I’ve got this shower thought hunch about why corporations are so into subscription services rather than sales.
If you look at Steam, a 60 dollar game nets Valve around 20 bucks (30%) for every sale. On the other hand a subscription like Xbox Game Pass can only get Microsoft a maximum of 16 bucks per month, not even counting how much they pay to the developers included in the program.
So at least from this shallow reading, subscriptions should be worse than sales.
But on the other hand, there are some advantages which are obvious.
First off, casual users might not even be a potential loss for more expensive games. Besides that, it further alienates consumers from specific products they might want to consume, taking away developer power. And finally lots of people might just forget to cancel it because “it’s so cheap” even when not using it.
But my shower thought was: what if this is favoured because it’s worth much more as a financial asset?
Sales percentages are unpredictable and depend too much on third-party developers. If only flop games come out for a month, Valve will only learn about their lost potential revenue that same month. It’s all a series of events.
On the other hand, subscription numbers are easy to track. If they go down, Microsoft will have at least a month of a heads up. If they go up, they can know beforehand that they’ll have more money in the future. They are much more stable. They’re financial assets.
Does this make sense? Has somebody who actually knows what they’re talking about ever written about this?
It’s more valuable, you’re right, plus a subscription service means that the person “signing up” doesn’t own the product in question. So if they had a physical or digital copy of a game and they payed $60 for it, if the company that made it wanted to increase the price on that game, that person wouldn’t pay a single extra cent. On the other hand, if they are subscribed to a “gamepass” or whatever, the price of that subscription to play their game might go up over time, meaning the company doesn’t just profit, it can increase profit for no expense on their part.
Additionally, a subscription service encourages people to play the game more frequently, which means they less likely to spend time (and money!) playing the competitor’s games, as they need to get their “money’s worth” every month.
Subscription services have a ton of benefits for big companies and none for consumers, so naturally it’s the way everything is headed.