IcaroRibeiro said:
Good point. Even if the the revenue from retail market is bigger than subscription, indeed the net margin for subscription is wider. But with digital retail market booming and physical marketing shrinking it won't be for very long The problem with premium pass market is generally other: royalties, that's how Spotify never made money and why Netflix is so eager creating its own content. I'm not familiar with GP library, are they all MS games or include some 3rd party? |
Its actually a very bad point. Because it's not taking all the associated costs of a subscription model into consideration.
Lets be generous here. Let's say Gamepass has a sub-base of 40M people today. And let's say those people are paying $9.99/month. Thats Thats a whopping $4.8B!!!
But here's the catch. How much of that is spent to just keep the service active worldwide? Lets be nice again and say MS spends $800M on operational costs every year. So they have $4B left.
Now let's start talking about deals. The only way that service gets that good is if people see and know they get all AAA games day 1 on the service. So sets take one such game for instance. GTA6. Now rockstar knows their game can sell as much as 50M copies. At full price and that's $3B in revenue. BUt they also know that making that game available on gamepass on day 1 would cripple those sales. How much do you think they would be willing to deal with MS to get the game on there on day 1? $500M? $1B? $1.5B?
Now do the same for every other major AAA game released for every calendar year. Granted, not all of them would command the kinda deal GTA6 could, but they would all be asking for well over $200M each. And any game that can or could have sold more would be asking for more. Why do you think Netflix spends so much on making Netflix original content, and mind you, Netflix business model has them putting up content from third parties long after their TV rotation or theatrical release. And even then its not viable for them.
