PlayStation tiptoes into subscription gaming
Good morning! Sony’s highly anticipated announcement of its updated subscription service offering was as understated as the product itself. I'm Nick Statt, and after months of waiting I finally own a Herman Miller desk chair. My back has never been happier.
Not quite the subscription service we were expecting
Sony revealed its much-anticipated answer to Xbox Game Pass yesterday, but it wouldn’t be fair to characterize it as such now that we know just how understated it is. It’s a far cry from the all-in subscription push some industry watchers were anticipating, and it illustrates just how wary Sony is of following in the footsteps of Microsoft.
Much of PlayStation Plus is remaining the same. Sony’s longest-running PlayStation subscription product has been PS Plus, which costs $60 annually for access to online multiplayer and a smattering of free games throughout the year, among other perks. But it’s become outdated.
- Sony is introducing two more subscription levels to address this. PlayStation Plus Extra, for $15 a month, will include “blockbuster hits from our PlayStation Studios catalog and third-party partners.” The highest tier, PS Plus Premium for $18 a month, will include 340 additional classic games and cloud streaming, but limited in its offerings.
- But it’s not clear which third-party partners Sony has signed up, and whether that list will include games from Microsoft-owned studios like Bethesda or Activision Blizzard. The service also won’t include new PlayStation Studios titles the day they release, as Microsoft does with Game Pass.
Sony is not yet convinced subscription gaming is even viable. As it stands right now, most gaming subscriptions outside Game Pass are a nice, additive business that brings in more customers who might otherwise not have spent any money on the platform. To go further than that, as Microsoft does, would be too risky.
- "We feel like we are in a good, virtuous cycle with the studios," PlayStation CEO Jim Ryan told Gamesindustry.biz on Tuesday, "where the investment delivers success, which enables yet more investment, which delivers yet more success. We like that cycle and we think our gamers like that cycle."
- It’s important to note that Microsoft is only able to do what it does with Game Pass because its primary businesses — productivity software, operating systems and cloud computing — are among the most lucrative in the world, and they give the Xbox business a war chest Sony simply cannot compete with. Microsoft’s current market cap is 18 times that of Sony.
Subscription gaming is far from a slam dunk. The economics of the game industry — and how slow the market has been to adopt streaming and subscriptions — mean that no single business model will likely win out anytime soon. In that way, Sony is being prudent and likely rightfully conservative about pushing too hard in one direction.
- Microsoft’s investments in the cloud and subscriptions were designed to help dig it out of a deep hole of its own making during the Xbox One era, and it’s been working. Microsoft’s first-party games are seeing record levels of players, and Game Pass is growing, albeit slowly.
- But subscription and cloud gaming is a tiny slice of the overall market, representing just 4% of North America and Europe game markets, or roughly $3.7 billion, according to a recent study from Ampere Analysis. Of the available services, only 5% are cloud-only offerings, while a majority (60%) use Xbox Game Pass. The study found that most Game Pass users download their games and do not stream them at all.
For now, it looks like Sony is biding its time. Ryan said “things can change very quickly in this industry, as we all know,” and that he never would have anticipated PlayStation Studios games finding such success on the PC platform even just four years ago.
Subscription and cloud gaming are very obviously fast-growing, potentially major parts of the business, and the question now is how developers intend to make room for them and whether there ever will be a moment where the scales tip away from standard retail. Microsoft is standing alone with Xbox Game Pass, at least for the time being, and it may take years before we know just how early it might be to gaming’s big distribution shift.
A MESSAGE FROM HASHICORP
If you’re a CEO these days, odds are that your CIO understands something you may not: your company’s cybersecurity strategy is fundamentally flawed, and has been ever since your organization began using cloud-based services.
People are talking
Elon Musk’s most recent filing with the SEC includes these Eminem lyrics:
- “The SEC won’t let me be or let me be me so let me see/ They tried to shut me down.”
Jack Dongarra just won the Turing Award for his supercomputer work, but he's also thinking about the cloud:
- "It’s an inflection point we’re at, one which has us either going in the traditional way of building our own equipment and using it just as it is, or going to cloud-based computing, and using cloud-based systems to satisfy our needs."
Jim Rowan said Volvo needs to make better decisions about its software purchases:
- “How do you actually make the best of the computational power that you’re spending a lot of money on to put in the vehicle?”
A group of private-equity firms is buying Nielsen in a deal that values the TV ratings company at $16 billion including debt.
WeWork CEO Sandeep Mathrani is the company’s new chair, and SoftBank’s Saurabh Jalan joined its board as director.
Jamie Davies is the new CMO of Izumi World. Davies has been a marketing exec at Samsung, Xbox and Rarible.
Shireesh Thota is the new SVP of Engineering at SingleStore. Thota previously led engineering efforts at Microsoft’s Cosmos DB and Postgres Hyperscale.
Kara Wilson joined Accela’s board. She’s also a board member at Paychex, OneStream and other software companies.
In other news
The Pentagon is looking to award billions in cloud contracts in December. Officials plan to dole out as much as $9 billion to cloud infrastructure services as part of its Joint Warfighter Cloud Capability initiative.
Meta is on a mission against TikTok. The company has hired Targeted Victory, a well-known Republican consulting firm, to turn the American public against TikTok, according to The Washington Post. Its message: TikTok, not Meta, is the real threat.
A small town in upstate New York has become the center of a bitcoin debacle. The Greenidge power plant in Seneca Lake wants to expand, but town residents are worried it could turn into a climate disaster.
The NFL may be working on its own streaming service for smartphones. Live football is the crown jewel of TV right now, and it would be a huge swing for the league to take some of its streaming in-house.
Your bonkers new gadget of the day: The Dyson Zone, a pair of Bluetooth headphones that also act as an air purifier around your face. It's a Bane mask with music playing, basically.
Activision Blizzard settled its sexual harassment lawsuit. The company still has lawsuits from former employees, shareholders and the California housing department.
Axie Infinity was hacked. Nearly $650 million in ether and stablecoins was stolen from the play-to-earn game after hackers got into its network, called Ronin.
The Russian government may be able to see user data from Yandex, the Financial Times reported. The issue is making privacy watchdogs nervous that the Kremlin can track people.
The FTC thinks Intuit’s TurboTax is deceptive. The commission said Intuit’s claims that TurboTax offers free tax services is misleading, because many consumers are still charged.
Otter.ai wants to be something more
Everyone loves Otter.ai for its transcription services. But now the company wants to go a step further by offering new features, like creating automatic and curated meeting recaps. Here’s a look at Otter’s new tools:
- “Meeting Gems” that let you put your most important notes in one space
- A screenshot button that allows you to include images in notes
- AI-generated summaries of notable meeting moments
- A calendar view that lets you join meetings from Otter’s home screen
A MESSAGE FROM HASHICORP
As a business leader, you need to understand that zero-trust is not just another buzzword. It’s a fundamentally different mindset that you will need to embrace — and the sooner you do so, the better.
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