The two market leaders, Xbox and PlayStation, alongside other competition like Nintendo, Ubisoft and Electronic Arts, among others, might want to sell you their respective subscription services, proudly telling everyone about their year-on-year growth. But, it appears that, just like their counterparts in the music and movie industries, their growth might have already reached a plateau.
With companies like Microsoft not releasing subscriber numbers since January 2022 and the overall subscription market accounting for only about 10% of annual video game spending in the U.S., questions arise about the future trajectory of these services.
Xbox Game Pass, a key player in this domain, had reached 25 million subscribers in early 2022. An employee’s LinkedIn profile hinted at 30 million subscribers, but there was a quick retraction, leaving ambiguity about the actual figures. As we go deeper into 2024, Omdia analysts, in a recent interview with IGN, estimate that the popular gaming subscription service had approximately 33.3 million users by the end of 2023. Despite impressive growth, there was a slight decline in the growth rate compared to the previous year. The majority of these subscribers are on the Xbox Game Pass Ultimate tier, which offers device-agnostic access.
2023 was a strong year for Game Pass, with titles worth $9000 and 50-day-one releases, offering substantial value to its subscribers gamers. The service will continue this momentum with 40 day-one releases confirmed for 2024 already. Not to mention, the successful merger with Activision Blizzard could enhance the service’s catalog, adding popular titles and potentially increasing subscriber numbers.
Despite these positive indicators, the industry’s overall sentiment towards subscription services remains cautious. Many prominent developers and industry analysts emphasize the importance of maintaining the traditional models of selling games directly to players. Case in point, Larian Studios’ CEO, which came in direct response to Ubisoft’s blunt statement about how gamers should accept the shift in video game ownership already. Finally, concerns are also raised about the long-term viability of these subscription models, particularly when considering the substantial costs involved in producing AAA titles.
Ultimately, the data suggests that subscription services aren’t dominant yet and are unlikely to become the sole means for game distribution in the near future, as succinctly explained by Circana’s resident video game industry analyst, Mat Piscatella. This perspective is further supported by the performance of platforms like Steam, which continues to be a central hub for gaming despite the rise of subscription services.
On the technical front, cloud gaming, a major component of video game subscription services, faces challenges. Players report inconsistent experiences with Xbox’s cloud gaming, citing issues with server capacity and stability. In fact, cloud gaming isn’t available worldwide yet. The same goes for cloud streaming on PlayStation 5, forcing Sony to release the PS Plus Deluxe subscription variant in areas not supported by its cloud streaming services. This variability in user and gameplay experience indicates the need for further financial investment and technical development in cloud gaming technology to support the growth of subscription services, which costs a lot of money that neither Sony and Microsoft might be willing to put in anymore.
While subscription services such as Xbox Game Pass and PlayStation Plus have brought significant changes to the video game industry, their growth seems to have plateaued, accounting for a relatively minor portion of the overall revenue. The future of these services will depend on various factors, including technological advancements, content quality, and consumer preferences.
As the video game industry and consumer tastes change, it remains to be seen how subscription models will adapt and whether they can sustain their growth in the long run.
