“It’s very hard to launch a $120m game on a subscription service charging $9.99 a month. You pencil it out, you’re going to have to have 500 million subscribers before you start to recoup your investment. That’s why right now you need to take a loss-leading position to try to grow that base. But still, if you have only 250 million consoles out there, you’re not going to get to half a billion subscribers. So how do you circle that square? Nobody has figured that out yet.”
“Consolidation, from a bank ledger side of the calculation, makes sense,” Layden acknowledges. "Grab up all the resources so the other guy doesn’t get it and put them to task on the thing that you want to have done. But it takes the variety out of the marketplace. That’s my fear. And over time, that is going to make the industry moribund, and it’s going to create a world of sameness.
This is like an amateur giving a pro advice on how to run things lol. I’m sure MS knows better. Especially Phil Spencer. Dude has hit it out of the park on all of his decisions so far.
I think he is wrong on all accounts. The movie industry is proof of that, and MS’ gamepass as well.
MS has the most diverse of games out there. By a mile. All thanks to gamepass.
If anything…it is Sony that is taking the variety out of the marketplace with their ‘‘blockbuster’’ 3P over the shoulder games.
I mean is Layden ok? The guy cant even do basic math.
His figures are just wrong
Gamepass does not need 250million subs to cater for AAA games.
If gamepass right now with 25million subs is generating roughly $250 million a month or $3 billion/year, it can already support multiple AAA games
Lets break down yearly cost
$1 billion/year for AAA games (if it cost roughly 67mil/year per game, thats 5 AAA games every year.
$500 mill/year for 3rd party deals
$500 mill/year for indie + AA games
$100 mill/year infrastructure costs
Thats still $900 million profit just from gamepass and thats not even counting profits from steam/pc and boxes/digital sales.
So layden is just plain wrong here.
And gamepass seems to be the perfect solution to stop “sameness” more creative games can be made because gamepass takes away the added pressure of having to sell 8 million copies.
So really gamepass is the solution to Laydens concerns for the direction sony is taking lol.
I’m sure he was just spitballing with some napkin math that got away from him, but… 500 million Game Pass subscriptions to recoup $120 million…? That’s orders of magnitude away from any kind of number that makes sense.
This is a very confusing interview with the ex-head of Playstation and raises a lot of questions. Why did he increase the budgets of these games so much if he is concerned about it? Why didn’t he greenlight a new Parapa? Why didn’t he put more diverse and smaller games on the main stage? Why is he so bad at math?
It’s very hard to launch a $120m game on a subscription service charging $9.99 a month. You pencil it out, you’re going to have to have 500 million subscribers before you start to recoup your investment.
Those figures only makes sense if all AAA industry is consolidated into MSFT (yet numbers are still way off… 500 million x 10USD is enough to fund more than 20 AAA 120m-games per month and still get plenty of benefit), and they decide to distribute only via game pass. Both assumptions are extremely bold and were not clearly stated. Complete non-sense and should be ignored.
I like Layden but disagree in regards to his comments about it being hard to launch a $120m game into Game Pass and the consolidation remark which has nothing to do with variety whatsoever.
I think the quality of the interview leaves some questions on the table. I blame the author of the article more than Shawn Layden. I am sure a lot of context is missing and that is the fault of the author!
His math isn’t as broken as everyone thinks. Say you have 500 games on the service (GP should hit that mark by end of this year). $5bil/month works out to $10mil per game per month, or $120mil per game for the year. That is most likely where he gets his figures from and why he chose the $120mil figure as an example.
That said, he is still making really strange assumptions. He assumes the existing console base is the max addressable userbase, which be true for Sony but not MS. He assumes that all games need to be that high budget for a AAA-like player experience, but that isn’t necessarily the case as demonstrated by FlightSim which is almost certainly the most technologically impressive game ever made yet was built by a small team in a very reasonable timeframe. That kinda thing requires access to top class cloud compute and ML expertise though, which Sony lacks. He assumes the game loses 100% of any possible retail sales, which we know is the polar opposite of what happens (with Game Pass at least). He assumes the games aren’t making any revenues from DLC/MTX’s or any kind.
It is important to understand that this interview is from the pov of Sony’s executives thinking about subscription models during the PS4 gen, so his thinking would be soloed and contextualized by Sony’s strengths/weaknesses. You can certainly detect some animosity b/t him and his ex-employers on the topic of consolidation too. His comments make complete sense when applied to Sony’s catalogue but not at all to MS, for instance.
And just like that the Playstation response to gamepass gets that little bit further away from existing.
Interesting that Sony is the only movie studio without a streaming service either. I think their Japanese elders running the company just don’t get it.
No, his numbers are pulled from his ass, they make zero sense.
There is no “subscription service” that would require spending $10 million each for 500 games for 1month.
Take the month outriders came out, that game would of cost around $70 million to make
Outriders was likely to have projected sales of about 1 million on xbox platforms giving square around $30 million profit.
No Microsoft probably offered $35 million for 1yr on gamepass and a bunch of statistics that show gamepass would increase the playbase and awareness of outriders by a significant margin.
Other older games on games would be getting a small fraction of that, the smaller indies will get 10-50k and older bigger games wont be getting over 100k/month
Microsoft could spend 50mill/month on 3rd party and would have a decent offering, at the moment they are probably spend 100mill/month.
He believes you need 5bn a MONTH to a) not only make money, but also b) be able to justify less than a handful of $120 million games a YEAR?
lol no. His math is completely busted here. Microsoft also doesn’t pay monthly to have games on there. They up front and I’m assuming there’s a possibility some games have a deal for per download or some kind of usage payment.
But no matter which way you slice it, Shawn is so way off here it isn’t even funny. It would be sad if it wasn’t obvious why he was making this stuff up.
Perhaps you could be more specific or is that to much for you?
LOL
Its funny you dont even explain why my numbers dont make sense.
I dont know how you can seriously suggest that $5 billion/month is needed for game sub service.
$5billion/month could fund all of microsoft,sony and Nintendo first party as well as netflix + amazon video combined and you would still have a couple of billion in change.
Well, you see, your numbers don’t align with his meritless argument, so clearly they were derived from the anus. However, his wholly fabricated and arguably baseless conjecture of 500 games costing 10 million dollars each per month is right and true. Because…reasons.
