​The PlayStation 5
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PlayStation tiptoes into subscription gaming

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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 But it’s become outdated.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.

— Nick Statt (email | twitter)

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