Microsoft is fully deploying “Netflix Model” for games with new Xbox

Video streaming services can no longer be imagined from the average Dutch household. Watch the latest season of your favorite fantasy series with your friends or have discussions at work about the documentary series that is now the conversation of the day: it has become part of the daily life of many people over the past few years. With games, it‘s not so common, but if it’s up to Microsoft, it‘s about to change quickly.

The American company is launching its new game console today. Or actually two new game consoles: the Xbox Series X and S. The latter is a cheaper model.

Microsoft promises more powerful graphics, faster loading times and a better online environment, but it wants to profile itself with a wide range of games that can be played at a fixed price: the Game Pass. And Xbox seems to have a good reason to do that.

Interest in subscriptions

Figures from market researcher Simon-Kucher & Partners show that over a third of gamers already have a game subscription. Like PlayStation Plus, which is necessary to play online games.

The survey of more than 13,000 respondents in 17 countries shows that about 80 percent of those who already have such a subscription are open to another subscription.

It’s simple from a business point of view and from the consumer, says Hong-May Cheng, partner at Simon-Kucher. You bind people to you longer and you increase the appreciation of your company. Xbox seems to want to use the Game Pass and the cheaper console to bet on the casual gamer, people who don‘t play superfanatically games.

Backlog on competitor

Another reason Microsoft opts for a subscription model is that it is lagging behind the PlayStation of competitor Sony. His new console, the PS5, is coming out next week.

The predecessor was sold roughly twice as much as the previous Xbox worldwide. This was partly due to the so-called first party games, games made by Sony studios and released exclusively on the platform.

Xbox also has its own exclusive titles that sell well, such as Halo shooting game and Forza Horizon racing game. But in numbers of exclusive games, it has lagged behind on Sony in recent years.

However, Microsoft recently made a record record record in the gaming industry with the purchase of ZeniMax Media, which is responsible for the popular Elder Scrolls games and the Fallout titles.

Here’s Gears 5, one of the exclusive games available today on the new Xbox:

Microsoft doesn‘t want to say whether future games from ZeniMax will be released exclusively on Xbox, but they will be released on Game Pass from day 1. We didn’t make this deal to keep games away from another platform, said head Xbox Phil Spencer last month in an interview with Kotaku website.

We want more people to play our games. But I have to note that it is not necessarily necessary for us to offer these games on a platform other than Xbox to make the deal work out for us.

PlayStation does it differently

Nevertheless, the shift to the subscription model can also have drawbacks. For example, it is unclear whether it is profitable for game publishers and developers, because there is a chance that people will be less willing to pay 50 euros or more for a new game in the future, says Cheng.

According to the consultant, there is a chance that games will be made in a different way. The budget for the development of large premium games is up to hundreds of millions of euros, similar to blockbuster films. Short-term subscription revenue can‘t compete with that, unless you as a company choose to develop other games at a lower budget.

Competitor Sony absolutely does not like that. Although it has its own Netflix model with PlayStation Now, new games will not be available on day 1, says PlayStation boss Jim Ryan. Because of the high development costs, this is simply not a sustainable model, he says to news website GamesIndustry.biz. We want to make our games bigger and better. To give them away immediately with a subscription just doesn’t make sense for us.