Former Sony executive Shawn Layden, who recently joined Streamline Media Group‘s advisory board, has expressed his doubts about subscription models like Xbox Game Pass, arguing that it’s difficult to make a profit by offering big budget games on a subscription service.
“It’s very hard to launch a $120m game on a subscription service charging $9.99 a month,” Layden told Games Industry. “You pencil it out, you’re going to have to have 500 million subscribers before you start to recoup your investment.”
Layden acknowledged that Microsoft is taking a loss-leading position initially in order to substantially grow Game Pass’ user base. However, he isn’t too convinced that such a strategy will work.
“If you have only 250 million consoles out there, you’re not going to get to half a billion subscribers,” he added. “So how do you circle that square? Nobody has figured that out yet.”
Layden is also skeptical about streaming technology like xCloud because of its limited reach.
“People buy consoles because they want access to the content,” he continued. “If you can find a way to get the content into people’s homes without a box, then yes, indeed. Everyone has a streaming solution of some form. Most of it is limited by whether you have a decent internet connection. And they haven’t constructed the business model that works yet for that.”
Microsoft CEO Satya Nadella has said that Xbox Game Pass is “growing rapidly.” Although Sony’s Jim Ryan isn’t in favor of the model, he’s previously said that the company will have a response to it.
[Source: Games Industry]
