How Game Pass has changed the gaming landscape
6.7.2022
Translation: Patrik Stainbrook
Game Pass offers a supposedly unbeatable deal for gamers and developers. However, the impact that such subscription models have on the industry shouldn’t be underestimated.
«Monetisation has a massive impact on how and what kind of game you develop.» Daniel Lutz is convinced. The former Square Enix Montreal creative director isn’t alone in his opinion. I’ve spoken to several developers on the topic. Despite the allure of subscription services such as Game Pass, there’s great unease regarding their long-term consequences for the industry.
Job security instead of wealth
Game Pass, PS Plus, EA Play, and now Netflix are just a few services that offer subscriptions for gamers. For a monthly fee, you get access to a mountain of games. Sometimes older titles such as PS Plus, or brand-new ones such as Game Pass, even premium mobile titles like Netflix. Deals with game studios often turn out similarly. «They pay you a fixed amount, which for indie games is usually in the five to low six figures. In exchange, your game is exclusive for six to twelve months,» explains Lea*, a developer whose game will soon appear in Game Pass. Like another colleague whose game is already included in Microsoft’s service, she prefers to remain anonymous. As a rule, contract details cannot be commented on publicly. Others like Giants, the makers of «Farming Simulator», don’t want to comment on the issue for now. The company first wants to gather more experience, it says on request.
You obviously won’t get rich from a Game Pass deal. Instead, you’re guaranteed job security. And the chances of a surprise hit are vanishingly small anyway, given the mass of new games. «We’re ambivalent about the whole thing. The deal gives us visibility, but it cannibalises sales on Steam,» said indie developer Patrick*. It’s believed that there will be a five to ten per cent revenue loss on Valve’s platform. Steam is and remains one of the most important sources of revenue, especially for indies.
In addition, there are, of course, in-house studios that develop games for the services. Game Pass includes all titles from Microsoft Studios. So Bethesda, Obsidian, 343 Industries and Rare, among others. Netflix has also been busying itself acquiring Boss Fight, Night School and Next Games. These studios don’t have to worry about a distribution key. Instead, they’ll probably be the first to feel the changes that subscriptions have on game development.
Games will change
«A major change, with huge repercussions for how studios evolve.» Spry Fox CEO David Edery, predicting the future of subscription models for games. His studio is responsible for the word puzzle series «Alphabear». With «Cozy Grove» they’ve also already had experience with Apple Arcade. He expressed his fear to Simon Carless in his GameDiscover newsletter. «The subscription services really want popular games that get updated forever. They’ll be paying people to make those.» A big question David has is how Valve and Epic will react. Valve owns the largest games platform in Steam, and Epic owns one of the most popular IPs in «Fortnite.» «[…]I wonder how long they can help preserve the premium game sales space in its current form,[…]». But the process won’t happen overnight, he says. «It took the rise of stuff like Disney+ and the pandemic to finally make me adopt multiple subs,[…]» so he expects ten to 15 years before big changes in gaming will be felt.
Again, things can move faster, as Apple Arcade shows. «At first they wanted pretty little games, preferably with a story. Then bam! Leadership changes and suddenly everything needs to offer retention,» says Lea*. Patrick* adds, «For linear stories without replay value, that would be a nightmare». This change has long since taken place in the mobile sector. The free-to-play model has completely taken hold there, with a massive impact on games. «Everything is aimed towards getting players hooked from the first second,» says Daniel, who is now developing a game on his own. The chance of players bailing out is apparently too great.
It’s unclear what will become of «Game as a service» (GaaS) titles such as «Destiny» or «Ark». Their business model consists of releasing new paid updates with new content for years. They, too, can benefit from staying in Game Pass. «[..]there’s quite a lot of AAA-adjacent GaaS games who benefit from being in Game Pass[…] That way, it gets them a burst of new players who will spend more money on upgrades – IAP, DLC, etc. – over time,» said Simon in his GameDiscover newsletter. Spry Fox’s David can envision GaaS approaching free-to-play games, «[…]downward price pressure on the base SKU; charging for updates that previously would have been free and/or offering «optional», but highly desirable content for $; etc.»
Sony is sticking to the premium model
Sony is the end boss. True, the company recently began offering an expanded PS Plus subscription model. At the same time, they never tire of emphasising that they will continue to focus on big single-player titles despite reinforcements in the GaaS space. The company doesn’t believe in the Game Pass model with new titles directly at launch. You’ll struggle to find any such titles, even in the most expensive PS Plus Premium subscription. «The level of investment that we need to make in our studios would not be possible, and we think the knock-on effect on the quality of the games that we make would not be something that gamers want,» explains PlayStation CEO Jim Ryan in an interview with Gamesindustry.biz.
How long Sony will stick to this strategy or whether the Game Pass model is unstoppable remains to be seen. It’s clear that Microsoft will soon jack up prices. After all, from the customer’s point of view, the offer is almost too good to be true. And once you’re in, you’re not so quick to quit. We have Netflix and Co. to thank for that. So let’s enjoy the honeymoon phase while it lasts.
*Names changed
Philipp Rüegg
Senior Editor
Philipp.Rueegg@digitecgalaxus.chBeing the game and gadget geek that I am, working at digitec and Galaxus makes me feel like a kid in a candy shop – but it does take its toll on my wallet. I enjoy tinkering with my PC in Tim Taylor fashion and talking about games on my podcast http://www.onemorelevel.ch. To satisfy my need for speed, I get on my full suspension mountain bike and set out to find some nice trails. My thirst for culture is quenched by deep conversations over a couple of cold ones at the mostly frustrating games of FC Winterthur.
