What's behind Xbox’s platform (& subscriber) moves?

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[The GameDiscoverCo game discovery newsletter is written by ‘how people find your game’ expert & company founder Simon Carless, and is a regular look at how people discover and buy video games in the 2020s.]

We’re back, and we finally have the time and space we need to discuss what a big deal the latest multiplatform moves by Xbox are - or frankly, aren’t - given the state of the PC & console game biz in 2024.

And before we start - did you know that the voice actor who performed the ubiquitous ‘PEGI 18’ European ratings logo voiceover was paid just 200 Euros for it, 15 years ago? (Weird - wonder if the lion roaring in the MGM logo got steak-based residuals?)

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Analysis: Xbox’s platform (& subscriber) moves?

Sometimes a little time brings some handy perspective. So it’s great we had a few days since that ‘Xbox management lays out the future’ video podcast for a lot of the teased announcements to roll out.

Last week’s announcements that certain Xbox first-party games were going multiplatform unfortunately… lacked the name of the games. But they were widely leaked, and today’s announcement confirms that:

• Obsidian’s quirky medieval narrative adventure Pentiment (already on Xbox/PC) is coming to PS4, PS5 and Nintendo Switchon February 22th.

• Tango Gameworks/Bethesda’s rhythm-based action game Hi-Fi Rush is coming to PlayStation 5 on March 19th.

• Co-op miniature survival game Grounded - also from Obsidian, and 20 million players strong, will be coming to PS4, PS5 and Switch on April 16.

• Rare’s co-op and PvP piratical adventure game Sea Of Thieves, which has 35 million players between Xbox and PC, will be coming to PS5 on April 30.

As the announcement notes: “These titles join franchises like Minecraft, Call of Duty, Overwatch and Diablo – which already reach players and fans on multiple platforms.” So to some extent, there’s nothing to see here. But in other ways… there’s quite a lot to see.

What has changed to roll these games out multiplatform? Well, just as we discussed with Sony last week, Xbox is finding that there’s money to be made on other platforms, and the upside of going ‘more multi-platform’ is bigger than the downside.

You will notice that Xbox is being more aggressive about this than Sony, though. Sony is at the ‘more Day 1 launches on PC’ stage (see Helldivers 2), whereas Microsoft is all the way at ‘also launch big Xbox games on the PlayStation hardware’. We think there’s two main reasons for that:

Hardware penetration for the current-gen Xbox: given that even Sony is struggling to make its PS5 console sales goals, with a major recent downgrade, and it may be outselling Xbox Series X/S by 2:1, the ceiling for the market is likely being reached.

In fact, Circana’s Mat Piscatella just shared a graph of U.S. video game hardware spending by year since 1994, noting: “The US video game hardware market is… a mature market at this point.” And it certainly is:

Of course, there are still possibilities for international growth. PlayStation, in particular, is seeing growth in the Middle East and (via gray market imports) in mainland China. But Xbox’s chief ‘console/Game Pass’ markets - the U.S., the UK, Brazil, France, Germany and Mexico, we believe - are largely on the mature side.

Flattening of the Xbox/PC Game Pass growth curve: the subscription business is really hard. (We know, since we run one.) As the years progress, you get a combination of both voluntary - ‘I opt out!’ - and involuntary - ‘My credit card expired!’ - churn.

And this need to continually ‘top up the funnel’ means that, as you get new subs in, almost an equal amount fall out of the bottom. In addition, Xbox has a lot of historical ‘Xbox Live Gold’ subscriptions which obfuscate the situation.

As a reminder, we wrote a newsletter about the ‘subscriber shuffle’ back in October 2023, referencing leaked data that “total paid console subscriptions for Xbox [including both Xbox Live Gold & Game Pass] were actually down slightly (5%) between April 2021 and April 2022, to 33.6 million.” (At the time, Xbox was only listing Game Pass milestones.)

There was then a change of classification, and Xbox Live Gold is now Game Pass Core. Thus, we predicted that as a result, “you’re very likely to see Xbox report it has more than 30 million Game Pass subs in the near few weeks/months.”

We hate to Nostradamus you. But yes, Xbox announcing 34 million Game Pass (Core & non-Core) subscribers last week was exactly that report. And it arrived with an interesting, semi-related flub, per The Verge:

”While Xbox president Sarah Bond mentioned that 34 million Xbox Game Pass subscribers will have access to Diablo IV next month, the game won’t actually be available to all Game Pass subscribers. “The 34 million Game Pass membership number is accurate. Diablo IV is coming to Xbox Game Pass on March 28th, with the exception of the Xbox Game Pass Core catalog,” says Kari Perez, head of communications for Xbox, in a statement to The Verge.”

To some great extent, this is Xbox optics at work. And when we thought of it, we realized - Xbox is doing pretty well overall at convincing a) people to upgrade from Gold/Core b) getting brand new subscribers.

They were just contending with a massive existing base of Xbox Live Gold subscribers (17 million in April 2021), some of which were barely paying attention to it hitting their credit card statements - as always happens in subscription businesses.

As to where this all nets out? You may be almost as confused as us. Somebody who’s tried to work it out is ‘enpleinjour’ from the Install Base Forums, who made this graph & some commentary based on public & leaked data:

How much of this is correct, vs. some kind of Pepe Silvia fan hallucination? Actually, it seems largely good, and it also weaves in the Xbox ‘leadership chart’ targets - which were presumably ‘big hairy audacious goals’ for the subscription business. The main thing you will see is - yes, there’s a lot of flattening vs. those big goals.

‘Enpleinjour’ is excluding Game Pass Core from this graph. So it’s listing last week’s milestone as 29 million Game Pass subscribers. Therefore, he suspects there are around 5 million Gold/Core subscribers left - massively down from that 17m figure.

And when asked about this by Game File’s Stephen Totilo, Xbox’s Phil Spencer seems to back up that the amount was fairly low: “Game Pass is indeed growing, he said. People who previously had Xbox Live Gold but not Game Pass who could be added to the tally last year was ‘a pretty small number.’.”

So is Xbox ‘messing this up’? Absolutely not - this is a market ceiling issue. Sony is having very much the same issue with PlayStation Plus. It was somewhat unreported, but in this Q3 results transcript [.PDF], PlayStation announced a “slight year-on-year decrease in the number of PlayStation Plus subscribers”, but “revenue increased 11% year-on-year”, due to price increases and shifts to higher tiers.

And for PlayStation’s next fiscal year, they said that “we expect subscribers to be on par with this fiscal year, or slightly less.” Now, we know PlayStation Plus is slightly less ‘front and center’ that Game Pass is - and PS+ Essential is kinda a Gold equivalent, confusing the comps - but you get the idea. (Subscriber churn is a big issue here too.)

Conclusion: Xbox’s evolution looks a lot like other ‘content providers’…

So where does Xbox go from here? On that podcast last week, Xbox’s Matt Booty showed that he gets it, saying: “We've kind of seen this inversion over the past 5 years where it used to be that the platform was the biggest thing, and the games would tuck in within the platform. Today, big games like Roblox or Fortnite can be bigger than any one platform. So that really changed the way we think about these things.”

And what does this mean for Xbox’s own (non-ActiBlizz) studios? Well, we’re probably out of the honeymoon-ish Pentiment phase for them, in terms of ‘make something beautiful, and we’ll semi-bury the costs in the Game Pass P&L’. (There should still be some appetite for this, but it’s going to be limited by the modestly expanding size of the Game Pass ‘pot’.)

Making games isn’t cheap - especially not for the large, scaled North American & Western European internal studios that Xbox owns, especially compared to the (relative bargain) prices it can license third-party game content onto Game Pass for.

So unless you can prove prestige first-party titles are retaining subscribers, there’s going to be more focus on GaaS-ish Grounded & Sea Of Thieves-like games that can also monetize on other platforms. Y’know, like the rest of the industry works? Makes sense!

Public ‘pitch decks’: yes, we have some more…

Just a quick one, here, but you may remember that we launched a public pitch deck archive a few weeks back, featuring dev-created pitch decks from unreleased & released games from Cosmoteer to Trash Goblin and beyond.

Well, thanks to some kind devs, we have another four pitch decks on our ‘free’ GameDiscoverCo pitch decks page across on GameDiscoverCo Plus. Once again, it’s a blend of already-out and yet-to-debut titles.

These include Star Drifters’ First Dwarf (pitch deck, Steam page), an unreleased ARPG base builder where you’re a “dwarven scouting engineer, sent in his mana-powered mech to explore new lands hidden in the clouds.”

Other newly public pitch decks are for games including platformer Captain Soda, narrative puzzler Lil Guardsman, and dice building game Dice Of Olympus. And yes, we know that some of you see a lot of (too many?) decks. But for those who don’t, and want to make their own, resources like this are helpful to benchmark against…

The game discovery news round-up…

Finishing off the ‘free stuff’ for the week - Plus subscribers, you get actual game analysis on Friday - here’s what we spotted in discovery news this wek:

• Always good to check in with the Footprints.gg top ‘trad media’ mentions for games for the last week. This time, the breakout success of Helldivers 2 heads things up, closely followed by Skull & Bones (for better or worse), Diablo IV and Palworld. (Lots of evergreens in here.)

• Nintendo’s latest Direct (video, official press release) was largely ‘late-period Switch business as usual’. But it included a Disney Epic Mickey: Rebrushed reveal, Rare-created games like Killer Instinct and Battletoads in Nintendo Switch Online, and good-looking 3D platformer Penny’s Big Breakaway stealth launching.

• Why are ‘giant hit’ high-CCU games difficult to technically maintain? One of the key network folks on Dauntless has a Twitter/X thread about it which discussed the super-complex tech factors at play: “we planned for 260k ccu peak (players online). during open beta (2018), we'd hit 65k with some wrangling. it fell over at 10k ccu. took 3 weeks of 15 hour days 7 days a week to get it stable.”

• We’ll return to this, but Steam’s 2023 summary/year in review is here, including some fascinating stats: “2023 was the first year in Steam’s history where more than 500 games earned more than $3 million in gross revenue - in that calendar year alone… that’s more than double the number of games hitting the same threshold.. in 2018.”

• Xbox’s next set of Game Pass titles for February are upon us. And again, they’re pretty good - spanning Bluey: The Videogame, Tales of Arise, Warhammer 40,000: Boltgun, and also the cloud version of Madden NFL 24, if you have Game Pass Ultimate/EA Play. Bluey/Warhammer crossover wen?

• Minecraft has introduced ‘add-ons’, which is a) a big deal, but also b) confusing, as PC Gamer explains: “It seems the term is now being reserved for add-ons which can be added to existing worlds, and which can be combined or removed at will - rather than being tied to a world pre-made for the mod, in the way of past Bedrock add-ons.” So yep, things (pets, computers, etc) you can stick into your existing world.

• Benefict Evans pointed out in his newsletter that not one single of the Apple Arcade ‘spatial games’ for Vision Pro is VR-only, even though it’s technically 100% possible. (They are all ‘mixed reality’.) Apple has obviously decided VR is bad - the PR focuses on “amazing new gameplay opportunities by blending digital content with the physical world.” (And lack of game controllers limits VR ports.)

• A good catch by Tweaktown’s Derek Strickland here: “PlayStation recently hit 123 million MAUs. SIE CEO Hiroki Totoki mentions that one particular F2P game significantly contributed to the new user record. Roblox was released on PlayStation [on] Oct 10, right at the start of the Q3'FY23 period in question.” Wonder how many of these were PS4 users vs. PS5! (Roblox is available on both.)

• GDCo Plus subscriber Liam Cary spotted a big VR milestone: “Gorilla Tag just became the first ever app/game to surpass 100,000 ratings on the Meta Quest store! Thats roughly 2x as many ratings as the 2nd and 3rd most rated apps, Beat Saber ($35) and Gym Class Basketball (free).”

• Microlinks: Humble has now helped players raise more than $250 million for charity over the firm’s lifetime; there’s an interesting ‘Game developer’s guide to the Chinese market’ .PDF available here; mobile firm Space Ape Games (Beatstar, Chrome Valley Customs)talks turnaround success - and hiring Xzibit to help UA!

Finally, we were kinda surprised to see The Guardian interviewing the creator of PlayStation 4/5 game Stroke The Beaver (and, yes, Stroke The Dik-Dik), especially since we thought Sony was addressing Platinum Trophy shovelware.

Well, “Since launching in September 2022, the Stroke games have been downloaded more than 120,000 times, amassing over £275,000 in sales.” These ones must have sneaked under the radar? Sony gamers’ lust for easy Platinum trophies will never be sated:

[We’re GameDiscoverCo, an agency based around one simple issue: how do players find, buy and enjoy your PC or console game? We run the newsletter you’re reading, and provide consulting services for publishers, funds, and other smart game industry folks.]