The likes of Nintendo, Sega, and Atari experimented with game subscription services since the ’80s, but modern takes on the idea only started gaining traction after Netflix popularized the concept of paying for on-demand catalog entertainment over the course of the previous decade. Looking at every gaming subscription out there, Microsoft is currently the arguable leader in the segment with its Xbox Game Pass offering, both in terms of content volume and variety. That said, Sony, Ubisoft, Apple, and half a dozen other companies are currently competing in the niche.
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Zelnick acknowledged Microsoft’s dominant market position during yesterday’s earnings call, but said that the Game Pass business model is a much better match for “linear entertainment,” i.e., hand-crafted games with predictable playthrough times. The executive reiterated the distinction between those products and the niche in which Take-Two is competing, which he categorized under a broader label of “interactive entertainment.” In conclusion, the CEO said that Take-Two’s studios will continue to focus on designing long-term experiences instead of “catalog titles” suitable for subscription-based distribution.
Seeing how Grand Theft Auto 5 is the most profitable entertainment product of all time, Zelnick’s comments are far from surprising. Take-Two spent the better part of its 30-year history as a Fortune 500 company, and it got there by consistently putting out hits that broke sales records while they were still retailing at full prices.
Looking at the bigger picture, another thing standing in the way of same-day releases on subscription platforms is the fact that right now, only Xbox Game Pass is pursuing day-one games as a growth strategy. In contrast, publisher-run services like EA Play and Ubisoft Plus are more interested in exclusives, while solutions such as PlayStation Now and Nintendo Switch Online’s classic catalog aren’t marketed as Netflix-like gaming services in the first place. Regardless, Zelnick’s remarks strongly imply that Take-Two also isn’t interested in running its own subscription service for the time being.
While Microsoft probably didn’t count on Grand Theft Auto 6 to boost its subscriber numbers, the fact remains that the game subscription market already seems close to reaching saturation, at least relative to console ecosystems and their installed base numbers. E.G., Game Pass missed its subscriber goal twice in a row now, which is a big part of the reason why Microsoft is still buying up major studios left and right in hopes of boosting its portfolio of day-one releases, exclusive or not.
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Source: The Motley Fool
