The ex-president of PlayStation Studios does not believe that Xbox Game Pass is profitable: “you have to go at a loss”
The ex-president of PlayStation Studios does not believe that Xbox Game Pass is profitable: “you have to go at a loss”
“It’s tough to launch a $ 120 million game on a $ 9.99-a-month service,” says Shawn Layden.
Xbox Game Pass burst onto the market a few years ago with a groundbreaking proposition. A single subscription, access to more than 300 games on several different platforms and with premiere titles, which make it the cornerstone of Microsoft’s strategy in the world of video games. But the Redmond people have always been elusive when it comes to publishing the costs of the service: how much they pay for each game, how much it generates in additional DLC sales… If Xbox Game Pass is profitable , let’s go. A question asked by Shawn Layden , the former president of PlayStation Studios.
In an interview with Games Industry, following his statements a year ago about the rising cost of AAA developments in the industry, Layden has addressed Xbox strategy with proposals such as this subscription and the xCloud cloud game. As he explains, the current market encompasses between 240 and 260 million consoles worldwide, a figure that has not changed since the 1990s. And Xbox is confident that subscription services and streaming will be what will expand the market to higher numbers, while a higher number of subscribers would make your services profitable.
However, Layden does not see it in the same light , and believes that subscription services are not profitable in an industry where development costs are at the top. “It is very difficult to launch a $ 120 million game on a subscription service that charges $ 9.99 a month. You do the math, and you would need to have 500 million subscribers before you start to recoup your investment. That’s why right now you need to go at a loss to try to increase that [user] base. “
You would need to have 500 million subscribers to recoup the investmentShawn layden“But still, if there are only 250 million consoles in circulation, you’re not going to have half a million subscribers. So how do we balance all of that? No one’s figured it out yet .” This does not mean that Shawn Layden is suspicious of the Xbox Game Pass proposal as such. Simply, the former president of PlayStation believes that his business model is not profitable at the moment, and doubts that it will be until the market grows significantly.
On this topic, Xbox Marketing Director Aaron Greenberg recognized in 2020 that Xbox Game Pass is not profitable in the short term , but it is a long-term benefit for the brand. We remind you that, at this time, you can get a month of Game Pass for only 1 euro if you are new subscribers, which will allow you to try games like Microsoft Flight Simulator – recently released on consoles – as well as these other 11 games that join in july .
More about: Xbox Game Pass , Xbox , XCloud and Shawn Layden .
