate NA & Europe in particular. Back to the $133 billion gaming revenue figure above, I said China made up the majority of that; in other words they made up roughly 30%. Removing them from that figure brings it down to $92.15 billion. Of THAT amount, NA made up the largest, at around 40%. Europe made up about 29%, and Japan constituting about 20%. That leaves ROTW with 11%.

Sony reported $2.5 billion in revenue off PS+ last year; if we go with the above marketshare percentages we see that NA & Europe would account for 69% (nice!) of that amount, or $1.725 billion. At least, theoretically they would; if we also include the per-platform market split estimates, for those various regions, and assuming subscription service splits mirror the install base and general platform ecosystem marketshare splits, then for both PS+ and NSO we'd get:

-PS+ (take the $2.5 billion, multiply it by the region marketshare total, take that result and multiply it by estimated platform marketshare in region):​
-Japan: $500 million (theoretical); $65 million (actual)​
-ROTW: $275 million (theoretical); $151.25 million (actual)​
-Europe: $725 million (theoretical); $398.75 million (actual)​
-NA: $1 billion (theoretical), $358 million (actual)​

Now some of that might look kind of sus; at the least NA and Europe figures should be flipped, no? Well, this is the best I can do with what info I can find :/ Now time for Nintendo:

-NSO (take $384 million, multiply it by the region marketshare total, take that result and multiply it by the estimated platform marketshare in region):​
-Japan: $76.8 million (theoretical), $65.28 million (actual)​
-ROTW: $42.24 million (theoretical), $16.896 million (actual)​
-Europe: $111.36 million (theoretical), $38.976 million (actual)​
-NA: $153.6 million (theoretical), $53.76 million (actual)​

Again, some of these could probably be flipped, but I think I'll leave it at that for now. So, going back to the Axios article, they said the combined NA & Europe market for game subscriptions was $3.24 billion (they actually cite $3.7 billion but 4% of $81 billion works out to $3.24 billion). Okay then, let's look at Sony & Nintendo's theoretical shares in those markets and subtract them. That's a total of $849.486 million, bringing that total down to $2.39 billion. Now THIS time, I'll try to do XBL Gold as well; if GamePass was reported at 25 million subscribers recently, Xbox consoles are the only MS gaming products where you have to pay for online (i.e pay for XBL Gold), we assume the ratio of Gold subs to XBO/Series owners is roughly equivalent to Sony's (1:2.87 (133.25 million install base vs 48 million subs), then that gives 24 million XBL Gold subscriptions. So now let's do some more numbers!

-XBL Gold (take total sub numbers, multiply by region marketshare total):​
-Europe: 6.96 million (theoretical)​
-NA: 9.6 million (theoretical)​

This gets a bit tricky because as you can see, NA and Europe would account for 69% (nice nice!) of XBL Gold subs...which probably isn't that far off from the truth. In fact, we can probably say as much as up to 85% of all XBL Gold subs come from the NA and European regions, as I doubt very many in Japan or ROTW bother with XBL Gold. So this gives us a sub range of between 16.56 million - 20.4 million XBL Gold subs in the combined NA & Europe regions. I'm almost tempted to say up to 90% of all XBL Gold subs come from these two territories, which would push the total up to 21.6 million across the two.

Now, if we assume the average monthly revenue per XBL Gold user is the same as with PS+, or $4.33, then XBL Gold would be bringing in between $860.457 million - $1.059 billion a year between NA & Europe, with an extreme high-end of $1.122 billion per year. So now, we subtract these from the $2.85 billion above, and get a range for cloud-only/game subscription service marketshare of between $1.286 billion (XBL Gold in both regions is 'extreme high-end' share) - $1.331 billion (typical high-end) - $1.529 billion (XBL Gold in both regions is in the lower end).

Something else you notice is that these numbers almost line up with the report from WCCFTech linked right at the start, so I could've just used that instead of doing all this extra number-crunching. However, it's still important IMO to see if things line up; they just happen to (for the most part) here. I also had to rely on some 2020 numbers here because 2021 numbers were not easy to find if at all, but I tried my best to account for that regardless.

Anyway, we now have three numbers we can use to try guessing what actual GamePass revenue is at. Whichever one we choose, GamePass will account for 60% of it, as per the Axios article. So the first figure (and possibly most realistic, unless you want to assume NA & Europe accounted for 100% of all cloud gaming revenue :S) would put GamePass at an annual share of $771.6 million. The second gives it $798.6 million a year, and the 3rd (which is near 0% probability) is $917.4 million/year for GamePass in NA & European markets.

For sake of realistic outlook though let's just say GamePass is likely between $771.6 million and $798.6 million for NA & Europe (combined). That's a monthly per-user revenue of between $2.57 - $2.66; this also assumes that at least 80% of GamePass subscribers are in NA & Europe (which is certainly possible, and likely). What all this basically gets at is simple: on its own, GamePass isn't really doing "major" numbers. Like I said before, a single AAA game selling $10 million at $60 a pop brings in almost as much revenue on its own as GamePass would the entire year, so it's no wonder we don't see 3P big AAA releases in the service Day 1, and probably won't for a while. In fact, thanks to Sony's strategy of combining PS+ and PS Now, there's a bigger likelihood THEY could get some 3P big AAA releases Day 1 through their revamped PS+, than Microsoft will with GamePass! The main reason being because 3P AAA Day 1 releases won't have to be specifically tied to the PS Now tier.

However, that aside, GamePass still serves a pretty good role for Microsoft right now. It IS added revenue at the end of the day, which combines healthily with their XBL Gold revenue (unless there is more bleeding of Gold subs into GamePass than I'm factoring for here). If Microsoft introduced GamePass as an additional tier in the way similar to how Sony's merging PS Now into PS+, they would be better off, and it's going to be harder for them to converge the services now in light of how they've designed GamePass up to this point. There's also the costs associated from the Zenimax & ABK acquisitions; while I think Microsoft itself has taken on the costs of those rather than simply Xbox division (especially in the case of ABK), the Xbox division, and GamePass in particular, still have to account for recouping some of those billions. This would have to be done through profits; assuming Xbox division makes 10% of the annual revenue of the rest of Microsoft, then it's likely Xbox division profits are expected to account for 10% of the Zenimax & ABK costs over time, or $7.65 billion. We don't get Xbox division profits, only revenue. But assuming they keep the majority of their services revenue as profit, combined with 30% cuts from 3P sales and what they get from 1P software sales Xbox as a division is probably bringing in $1 billion of profit annually, or just a bit shy of that. In other words, for Xbox division to contribute its share in profits, to the acquisition costs of Zenimax & ABK, it'd take them about eight years if 100% of profits were going to that.

Which they aren't, so it will take quite a bit longer. But this is just looking at that side of things from one perspective, and most likely Microsoft aren't strictly looking at Xbox & GamePass profits in that matter when it comes to recouping costs on spending for ABK & Zenimax (or the other purchases too, for that matter). I'll leave off saying that, if we're just talking about 3P Day 1 AAA games in the service, then no, GamePass isn't a viable model for the majority of AAA games. Not unless they rely a metric ton on MTX and DLC content sales, anyway. This also shows Jim Ryan wasn't just huffing & puffing when he claimed that Sony's games are not financially feasible in a GamePass-like service; the numbers outright prove he's correct when you consider the budgets for Sony's typical marquee AAA 1P releases. 1P Day 1 AAA releases for Sony might be more of a possibility in something like PS+, though I would only expect it with a single such game. Most likely, with their service revamp we could get some 1P co-developed AA Day 1 games in the new PS+, I think the structure and revenue size of the service in that regard can support those types of games. Think if something like Shadow of the Colossus remake came out today or a year from now; that would be the sort of Sony game which could potentially see Day 1 in the new PS+, probably at the Essentials and Premium tiers.

OTOH, GamePass I think, IS suitable for smaller indie Day 1 releases, and late 3P AAA additions here and there...which is exactly what it's been serving for the longest time. Even if MS are covering the dev costs for some of these indie games, their budgets are peanuts compared to AAA games, so it doesn't eat that much into revenue from the service. They also seem to choose just specific AAA 3P releases into the service, likely to save on costs, hence we see stuff like the $15 million they paid for GotG into GP lately, some six months after initial launch. It's a potentially good back catalogue for those who happen to have a lot of older games they want to catch up on for the cheap, especially if they are indie and MS 1P content, less so 3P AAA content but you may get a few noteworthy ones every now and then (aside from the sports games, because who honestly plays last year's version of Madden, FIFA or even MLB?).

I guess the big question will be, is GamePass going to be sustainable for the new MS 1P big AAA releases? Will it be able to generate enough revenue to make up for any drop in sales for games like Starfield, Avowed, Hellblade II, Forza Motorsport 8, Perfect Dark etc. going into the service Day 1? Based on what the annual revenue figures seem to be at current, in order to maintain those revenue rates and have additional revenue to make up for lost sales, MS would probably need a few million more active subscribers per game. And if they're talking about having one big AAA game per quarter, take whatever that amount is and multiply it by 4. That's the total amount of new annual subscribers they'd need in addition to what they already have, to potentially make it a sustainable model for their own 1P AAA releases. I personally think there's way too much volatility in this type of business model to make it fully sustainable let alone lucrative for multiple 1P AAA releases, unless you can make sure exactly that the amount of people opting to subscribe for the game isn't more than what you'd lose in sales revenue, without buffing up the total revenue in the subscription side, otherwise that's like a net loss.

But hey, it's ultimately Microsoft's service, ultimately their games. They're the ones who have to try and figure this out and make it work for the long haul, not us 😉
That was a lot of text, dude. And it's 1 a.m. in the morning here, and I read GoTG as Game of the Generation and got really confused for like 10 seconds 🤣🤣

Anyway, one comment (and I'm almost afraid of mentioning it because of all the calculations and hard work you've already done here 😛) Sony's PS+ annual revenue is more than $3 billion if I'm not mistaken. They earned $3.22 billion at EOY FY 2021 when they had 47.6 million subscribers.

The $2 billion something figure that I used (I'm assuming you used that number because of the numbers I ran) was an estimate of the percentage of revenue they'd earn from only NA and EU. Assuming Sony's PS+ revenue share is higher than the one used here, that'd leave a smaller revenue pool for Gamepass, bringing its total revenue and ARPU even more.

And one question: I didn't understand what you did with XBLG. Are you counting 21 million XBLG subscribers separately from Gamepass or was that just for a separate calculation? Mentioning this because I believe that a large percentage of XBLG users must have migrated to GPU by now, which is also reflected in the estimate ARPU for GP. What's the ratio you're using?

Kudos to you; that was a lot of work. Cheers!
 

RevGaming

Member
Sony fans rather pay 700 - 1600 dollars a year rather than GP 160 dollars a year with all the AAA games ! I applauded them!
I wished Sony made that many games.

Who the hell is spending 700 or 1600? lol

I bought two this year and GoW is next but that's it. Not even close to 700 lol.
 
That was a lot of text, dude. And it's 1 a.m. in the morning here, and I read GoTG as Game of the Generation and got really confused for like 10 seconds 🤣🤣

Anyway, one comment (and I'm almost afraid of mentioning it because of all the calculations and hard work you've already done here 😛) Sony's PS+ annual revenue is more than $3 billion if I'm not mistaken. They earned $3.22 billion at EOY FY 2021 when they had 47.6 million subscribers.

The $2 billion something figure that I used (I'm assuming you used that number because of the numbers I ran) was an estimate of the percentage of revenue they'd earn from only NA and EU. Assuming Sony's PS+ revenue share is higher than the one used here, that'd leave a smaller revenue pool for Gamepass, bringing its total revenue and ARPU even more.

And one question: I didn't understand what you did with XBLG. Are you counting 21 million XBLG subscribers separately from Gamepass or was that just for a separate calculation? Mentioning this because I believe that a large percentage of XBLG users must have migrated to GPU by now, which is also reflected in the estimate ARPU for GP. What's the ratio you're using?

Kudos to you; that was a lot of work. Cheers!

Thanks, & good stuff to you as well dude; well the $2.5 billion I pulled for PS+ was from one article...I might have it bookmarked, but it listed $2.5 billion from PS+. Those could have been 2020 numbers though, for all I know. Gotta find the link again.

But if the $3.22 billion is accurate, then that does indeed lower the total share in NA & Europe markets for cloud services, which those like GamePass would be classified under as a subset. How much lower would that percentage go though, I don't have a way of determining that.

Also yeah for XBL Gold I counted that separate from GamePass, though I'm in agreement that a lot of them have likely converted to GamePass Ultimate at this point, especially in the NA and European markets. Again though, I don't know if there's any way to tell how many have actually done so; considering Microsoft were going to try doubling XBL Gold in those regions to drive GP adaption, I have to think it's less than 50% have switched over, at least at that point. Maybe it's higher now?

But it's also worth considering what releases have come long-term since that attempted price hike which would have driven many more to switch. I don't know if Halo Infinite is a good volume mover considering it's kind of flatlined and now declined even on Xbox with player counts, let alone on Steam. FH5 isn't pulling that much more on either, otherwise you have Outriders (similar drop rate), MLB The Show '21 (probably had more sustained retention than the other games listed so far), Avengers (???), and a bunch of indies. Would those combined have been enough to drive say another 25% of XBL Gold users to GPU long-term, you think?

I wished Sony made that many games.

Who the hell is spending 700 or 1600? lol

I bought two this year and GoW is next but that's it. Not even close to 700 lol.

Every platform has its whales. Also: likely PS-centric streamers/content creators.

And before he got a Series X, DSPGaming 🤣.
 
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Thanks, & good stuff to you as well dude; well the $2.5 billion I pulled for PS+ was from one article...I might have it bookmarked, but it listed $2.5 billion from PS+. Those could have been 2020 numbers though, for all I know. Gotta find the link again.

But if the $3.22 billion is accurate, then that does indeed lower the total share in NA & Europe markets for cloud services, which those like GamePass would be classified under as a subset. How much lower would that percentage go though, I don't have a way of determining that.
So sorry. I thought I had linked to the article yesterday. https://venturebeat.com/2021/04/28/...-hot-but-sonys-profit-powerhouse-is-services/ It's $3.22 billion.
Also yeah for XBL Gold I counted that separate from GamePass, though I'm in agreement that a lot of them have likely converted to GamePass Ultimate at this point, especially in the NA and European markets. Again though, I don't know if there's any way to tell how many have actually done so; considering Microsoft were going to try doubling XBL Gold in those regions to drive GP adaption, I have to think it's less than 50% have switched over, at least at that point. Maybe it's higher now?

But it's also worth considering what releases have come long-term since that attempted price hike which would have driven many more to switch. I don't know if Halo Infinite is a good volume mover considering it's kind of flatlined and now declined even on Xbox with player counts, let alone on Steam. FH5 isn't pulling that much more on either, otherwise you have Outriders (similar drop rate), MLB The Show '21 (probably had more sustained retention than the other games listed so far), Avengers (???), and a bunch of indies. Would those combined have been enough to drive say another 25% of XBL Gold users to GPU long-term, you think?

Yeah, my estimate is that roughly 90% of XBLG users would have upgraded to GPU by now. Otherwise the GP ARPU and total revenue would be higher. A while ago I ran these numbers:
PlayStation sold ~115 million PS4 consoles and had ~47 million PS+ subscribers. That's roughly 41%. Xbox sold ~50 million Xbox One consoles. 41% would give us ~20-21 million XLG subscribers. All those people + 4-5 million on PC would give them 25 million subscribers, which sounds very reasonable.
If we break down:
  • 21 million * 90% = 18.9 million (subscribers who are paying $1 for GPU) = $19 million per month*
  • 21 million * 10% = 2.1 million (subscribers who are paying $15 per month) = $21 million per month
  • 4 million (pc) (subscribers who are paying $10 per month) = $40 million per month
$19m + $21m + $40m = $80 million per month or $960 million per year. And even that is wayyyy higher than the revenue mentioned in this report. And the reason* I think is that (ref: first bullet point) those people aren't paying $1 every month. They just used $1 to upgrade once a year.

So if we do [($21m + $40m)*12 + $19m], we get $751 million per year. And this is much more in line with what these reports are telling us.

Unless I've done any mistake with the calculation, I think this is as close as we're gonna get with this.


Just for fun if we assume that only 70% of XBLG users have transferred to GP, and 30% are paying $15 per month + 4 million PC users are paying $10 per month, the total annual revenue of GP becomes $1.8 billion p/a -- which we know from these reports is just not the case.
  • 21 million * 70% = 14.7 million (subscribers who are paying $1 for GPU) = $15 million per month
  • 21 million * 30% = 6.3 million (subscribers who are paying $15 per month) = $95 million per month
  • 4 million (pc) (subscribers who are paying $10 per month) = $40 million per month
 
So sorry. I thought I had linked to the article yesterday. https://venturebeat.com/2021/04/28/...-hot-but-sonys-profit-powerhouse-is-services/ It's $3.22 billion.

Ah, I got'cha. Those numbers there look more recent than what I had, which were from around November 2021 (where the $2.5 billion quote came from). Just makes me wonder what numbers were the Axios report using that much more.

Yeah, my estimate is that roughly 90% of XBLG users would have upgraded to GPU by now. Otherwise the GP ARPU and total revenue would be higher. A while ago I ran these numbers:

If we break down:
  • 21 million * 90% = 18.9 million (subscribers who are paying $1 for GPU) = $19 million per month*
  • 21 million * 10% = 2.1 million (subscribers who are paying $15 per month) = $21 million per month
  • 4 million (pc) (subscribers who are paying $10 per month) = $40 million per month
$19m + $21m + $40m = $80 million per month or $960 million per year. And even that is wayyyy higher than the revenue mentioned in this report. And the reason* I think is that (ref: first bullet point) those people aren't paying $1 every month. They just used $1 to upgrade once a year.

I can see a good probability where a majority of XBL Gold subs have converted to GPU. It might have been around 90% at the time MS wanted to double XBL Gold costs, though, so it could be possible to say that the conversion rate at that point early '21 was around 45%? Middle of 2020 through I guess Fall 2021 saw big growth for sub services in general IIRC, due to lockdowns, so between early '21 up to somewhere in late 2021 (or perhaps up to this point) it would have risen to that 90% conversion rate between XBL Gold subs to GPU.

Trying to figure the timetable for those conversions would be the hardest part, since those are the type of numbers MS absolutely don't divulge and third-party tracking organizations can't get access to them, either. But I suppose that conversion rate for another 45% happened starting around the time of MLB The Show and Outriders coming to the service, and majority of growth trajectory in those conversions happening between then and leading up to FH5 and Halo Infinite releases. I would also like to think the Halo Infinite flights saw big spikes of any such conversions from XBL Gold subs to GPU subs.

One other thing I'd like to clarify real quick is for the XBL Gold numbers, I actually included XBO & Xbox Series systems, not just XBO. And for PS, I was factoring ini PS4 & PS5 systems. But also like had also mentioned a bit above I was using older PS+ revenue figures and (apparently) sub numbers too (I wasn't aware they had lost about a million subs between November last year and April this year), so yeah :S.

So if we do [($21m + $40m)*12 + $19m], we get $751 million per year. And this is much more in line with what these reports are telling us.

Unless I've done any mistake with the calculation, I think this is as close as we're gonna get with this.

Those look like good numbers. Interesting enough it seems like we both took some different methodologies (and in a few cases, but arrived at numbers that are relatively close to one another. I think that might be a bit telling, if there are some divergent methodologies that can be applied but landing within a relatively same ballpark with good-intended calculations (and generally correct data points).

And really the whole point of this for me was to debunk some of the ideas I've seen pushed around by certain gaming channels, etc. that calculate revenue for these kind of services in a very simplistic and unrealistic way. Where they just take the total sub count, take the highest tier, assume everyone is paying that tier and doing so for the entire year, and on top of all that figure the end revenue is pure profit!

Seeing that from some people who should probably know better was just pretty infuriating 🤣

Just for fun if we assume that only 70% of XBLG users have transferred to GP, and 30% are paying $15 per month + 4 million PC users are paying $10 per month, the total annual revenue of GP becomes $1.8 billion p/a -- which we know from these reports is just not the case.
  • 21 million * 70% = 14.7 million (subscribers who are paying $1 for GPU) = $15 million per month
  • 21 million * 30% = 6.3 million (subscribers who are paying $15 per month) = $95 million per month
  • 4 million (pc) (subscribers who are paying $10 per month) = $40 million per month

Lol yeah, $1.8 billion/year is just a bit too much for GP given other numbers that have been provided in other reports. If the Axios article wasn't written so sloppily this whole discussion could've been way easier!
 

DaGwaphics

Gold Member
Lol yeah, $1.8 billion/year is just a bit too much for GP given other numbers that have been provided in other reports. If the Axios article wasn't written so sloppily this whole discussion could've been way easier!

When there are no concrete numbers directly from MS regarding what percentage of their gaming revenue in total is coming from GP, the guesstimates around that are completely meaningless from ALL sources. Because, without that figure there is no way for analysts to calculate the correct top-end number for "game subscription services". If you don't have valid numbers to begin with, you can punch in all the "valid" numbers you can find and it still doesn't tell you anything at all. Without MS's numbers how do we know the total for this space was 4% and not 5% or 6%? Anyone providing a number there has to be making a guess.
 
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When there are no concrete numbers directly from MS regarding what percentage of their gaming revenue in total is coming from GP, the guesstimates around that are completely meaningless from ALL sources. Because, without that figure there is no way for analysts to calculate the correct top-end number for "game subscription services". If you don't have valid numbers to begin with, you can punch in all the "valid" numbers you can find and it still doesn't tell you anything at all. Without MS's numbers how do we know the total for this space was 4% and not 5% or 6%? Anyone providing a number there has to be making a guess.

I mean, that's certainly true to an extent. But it also kind of shows IMO that MS's unwillingness to provide those numbers is hampering growth within the sector, in some ways. If they really believe this form of content delivery is a big part of the future, they should be willing to provide numbers in metrics at least closely aligned with revenue figures, that way other would-be players can determine what's worth investing in that space.

Like, we wouldn't be getting a lot of the gaming investments and purchases we've seen lately if industry numbers related to revenue and profit were obfuscated writ large. So it's just odd that Microsoft don't report their GamePass revenue figures, and IIRC, they don't provide what portion of Xbox division revenue is from services explicitly, because they bundle that into Content & Services which we know also includes revenue from 1P game sales and 30% cuts from 3P game sales.

Granted, it's not like Sony provide revenue for PS Now either, or Nintendo for the NSO Expansion tier, but they both at least provide isolated revenue for strictly their gaming services so that makes it easier to work out what PS Now etc. revenue figures could be, combined with articles like the Axios one that give us a percentage of what marketshare services like GamePass have in that segment of the game subscriptions market. At the same time though, it's not like Sony or Nintendo are pushing game subscription services or cloud gaming anywhere near the same degree as Microsoft, so you'd figure if this is something MS are pushing, they would want to make it easier for others to see what the real growth and size is on their end by providing at least services revenue in its own category when it comes to their quarterly and annual fiscal results. Ultimately, it's the revenue metric that anyone else is going to genuinely care about; every other metric IMO plays second fiddle when you're talking about businesses that need to generate revenue & profit.

It's especially important in Microsoft's case to perhaps consider doing this IMO because they're really the only company of their size pushing for this particular model, so if it's indeed not bringing in massive revenues or is only "sustainable" in a way suitable for a company of their size and resources, that might not make pursuing this slice of the market very lucrative or fiscally wise for smaller companies to try, as those similar small revenue/profit margins or losses could bankrupt them. And ultimately, if you want this slice of the market to grow larger and at a quicker pace, you're going to need more companies successfully investing into it in ways where it makes financial sense for them, in a way that isn't dependent on monies of another company in the space like Microsoft.

At least, that's the way I've come to see it. But all that said, I do think there are means for analysts to effectively guess where the size of these types of slices of the market are at, when you have adjacent data to work with. You can still get annual revenues from the Big Three. You can still get fiscal results from all the big publishers, and compile them together. Still get subscription numbers from all the companies offering such services, still get total market revenues by region etc. And all of those can be used to where you can figure a general rough top-end range for different slices of the gaming market, even subscription services and even game subscription services like GamePass and PS Now. They won't be perfect numbers, they never can, for the reason you mentioned. But if they're in a general ballpark then that is good enough for the most part.
 

DaGwaphics

Gold Member
I mean, that's certainly true to an extent. But it also kind of shows IMO that MS's unwillingness to provide those numbers is hampering growth within the sector, in some ways. If they really believe this form of content delivery is a big part of the future, they should be willing to provide numbers in metrics at least closely aligned with revenue figures, that way other would-be players can determine what's worth investing in that space.

The question there would be, what company would want to provide favorable numbers to competitors and potentially increase investment in competing services? MS is best doing what they are doing and keeping these figures to themselves, especially since the early years are the most decisive in setting the general market share. All we know for certain is that MS's gaming revenue has grown at a rate higher than their competitors since GP was launched, but as with everything else that doesn't mean a lot since we don't know if GP or other factors are driving that growth.
 
The question there would be, what company would want to provide favorable numbers to competitors and potentially increase investment in competing services? MS is best doing what they are doing and keeping these figures to themselves, especially since the early years are the most decisive in setting the general market share.

But this tactic is also the reason why 3P publishers DON'T want to put their big AAA games into such a service Day 1; if they don't want their pay to be based around what Microsoft would want to give them, and would like to see where the actual revenue figures for the service are in order to dictate terms that are best for them, they simply can't do that with the way Microsoft provides their numbers.

Again, this isn't exclusive to them because there are very few if any Day 1 3P AAA games for PS Now as well, but the difference again is that Sony aren't pushing that model in the same way Microsoft are pushing GamePass. And regardless of what the actual revenue numbers or percentage of the market game subscription services account for, they're such a small portion of the market that if anything you're hurting the growth by being stingy with those numbers and figures since doing so delays investments from competitors but also lowers investments from outsiders into your own service offering!

It's a tactic that hurts Microsoft as much as it supposedly helps them, IMO.

All we know for certain is that MS's gaming revenue has grown at a rate higher than their competitors since GP was launched, but as with everything else that doesn't mean a lot since we don't know if GP or other factors are driving that growth.

Considering that Nintendo and especially Sony also saw big growth in their gaming sectors during the same period, and don't have anything that's a genuine GamePass competitor in terms of size or push from the respective companies, I think it's more likely Xbox's growth in that period came from digital software spending and increases in DLC & MTX purchases.

Growth in GamePass subscriptions played a part too but I doubt it was on the same scale as those two, particularly when we're just talking about generated revenue.
 

Leyasu

Member
So sorry. I thought I had linked to the article yesterday. https://venturebeat.com/2021/04/28/...-hot-but-sonys-profit-powerhouse-is-services/ It's $3.22 billion.
Yeah, my estimate is that roughly 90% of XBLG users would have upgraded to GPU by now. Otherwise the GP ARPU and total revenue would be higher. A while ago I ran these numbers:

If we break down:
  • 21 million * 90% = 18.9 million (subscribers who are paying $1 for GPU) = $19 million per month*
  • 21 million * 10% = 2.1 million (subscribers who are paying $15 per month) = $21 million per month
  • 4 million (pc) (subscribers who are paying $10 per month) = $40 million per month
$19m + $21m + $40m = $80 million per month or $960 million per year. And even that is wayyyy higher than the revenue mentioned in this report. And the reason* I think is that (ref: first bullet point) those people aren't paying $1 every month. They just used $1 to upgrade once a year.

So if we do [($21m + $40m)*12 + $19m], we get $751 million per year. And this is much more in line with what these reports are telling us.

Unless I've done any mistake with the calculation, I think this is as close as we're gonna get with this.


Just for fun if we assume that only 70% of XBLG users have transferred to GP, and 30% are paying $15 per month + 4 million PC users are paying $10 per month, the total annual revenue of GP becomes $1.8 billion p/a -- which we know from these reports is just not the case.
  • 21 million * 70% = 14.7 million (subscribers who are paying $1 for GPU) = $15 million per month
  • 21 million * 30% = 6.3 million (subscribers who are paying $15 per month) = $95 million per month
  • 4 million (pc) (subscribers who are paying $10 per month) = $40 million per month
Nobody is paying 1£€$ a month. Even if they did the conversion with gold costing 40+1, it still works out more.

The problem here is that nobody has the correct numbers. The article for which this thread is based on is obviously flawed to.

They say 3.7bn with 60% of the revenue going to gp, yet you and the other person are saying that 2bn is what Sony earned with Ps+, and you are trying to work out from there.

Thus either the 3,7bn is wrong or the percentage is. Meaning anything else is just fun speculation at best.
 

Leyasu

Member
But this tactic is also the reason why 3P publishers DON'T want to put their big AAA games into such a service Day 1; if they don't want their pay to be based around what Microsoft would want to give them, and would like to see where the actual revenue figures for the service are in order to dictate terms that are best for them, they simply can't do that with the way Microsoft provides their numbers.

Again, this isn't exclusive to them because there are very few if any Day 1 3P AAA games for PS Now as well, but the difference again is that Sony aren't pushing that model in the same way Microsoft are pushing GamePass. And regardless of what the actual revenue numbers or percentage of the market game subscription services account for, they're such a small portion of the market that if anything you're hurting the growth by being stingy with those numbers and figures since doing so delays investments from competitors but also lowers investments from outsiders into your own service offering!

It's a tactic that hurts Microsoft as much as it supposedly helps them, IMO.



Considering that Nintendo and especially Sony also saw big growth in their gaming sectors during the same period, and don't have anything that's a genuine GamePass competitor in terms of size or push from the respective companies, I think it's more likely Xbox's growth in that period came from digital software spending and increases in DLC & MTX purchases.

Growth in GamePass subscriptions played a part too but I doubt it was on the same scale as those two, particularly when we're just talking about generated revenue.
Edit nvm.

I actually just reread your post with my glasses on. I agree with pretty much everything that you wrote.
 
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Nobody is paying 1£€$ a month. Even if they did the conversion with gold costing 40+1, it still works out more.

The problem here is that nobody has the correct numbers. The article for which this thread is based on is obviously flawed to.

They say 3.7bn with 60% of the revenue going to gp, yet you and the other person are saying that 2bn is what Sony earned with Ps+, and you are trying to work out from there.

Thus either the 3,7bn is wrong or the percentage is. Meaning anything else is just fun speculation at best.
Except the $3.7 bn and 60% were two different things.

The report that said Gamepass is responsible for 60% of subscription services revenue did not include PS+. If we make those numbers a part of this equation, it is very easy to get relatively close to actual GP revenue figures.

As thicc_girls_are_teh_best thicc_girls_are_teh_best said, we both used very different strategies but arrived at a similar figure, which also aligns with the revenue figure we get from the above-mentioned reports. Three co-incidences seem too much. I feel confident with these numbers.
 
Edit nvm.

I actually just reread your post with my glasses on. I agree with pretty much everything that you wrote.

Glad that there are some folks who can see it from such a perspective. Like, again, I understand where DaGwaphics is coming from and from MS's POV it's a smart play. But it's also not like this is a slice of the market where all the big players are already trying to break into, or even where there's a massive amount of customers clamoring to purchase (or in this case, subscribe to) it (when looking at the total market size).

It's basically like a game of poker; they've got their cards close to their chest and want others to make their plays but at some point at least some of them are gonna notice, hey, they've been at this table since the beginning and still haven't played. Maybe they're just bluffing, and it's time to call the bluff? Someone or something's gonna force MS to show the goods, show their cards, and hopefully for them it turns out they weren't bluffing.

EDIT: Also the $3.7 billion figure is probably wrong. Because they claimed it was 4% of an $81 billion market, but that would actually work out to be $3.24 billion.

Yeah, that Axios article is kinda trash if I'm being honest.
 
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DaGwaphics

Gold Member
But this tactic is also the reason why 3P publishers DON'T want to put their big AAA games into such a service Day 1; if they don't want their pay to be based around what Microsoft would want to give them, and would like to see where the actual revenue figures for the service are in order to dictate terms that are best for them, they simply can't do that with the way Microsoft provides their numbers.

Again, this isn't exclusive to them because there are very few if any Day 1 3P AAA games for PS Now as well, but the difference again is that Sony aren't pushing that model in the same way Microsoft are pushing GamePass. And regardless of what the actual revenue numbers or percentage of the market game subscription services account for, they're such a small portion of the market that if anything you're hurting the growth by being stingy with those numbers and figures since doing so delays investments from competitors but also lowers investments from outsiders into your own service offering!

It's a tactic that hurts Microsoft as much as it supposedly helps them, IMO.



Considering that Nintendo and especially Sony also saw big growth in their gaming sectors during the same period, and don't have anything that's a genuine GamePass competitor in terms of size or push from the respective companies, I think it's more likely Xbox's growth in that period came from digital software spending and increases in DLC & MTX purchases.

Growth in GamePass subscriptions played a part too but I doubt it was on the same scale as those two, particularly when we're just talking about generated revenue.

You'd think that third parties would have more information than the general public, but who knows.

The revenue growth difference has been quite stark, for example Sony was $25b in 2020 and $24.8 in 2021, while Microsoft went from somewhere around $12b in 2020 to $16b in 2021. But a lot went on there with Zenimax revenue getting added in and all that. So, I agree that we have no idea what the driver for that is. I'm sure some of it is just the fact that hardware sales for MS were quite poor for most of 2020, so that figures in as well.

Those gross revenue numbers are really all we have to go on in regards to how the different models are performing.

Nonetheless, I do appreciate all the effort you put into your posts though, always provide a unique angle to ponder from.
 
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Leyasu

Member
Except the $3.7 bn and 60% were two different things.

The report that said Gamepass is responsible for 60% of subscription services revenue did not include PS+. If we make those numbers a part of this equation, it is very easy to get relatively close to actual GP revenue figures.

As thicc_girls_are_teh_best thicc_girls_are_teh_best said, we both used very different strategies but arrived at a similar figure, which also aligns with the revenue figure we get from the above-mentioned reports. Three co-incidences seem too much. I feel confident with these numbers.
If it didn’t include Ps+, then shouldn’t you be adding that instead of subtracting it and then going from there?
 
If it didn’t include Ps+, then shouldn’t you be adding that instead of subtracting it and then going from there?
Those were two different reports, and two different sources. Hence, the confusion. Paraphrasing the following:
  • Report #1 -- All subscription services (GP, PS+, NSO, etc.) generated around $3.7 billion. (this report didn't say that GP is responsible for 60% of subs revenue)
  • Report #2 -- Gamepass is responsible for 60% of the subscription services revenue (this report didn't share any revenue figure, and it also didn't include PS+)
The confusion begins when we combine these two reports; we can't do that. The article you read in the OP makes that mistake -- it's not correct.

My analysis is mostly from the first report. We have the total revenue subs generated (D). We have the revenue that PS+ generates (A). We can easily estimate the revenue that NSO generates (B). We don't have the revenue that Gamepass generates (C).

A + B + C = D
or
C = D - A - B. (which is what I did).
 
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Leyasu

Member
Those were two different reports, and two different sources. Hence, the confusion. Paraphrasing the following:
  • Report #1 -- All subscription services (GP, PS+, NSO, etc.) generated around $3.7 billion rupees. (this report didn't say that GP is responsible for 60% of subs revenue)
  • Report #2 -- Gamepass is responsible for 60% of the subscription services revenue (this report didn't share any revenue figure, and it also didn't include PS+)
The confusion begins when we combine these two reports; we can't do that. The article you read in the OP makes that mistake -- it's not correct.

My analysis is mostly from the first report. We have the total revenue subs generated (D). We have the revenue that PS+ generates (A). We can easily estimate the revenue that NSO generates (B). We don't have the revenue that Gamepass generates (C).

A + B + C = D
or
C = D - A - B. (which is what I did).
Ok cool I understand.

Although, as Microsoft don't declare their revenue how did the report arrive at the figure? Same with the 60%.

"Rupees" lol
 
You'd think that third parties would have more information than the general public, but who knows.

The revenue growth difference has been quite stark, for example Sony was $25b in 2020 and $24.8 in 2021, while Microsoft went from somewhere around $12b in 2020 to $16b in 2021. But a lot went on there with Zenimax revenue getting added in and all that. So, I agree that we have no idea what the driver for that is. I'm sure some of it is just the fact that hardware sales for MS were quite poor for most of 2020, so that figures in as well.

Those gross revenue numbers are really all we have to go on in regards to how the different models are performing.

Nonetheless, I do appreciate all the effort you put into your posts though, always provide a unique angle to ponder from.

And likewise; more voices to contribute to these types of discussions, the better.

Speaking of hardware sales, IIRC the number of PS4s Sony were manufacturing in 2021, was quite low, as it seemed they were prioritizing PS5 production and shipments. Then the chip shortages really took effect (and, potentially, a shift in Sony having chip priority if some of the rumors are true) and they announced they would be increasing production of PS4s again later in 2021 partly to help offset lowered forecasts for PS5 production.

So that probably helps explain why revenue growth was flat for PS division between those two fiscal year periods (also frequency and performance of 3P software sales would count into that as well). I'll agree to a large extent that division revenue figures are of prime importance generally speaking, but specific subsets in those divisions, especially if some are being positioned as pillars of the brand, deserve their own focus as well IMO.

Ok cool I understand.

Although, as Microsoft don't declare their revenue how did the report arrive at the figure? Same with the 60%.

"Rupees" lol

They must have their own sources they share general market data with. I wouldn't be surprised if NPD and similar (like Famitsu) are part of those connections and general data on tracked sales, as one example, are provided.

There may also be contacts at some of these companies who leak certain numbers to them in confidentiality...at least I'm guessing, anyway.
 

Leyasu

Member
They must have their own sources they share general market data with. I wouldn't be surprised if NPD and similar (like Famitsu) are part of those connections and general data on tracked sales, as one example, are provided.

There may also be contacts at some of these companies who leak certain numbers to them in confidentiality...at least I'm guessing, anyway.
I see what you mean. Then which report had the correct info? The one the reported revenue 3.7bn for the EU/NA or the one that reported that GP accounted for 60% of the revenue in those markets?
 
I see what you mean. Then which report had the correct info? The one the reported revenue 3.7bn for the EU/NA or the one that reported that GP accounted for 60% of the revenue in those markets?
I'm going to assume the latter, since the former's can be disputed with some simple math. If $3.7 billion were the actual figure for subscription services in the market, then the market would've needed to generate $92.5 billion for that $3.7 billion to represent 4%.

Otherwise the actual figure for subscription services should be $3.24 billion. The numbers aren't even that close and the way that article's written neither figure is provided as a guessed estimate. Oh but also keep in mind the 60% figure is just accounting for game subscription services, i.e GamePass, PS Now, Luna, Stadia types following that model. It isn't including PS+, XBL Gold or NSO in there.
 
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