Recently, Nintendo’s Shigeru Miyamoto gave a talk at an event in Japan. He spoke against the freemium mobile model, that way that more and more games are attempting to make more money. Instead, he propped up subscription models, and spoke of game makers being in control of the perceived value of their software. That’s an important train of thought, and that brings me to Microsoft. Just as recently, Microsoft announced the Xbox All Access program, which is an unprecedented, new way to purchase a new game console. Combined with the already-established online subscription services, Xbox Game Pass, and now All Access, I suspect that Microsoft is playing a long game, and that game is pushing the games industry to its next evolutionary step.
Games are expensive. And the price of a game at a retail shelf hasn’t changed since the PlayStation 2. That’s a problem, but one that consumers can’t be expected to solve. The freemium thing kind of works, but only in special cases. There’s some meteoric success, but a lot of failures in their wake. But what do companies do about it? They can’t just not spend millions of dollars to make games – the demand for huge games is just as high as the demand to not pay for than $60 for them. What Microsoft and Miyamoto to a lesser extent are bringing to the table are subscription services. These are ways to get players paying consistently for services they want, without dropping a ton of money on individual items.
It makes sense. People are happy to pay for things if there’s a perceived gain in value, and a convenient process. That’s why stuff like Netflix works so well. You have your monthly billing cycle, and it never gets more complicated than that, and you have access to more content than you’ll ever know what to do with. Meanwhile, Netflix is losing money, but also making a ton of it. It’s complicated venture capital stuff, but technically Netflix is booming and worth a ton of money. This is where video games could probably strive to be, and end up making lots of money.
Microsoft is opting to be the tip of that spear. Xbox Game Pass is already proving to be a success, but the real test will be when Microsoft starts pumping out more first party games in the next few years. Then, perhaps, Microsoft might be able to work on convincing third parties to contribute more content, faster. Or, maybe not – Xbox Game Pass could just as well stay as a supplemental source of income, and that’s fine. Especially if Xbox All Access does well. If that pops off, it’s a great way to make buying a new console much less risky. Who has 500 bucks to just drop on a console? Not many. But being able to pay that over the course of two years without API could be huge.
Without a doubt, other companies who are not Microsoft are watching what Microsoft is doing. The narrative for so long was that Microsoft has been failing this generation (not true), while the PlayStation brand just gets to spin its wheels without really moving the way things are forward. But if Microsoft is able to walk out at E3 or whatever next year and say, “hey, what we’re doing is working,” there’s no doubt there will be people scrambling to catch up. Nintendo is doing something similar too, with its own hybrid online subscription/game library program. Who knows how that will work out?
I love paying attention to what’s going on at Xbox in 2018. Every time there’s a big announcement, it’s something else that nobody else has done before on such a large scale. From accessibility controllers to console-owning payment plans, these are initiatives that nobody has even tried yet in that market-leading space. It’s possible that it doesn’t work out, and things go back to the PS4 way of Just Like Before, and there’s nothing wrong with that. But it feels like Microsoft is attempting to be an agent of change in the industry, and I’m intrigued to see how it all shakes out.