In 2017, Microsoft officially entered the game subscription battlefield with its own Xbox One home game console and launched a service called “Xbox Game Pass”. Due to its strong game lineup and fairly reasonable prices, a It has been widely praised by players since its launch. Since then, the Xbox Game Pass game library has continued to grow, with more than 200 games available for access to date. At this year’s E3 show, Microsoft announced that it will bring Xbox Game Pass to the Windows 10 computer platform, reflecting the new trend brought by the game subscription system.
Over the past few years, Microsoft has been saying that subscriptions are the future of gaming, and has aggressively acquired more game studios to expand its gaming empire.
However, Ed Fries, who built the game lineup for the original Xbox, has a different view of the future of the game industry: He believes that the current game subscription system will eventually destroy the entire game industry.
He gave an example, just as Spotify has changed the record industry, “The Game Pass that Microsoft is currently doing makes me very anxious. The reason why this thing is terrible is reminiscent of Spotify (membership-based music subscription service), and the prosperity of the latter has led to the whole The music industry has shrunk in half, and people don’t buy CDs anymore.”
Ed Fries said that he is a Spotify fan himself, and he likes the feeling that “all the songs are gathered here”, which is a good thing for users. But that’s not necessarily the case for the gaming industry, he said.
In the era of Ed Fries, he once witnessed the collapse of the original game empire Atari, and the scene of the great earthquake in the game industry in the 1980s. He would have this anxiety, and perhaps it was justifiable.
In fact, like most streaming subscription services today, almost all of them are still losing money. The game subscription system is also currently not making money, and it is in the stage of losing money and gaining fame. Unless the sponsor keeps subsidizing it, this business model cannot be maintained. Sony has previously calculated that to maintain so many studios, unless the number of subscribers exceeds 100 million, it will be difficult to recover the cost.
Related to this, Game Pass had just 25 million users as of January, compared with 182 million for Spotify and 220 million for Netflix as of March. But even with nearly 200 million subscribers and nearly $3 billion in quarterly revenue, Spotify still loses $6.5 million—70 percent of its revenue goes to buying music rights from labels such as Sony Music and Warner Music.
So, maybe Microsoft’s Game Pass will never be profitable, but Ed Fries’s concern about Game Pass’s impact on the game industry is not necessary – Spotify and Apple Music have indeed changed the consumption habits of music lovers, but the music industry in North America has not only Shrinking, it increased by 9.2% in 2020, and it increased by 23% last year. Goldman Sachs predicts that nearly 700 million people will pay for music subscription services by 2023, and more than a billion by 2030.
After all, it’s true that people don’t buy physical CDs, but the music industry already has more revenue streams. And musicians also have more channels for sound, not just record companies.
For the game industry, if the game industry can solve the problem of low development efficiency and split large-scale 3A games into multiple episodes to be released monthly or even weekly, maybe one day game subscriptions can become a profitable and serious business model.