The recent reveal of the anticipated Xbox Series-S(also called the “Series-S”)which is the little brother to the next-gen “Xbox Series-X”(also called the “Series-X”) has sparked up many direct power comparisons between Sony and Microsoft’s upcoming generation defining consoles. The upcoming Series-S takes a budget friendly approach that targets “1440p at up to 120 FPS” which makes it take a back seat compared to both of Sony’s new toys; However, many people bickering over the upcoming consoles have missed a key point in Microsoft’s plan to dominate the gaming industry which is the fact that services and subscriptions are becoming the future. The rise of subscription or service style gaming has only been highlighted with the recent hike in the pricing of the well-received Xbox Game Pass.
To many people the doubling of the price of Xbox Game Pass seems unimportant, but it is an important step in a long term subscription-based strategy that Microsoft has set in motion since the beginning of the Game Pass itself. In May 2020 Xbox Gamepass surpassed 10 million members which means that Microsoft in may made around 50 million dollars that month just through their subscription service and not by selling physical goods. The Xbox Game Pass deal easily spread to millions of gamers due to a frictionless service model that extended its arms to all Microsoft products on the market. The ecosystem and subscription model allows for large gaming companies like Microsoft to reach all types of gamers ranging from hardcore to casual due to a low barrier of entry for anyone who already owns a Microsoft product.
The ecosystem and subscription gaming model provides a wide net for companies to collect profit with and a major advantage over traditional hardware-based strategies. Physical hardware like games and consoles are expensive and traditional methods of selling these can have significant financial risks. The subscription gaming model that has been embraced by Microsoft can extract money from customers without them needing to buy any new hardware or go through traditional retail processes and the amount of money flowing into the company is much more consistent. The structure of the Xbox Game Pass inherently lowers risk as one failed game launch does not spell catastrophe is there is many other games on the roster that can entertain customers that month. The bundle-like nature of the Xbox Game Pass makes the proposition to purchase the monthly service irresistible to many gamers.
A recent announcement from Microsoft has made there already booming service even more tantalizing by adding a whole new library to the Xbox Game Pass Ultimate. The second tier of the Xbox Game Pass(Xbox Game Pass Ultimate) was announced to now include EA’s game library from their own service EA Play. EA play has over 60 games in its own library that includes some newly released games. This move solidifies the Xbox Game Pass as the ultimate value proposition subscription in the game industry with now over 150 titles available to play at any time. Among the game industry no gaming subscription service can even come close to the value offered by Microsoft.
The meteoric rise of Xbox Game Pass has placed many competitors of Microsoft in a dangerous position. Players of the gaming industry like Sony and Nintendo may be winning in hardware temporarily, but Microsoft’s Game Pass model is a constantly increasing stream of revenue that will outlast hardware hype in the long run. The money making model of Microsoft could also set an industry standard for prices and accommodations in the future and that could force upcoming gaming subscriptions from competitors to operate at a loss just to try and compete. Subscriptions are tolerated much more by consumers due to the effects of major companies like Spotify that have made the cheap subscription service model mainstream and gaming is not immune from the subscription wave.
The future of gaming might not be insanely powerful consoles, but subscription services that provide access to an ecosystem of thousands of games. Hardware might exist just to allow a standard entry into a digital ecosystem which is similar to how Apple now operates. The subscription gaming future could appeal to casual gamers and large companies at the same time for a variety of reasons. Gamers of the future might have to worry about keeping their 15 dollar subscription going instead of saving up money for singular game releases. Subscription-based Gaming is not a gimmick, but the future.
Sources: https://www.washingtonpost.com/video-games/2020/04/30/with-10-million-game-pass-subscribers-xbox-ecosystem-begins-coalesce/, https://www.theverge.com/2020/9/10/21430298/microsoft-xbox-series-s-hands-on-photos-price, https://www.gamesindustry.biz/articles/2020-09-10-xbox-game-pass-for-pc-will-rise-to-full-price-after-end-of-beta-period, https://www.gamespot.com/articles/xbox-game-pass-adds-ea-play-subscription-this-holi/1100-6481947/