In the music, TV and film industries, streaming has completely upended the business model. Instead of buying albums and films, most of us pay for a few subscriptions depending on what we want to watch, and maybe supplement that with the odd vinyl or special-edition Blu-ray. This has been pretty terrible for musicians, who earn approximately $0.004 per play on Spotify, while Spotify itself made $1bn in profit last year (admittedly after many years of operating losses). On the TV front, it’s increasingly annoying for customers: in my household we have to carefully bounce around between five different TV subscriptions depending on what series we’re into, to keep costs down.
This model hasn’t really caught on in video games. Apple has its Arcade service that offers premium mobile games for £6.99 a month, but free-to-play games are the norm on phones and tablets and make gigantic profits through ads and in-game purchases. (Fun fact: around 85% of all revenue in the entire games industry comes from free-to-play games, mostly in territories such as China.) Netflix packages games as part of its subscription, but not very many people play them. PlayStation and Nintendo both have subscription services, but they only include older games, rather than brand new ones. And then there’s Game Pass, the Xbox subscription service, which has offered a library of 200+ games including all of Xbox’s brand new exclusives for an eyebrow-raisingly generous price. Until now.
Microsoft recently announced that a Game Pass Ultimate subscription was going up from £14.99 to £22.99 a month. (This is the version that includes all the latest releases – cheaper options remain available). And while subscribers in some countries (mostly in Europe) received an email last night delaying the price hike, subscribers in the UK and US will still pay more. The hike has seemed inevitable for some time; nobody could quite figure out the economics of Game Pass given that blockbuster games cost hundreds of millions to make, and Microsoft has also been paying other developers to host their games on its service. Bloomberg estimates that putting Call of Duty on Game Pass last year cost Microsoft the equivalent of $300m in sales.
Does this suggest that Game Pass is not proving as successful as Microsoft would like? I asked Christopher Dring of The Game Business newsletter for his very informed opinion. “Game Pass is profitable,” he says. “But it’s clearly had an impact on the premium sales of games. It’s most notable with games like Halo Infinite and Starfield not charting as highly as you’d expect … Xbox bought Activision Blizzard for $70bn. That comes with scrutiny from the heads of Microsoft, including chief financial officer Amy Hood. It’s not just about profitability, it’s about growth – Microsoft expects a strong return from its Xbox division for that kind of investment. Not to over simplify things, but that’s why Xbox has been cutting costs, projects and even studios, and why it’s raising prices across the board.”
Xbox will be relying on Game Pass for growth, because its actual console sales have been in freefall for years. Microsoft stopped reporting how many Xboxes it was shifting, preferring instead to talk about revenue and engagement, but it is estimated that the Xbox Series S/X has sold a few million less than 2013’s Xbox One, putting it in distant third place behind Nintendo and PlayStation. Xbox’s own executives have said that console sales aren’t a priority: that’s why Microsoft has started putting all its games on PC and PlayStation, too, and why it’s been investing so heavily in buying up studios to make content for Game Pass.
But here’s the bigger picture: do we even want a subscription-based future for video games? And what does it mean for developers? One possible future follows the pattern of the TV industry: prices creep up, streaming services proliferate and gamers have no choice but to pay a fortune every year to play the latest titles. Meanwhile, developers will find it increasingly difficult to make the money needed to support big titles as direct sales dry up, forcing a consolidation of talent – which ultimately makes it harder and harder for original art to emerge. Millions of gamers are still happy to pay £70 for games on release day: Mario Kart World and Assassin’s Creed Shadows were two of the bestselling games in Europe in the first half of this year. Why would the big players seek to undermine that?
“For [smaller] developers, it comes down to whether you’re in it or not,” reckons Dring. “Right now, Game Pass is a strong discoverability tool in an era where that is a real industry issue. It’s also a way for players to access games at an affordable cost (well, it used to be), which in the current economy is important. But there are concerns for what the future might hold.”
Different business models can coexist, of course. In video games, free-to-play now coexists with premium games: they largely serve different audiences, and the data suggests that they do not cannibalise each other. Some people prefer to buy high-end consoles and high-end titles, and that market has remained pretty stable for the past decade; many more people engage casually with free-to-play games, a market that has been growing hugely, and has massively increased the overall gaming audience along with it. It’s possible that subscription services like Game Pass – if managed well – could offer an in-between option that doesn’t completely ruin the entire industry’s business model. But given the precedent elsewhere in the arts, and the rapacious hunger for profit and growth of big corporations like Microsoft, maybe that is overly optimistic.
Despite the price rise, Xbox Game Pass still represents good value for the most time-rich customers. “Xbox is asking its biggest players, those who engage the most, to pay more. That’s who Game Pass Ultimate is for,” Dring points out. “I suspect a large number of these players will accept it, if they can afford it, because, according to statistics, they get good value out of it. The average Game Pass Ultimate player plays $550 worth of games a year.”
Editor’s note: due to an editing error, last week’s edition referred to the new Nintendo of America president Devon Pritchard as “he” when she is in fact the first woman to hold the position. Apologies to Devon, and thanks to the people who wrote in to point this out.
What to play
There were so many good games in September that I’m still catching up with them (and I’m still very much stuck in Silksong’s web). Enter Baby Steps, a surreal slapstick comedy game that I’ve been looking forward to forever. It opens promisingly, as pathetic man-child Nate is zapped from his parents’ basement to a bewildering wilderness hike for which he is woefully unprepared; using the triggers to lift his pallid feet and the control stick to lean his weight, you stumble out of a cave and up to a camp at the foot of a mountain.
What follows, though, is one of the most painful gaming experiences you’ll ever have, as you slip and flounder and slide down sections of terrain that you already spent twenty minutes trying to climb. I misplaced one of Nate’s feet on a wooden beam across a gap and tumbled so far down that it took me several minutes to even make it back to the campsite I’d started at an hour before. And yet! I still stayed up until 2am playing this because it’s extremely weird and funny and obstinate, and because I finally feel like I’m getting somewhere with controlling Nate’s useless body. It’s a real “suffer for your art” situation but if you’re into novel suffering, give it a try.
Available on: PS5, PC
Estimated playtime: 10 hours
What to read
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If you want to know more about the ethical dubiousness of Saudi Arabia’s Public Investment Fund – which will soon co-own EA, as we talked about last week – Eurogamer asked Human Rights Watch for some insight: “This is a trillion dollars in Saudi state wealth that should be invested to realise the economic and social rights of Saudi citizens. We’ve found it’s been invested in vanity mega projects inside and outside of the country … We see this as a deliberate attempt to distract from the country’s human rights abuses.”
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My household’s summer obsession was the Netflix animated film Kpop Demon Hunters (iykyk), a movie so explosively popular that it is now taking over Fortnite with new modes and character cosmetics. This has sparked an interesting debate between me and my partner: he does not want our still-quite-young kids engaging with Fortnite at all; I am willing to overlook it because of how delighted they will be by it. Either way, I will be playing it.
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Pour one out for Rock Band, the once popular plastic-instrument game that soundtracked my uni days. Its last instalment, Rock Band 4, was delisted from stores last Sunday on its 10th anniversary, as the music licenses for its songs expired. If you own the game, there’s still time to bulk up your library of tracks before they are all removed from sale. Now that developer Harmonix is making music for Fortnite instead, we’ll certainly never see another Rock Band game.
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What to click
Question Block
A couple of weeks ago, I asked readers if there were any video game quotes that actually meant something to you – and it turns out there are plenty. In no particular order:
“All right, I’ve been thinking, when life gives you lemons, don’t make lemonade! Make life take the lemons back! Get mad! I don’t want your damn lemons! What am I supposed to do with these? Demand to see life’s manager!” – Portal 2, submitted by Helen
“‘We work in the dark to serve the light’ – I love this quote from Assassin’s Creed and have used it at work on many occasions; I work in the film and TV industry as an assistant director and spend a reasonable amount of time working in the physical and metaphorical dark as the person in charge of the light.” – submitted by Stephen
“Stay determined.” – Undertale, submitted by Kelly
“‘Courage need not be remembered, for it is never forgotten.’” – This Breath of the Wild quote has a special significance to me personally. A friend of mine, who is not a gamer, wanted to give me a baby shower gift, so he sent me a blanket and this quote printed on paper, which I still have hanging on my fridge. I love all things Zelda, hence why I named my daughter after the games. That quote is the exact moment Link is face to face with Dark Beast Ganon, the final fight, and his wise friend is telling him: You have it in you, you can do this. A beautiful quote for us, who had just brought a newborn daughter home.” – also submitted by Kelly
“‘We don’t go to Ravenholme.’” – I use this quote from Half-Life 2 across work and personal life to indicate a deep unwillingness – iykyk.” – submitted by Ben
“I get it. This won’t stop until I die. But when I die, I want it to hurt. When my friends leave, when I have to let go, when this entire town is wiped off the map, I want it to hurt. Bad. I want to lose. I want to get beaten up. I want to hold on until I’m thrown off and everything ends. And you know what? Until that happens, I want to hope again. And I want it to hurt. Because that means it meant something. It means I am something … pretty amazing to be something, at least …” – Mae Borowski from Night in the Woods, submitted by Kiera
If you’ve got a question for Question Block – or anything else to say about the newsletter – hit reply or email us on pushingbuttons@theguardian.com.
