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The video games industry is odd. This is a business where the leading companies regularly reset their market share every five-to-seven years. But over the last 12 months, we’ve seen a number of new trends that make video games seem like an even stranger beast — and one that is ready to change again.
The ways in which this industry are changing are plentiful, but they all seem like they are springing from the same underlying reasoning: making games is hard, but publishers and platform-holders could do more to make it less risky. And one of the ways companies are doing that is with a major focus on subscription services.
And that’s where Microsoft is leading the way.
Game Pass and subscriptions are disrupting how we purchase software
Xbox Game Pass debuted in 2017, but in 2019, it built up an undeniable momentum. Microsoft made it clear that the $10-per-month subscription service is the core of its business going forward. And on top of adding amazing games to the service like The Outer Worlds, Outer Wilds, and Void Bastards, the company got aggressive with promotional deals. You could get three months for a dollar or turn your current Xbox Live Gold membership into Game Pass Ultimate by paying $1. And now the service is also on PC as well as the Xbox consoles.
The result of those efforts is that Game Pass is growing quickly. And now we’re starting to see something of a network effect. People are getting Game Pass because their friends have it, and $10 per month is the cheapest way to play all those games together. That network effect is even increasing game sales. Because subscribers to the service are playing more games together, when those groups go to buy a non-Game Pass release, those groups are more likely to migrate together.
But even if some people are buying more games, there’s no doubt that subscriptions are in the process of changing everything. And in a few years, buying games is going to seem as weird as purchasing a new music album.
Microsoft is already seeing the benefit of this. The company’s Xbox One system is on the way out as the current console generation ends. But the Xbox division’s revenues aren’t taking a huge dip like is normal. Instead, it’s seeing a pretty steady stream of revenue. That’s due in large part to the increased performance of live-service games like Fortnite, Apex Legends, and Rainbow Six: Siege. But Game Pass is contributing to that as well.
Crossplay and first-party crossplatform support
If you look to other ways in which the industry is changing, it all fits with this trend. Crossplay is now the standard going forward. Sony, Microsoft, and Nintendo are feeling less precious about their walled gardens. And the reason, again, is that services are more important. And service games like Fortnite and Minecraft work better if platforms aren’t putting them into silos.
Even Sony, who was the company most adamant about opposing crossplay, is now onboard with the idea. It even recently revealed that it’s going to make MLB: The Show a multiplatform release. That’s likely indicative of the MLB’s wishes, but it’s also a sign of the times. Sony even sees that certain kinds of games don’t make sense as console exclusives. While God of War is almost certainly only coming to PlayStation 5, multiplayer games can’t rely on an audience on just one platform.
So yeah, things are weird. And expect them to get even weirder in 2020.
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