Former PlayStation Exec Shares Concerns With Xbox Game Pass Model

It’s not sustainable. Microsoft is making this a loss leader and everybody knows it.

You need to build a big enough user base like Netflix has. Microsoft is trying to do exactly that hence why they are pushing cloud gaming. So you can access the service without owning xbox. 23 million subscribers in less then 5 years.

@Chaudy Right, there's a reason all the media companies are forming their own subscription based streaming service. I think what Sony is also missing is that indie devs have stated that Game Pass actually boosts their sales and even moreso, their dlc sales.

@The_New_Butler Yup exactly.

Why would you need half a billion subscribers? I doubt it requires $5 billion to operate gamepass a month. The math just isn't there. The original release process that Sony uses still doesn't support it.

A games sold at $70 to 20 million people is $1.4 billion. That's the highest standard price Sony sells their games and the most amount of copies any of their games of sold for. That's not including the massive drop off in price games have during their lifetime.

It's ok to say game subscriptions isn't your thing but throwing out random numbers just makes you sound uneducated.

Let's be honest Sony, it's not that its unsustainable, it's just that you make more money selling a game at $70. Just say it as it is.

It's not a loss leader if subscribers are literally giving you billions of dollars a year, SOME of which is invested back into securing games for the service.

@AgentGuapo possibly but the difference is MS as a company are better equipped to utilise the benefits of being a multi faceted company where as Sony as a whole are not. Also it’s an odd thing to crow about that their production costs are higher!

Phil Spencer always congratulating the competition while the competition is busy fanning silly fan wars and moaning about what MS are up to instead of focusing on their own field. Like everyone has pointed out, 10 pound subscription from 18 million plus subs is quite a hoard of monthly income. Funny that this story breaks out just as reports are coming in that Xbox are succeeding at climbing those hurdles. Worse yet is that this kind of half assed comment sparks the whole arm chair self proclaimed business minded playhards who'll jump on this as more toxic ammo for their already shallow arsenal of arguments. I strongly feel this is a tactile attack on MS, at the point where things are peaking and at a time where PlayStation is being called up on their anti consumer BS, we get numpties like this spouting crap.

I'm not sure math's is his strength, 500 million subscribers would pay for 41 $120 million games per month

It's important to be cautious, when companies get successful they end up becoming very arrogant. Microsoft themselves even tried to double the price of Gold back in January to try and force people onto GPU.

So we'll see stuff like future price hikes, Gold being ditched but instead of online multiplayer being free it being that GPU is required, etc.

I just hope that when the time comes the backlash is as huge as it was back in January and forces Microsoft to backtrack.

@The_New_Butler even at those numbers I suspect it would be close to profitable, the 500 million number quoted would be enough for 41 AAA games to be made every month. So clearly it doesn't need to be anywhere near that

I consider game pass a rental service. If a game comes out I like the look of I’ll stump for a month and then give it a go. If I like it I will probably wait a few months and grab it on sale.

Microsoft's multi-million dollar contracts with companies (including Sony), educators, and governments are calling and they say Microsoft is doing just fine doing what it's doing.

I think Sony is just a little scared at what this all means in the long run. It may sound arrogant that a trillion dollar company is throwing it's weight around the way it does, but Microsoft plays a totally different game. Plus, the company had to adapt differently over the years to get to the position it is in now to have such weight.

Microsoft is playing the corporate survival game, not just the video game business...uhm...game. Xbox is a brand, not just a box.

Surely the "500 million subscribers" is a mis-quote?
By his logic, MS would be making almost £5.5 billion a month revenue!
I think 50 million subs, making almost £550 million a month revenue, is probably what he actually meant.
And take into account these games are still sold at retail and digitally for even more revenue outside of Game Pass.

Who knew that Microsoft was churning out 41 AAA games a month?!?!?................ More like square peg, round hole there Shawn. #maths

120m game - probably took say 4ys to make - an average of say 30m a year. 25m Subs paying an 'average' of $10 a month, I know some will be utilising special deals, converting Gold to Game Pass for extra months etc and of course you also have some paying 'more' for Ultimate too, but that's $250m a Month. That's enough to fund 2 AAA games EVERY month - just on subs alone.

I know it doesn't work that way because Games are not built in a month and so that $120m is spread out over the course of the development. Also, every game you download to play on Game Pass will give the devs some 'money' that also has to come from Subs.

However, what we are hearing is that those with Game Pass are actually 'buying' more games. Maybe its because the GP games are 'free', the money you would of spent on that game is going on another game, and then if you liked the GP game, may buy that too discounted. They are still making 'money' from Sales on that platform too so getting them into Game Pass is not that different from Sony trying to get people onto PS5 despite losing money on the initial platform sale - they know that that person will buy more games over time, buy services etc that all help fund the 'new' games.

Its not as if games like Halo, Forza Horizon, Flight Sim etc etc are NOT being sold too. Just being on Game Pass does not stop MS from selling it and getting money back just like Sony do as well.

Of course at the start of things, it can be very costly to a company until they build up enough of an Subscriber Base to be profitable. As of April 21, GP had 23m subscribers - up from 18m just 4months earlier in Jan 21 so at the rate of Growth, it will become Profitable - just like Netflix who are now competing with the 'biggest' Hollywood/TV studio's in terms of Producing their own content - that's funded by Subs to drive new Subs and bring more 'money' in....

A lot easier when you don’t hire Hollywood stars and focus on gameplay over cut scenes.

These Sony execs are so salty, jealous, and ineffectual, it's laughable. Offer something of comparative value instead of whining and making up crap.

He has missed the point and not really touched on cloud gaming which is where the biggest subscriber uptick is going to come from.

Those taking pops at Sony execs for a comment made by a former one are kind of missing the point too....

Something doesn't sound right here though. If gamepass model of giving away games day 1 on subscription was so profitable then Sony would start doing it tomorrow. Simple as. There must be a reason that Sony don't do it? Some people saying Sony don't know MS finances are a bit naive to think one of the leading companies in its industry doesn't know how these things are financed and haven't investigated doing the same thing themselves.
My guess is that Sony make so much money with their current model churning out AAA big budget games over and over and while MS in comparison just do not as they don't have as large an install base and even less quality games being released. Therefore the GP model is a lot less risky and worth the pursuit.

These figures mentioned here only talk of a game costing £120 mil to make, however with all the studio purchases the aim will be to release £120 mil game every month or so. This doesn't include the amount of money it costs to have a third party game available on there? No idea how much that costs a month per game but having a hundred of them or so available every month must add a fortune to the list. Plus the additional outlay to own these studios before they've even created any games (spreading £7.5 billion over the subscription on top is quite a lot of money!)

So in most realistic terms Sony make a ton load of money with their model and probably can't sustain it if they went to a Game pass model while MS are able to subsidise their gaming model through the vast pits of money from other parts of the business. Us consumers get to enjoy both Sony's first party big budget games and MS wide variety of game pass games but will continue to argue over which model is the 'right' one when there isn't one.

It may not be as sustainable as we think, but man, does it create a good word of mouth for Xbox. Game Pass is a wonderful service, and I fully expect Sony to have some competitor to it within the next two years. Also, David Jaffe may be an ex lead developer of a worldwide studio for Sony, but he hasn't been in that position in years. He's also a bit of a controversial figure as he'll make bold claims without any sort of backup.

I like how Sony and Microsoft are partners with cloud gaming. Sony needs Azure servers. Sony approached them. And Sony starts all this console war shenanigans. Your business model shouldn’t be about stopping cross play and cross progression on games. Whining about game pass and acquisitions while they acquire and have ps now. Pointing fingers but won’t look at themselves in the mirror. Big reason I jumped off the Sony ship.

And that Shawn is why you never came up with the idea because you lack vision, because you don't understand it and how it works. Thankfully Phil and his team have more balls and a bigger vision and came up with THE Netflix for gaming service, and IS making it work and it IS successful and they ARE making money from it.
Shawn's just embarrassed because PSN Now is a joke compared to Game Pass.

"It's hard to launch a $120m game on a subscription service...for us, sony"

There, fixed it for layden

I think some of you are forgetting to account for the costs of Game Pass. 23M people paying $10/month makes $230M/month of revenue.

However, MS cannot reinvest all that revenue on making two $115M games every month. Part of that share will be used to pay 3rd party studios that put their games on Game Pass, deals with publishers like EA, a part will be used on the maintenance of the service, and let's not forget that there will be a share taken as profits for the shareholders.

So, the fraction of your $10 that will actually pay for new games is much lower. I have no idea how much, maybe $1 or $2. But even assuming it's $1/month, with 20 million subscribers you'll still amass the budget for a $120M videogame every six months. Once they grow to 40 M subs, they would manage to fund one of those games every quarter, which is their target.

Surely Microsoft knows what is the magic number of subscribers that makes Xbox Game Pass break even. They might have already reached that number, or maybe they aren't there yet, but once they reach that critical mass, every new subscriber means easy money for them.

I mean people are still buying Game Pass titles AND also playing games on Game Pass. It's not one or the other. I'm going to buy a copy of Halo Infinite for sure, even though it's on GamePass

@The_New_Butler MSFT could leverage their store for that, not a bad idea!

Not read the entire thread comments but my 2 cent:

The GamePass model is self-correcting. The current subscriber base does not have to completely cover the cost of a game because not every potential buyer is on GamePass, and at the same time, when the subscriber does get that high, it will likely already cover the costs.

This is very easy to notice with MS games, that are on GamePass, being top charters on Steam continuously.

Just for the hell of it, if the service has 20 million subscribers, that means they currently have between 200 and 300 million dollars a month to finance games. They could easily just buy a couple Triple A games and exclusively make them available on GamePass, get no more new subscribers, and still make a profit.

I think the biggest breakthrough for the service will be when it hits 67 million users. At that point, they will be making between 670 million and 1 billion a month. And even then: those games will still sell on Steam and to non-subscribers.

This is all not even counting DLC revenue.

Many doomsayers cling to old quotes about GamePass not being huge profits, but that is because MS is opting to sink every single penny they get from the service back into it (for third party deals mostly, at this time.) The more deals they make, the more users they attract, and the faster the service grows, allowing them to earn more money, and repeat the cycle for even more growth.

Eventually the biggest problem MS will have is GamePass will earn them more money than they will know what to do with.

@The_New_Butler I agree with almost everything you wrote. The game is not on Game Pass forever, and many people will still have to buy the full game if they missed the window of opportunity to take advantage of the title when it was on game pass. On top of that, so many games are adopting a GaaS structure that people are investing more extensively in the title. Plus, DLC is usually not part of that package. So there is still tons of opportunities for MS and publishers/developers to make money if they have released a great game!

@Chaudy The dude is no longer at PlayStation. He mysteriously left a couple years back. I think it is his genuine personal opinion, not Sony's.

@Rural-Bandit You prayers just got answered. Sony has started rolling out 3rd party SSD expansion support. Also, the guy no longer works at PlayStation. I think it's just his opinion on the matter.

Sony is trying to downplay the Game Pass, because at the moment it's their biggest threat. Not because MS is competing directly, but because at some point Sony's customers will ask, why they don't do it like MS. That's when Sony will get into a skid. Better to propagate early on, that the very successful model is actually not working ... -_-

Sadly this is common practice with Sony. This does not work, that makes no sense, this is not viable, you cannot do that, etc. I am really ANNOYED by this bs! After the PS3, at the latest, they started to do and say things, which I consider unworthy for such a time-honored company.

@The_New_Butler i'm only paying €2 a month (legally) and I know many others who even pay as less as €1,70 a month. I don't believe going with €10 a month for your formula is quite correct.

Sony is arrogant. I am an ex Sony fanboy, but I did choose XSX because of the gamepass and because I see the Xbox ecosystem improving rapidly.