With the current crisis dynamics and oncoming recession, games streaming adoption will likely only be catalysed, potentially at the cost of margins for pure games companies in the near- to mid-term: Their financial and strategic positioning alone makes them considerable competitive market participants going ahead.
The current macroeconomic.Ĭue the disruptors, who in this case are not plucky start-ups, but some of the most powerful companies in the world-fully financially capable of sustaining loss-leading projects to create synergies elsewhere in their business model. Though parts of the games industry still stigmatize in-game purchases, the business model is a fundamental part of a successful and sustainable growth formula for games companies. How in-game spending will eat the games world Arguably, a large part of this addressable audience is still up for grabs, not just in the console space but also in the pc and mobile gamer segments. The point is that the majority of the games streaming addressable audience is not yet 100% secured for either Xbox or PS. No wonder behemoths like Take-Two interactive are comfortable holding back on games streaming. The ‘all you can eat’ proposition for a limited price makes it harder for the unit economics to encourage pure-play games companies to take the leap. There is a good commercial reason behind it – simply put, consumers are educated to spend significantly more money on games titles than they ever did with music or video. Despite some games streaming services existing for years, gaming is behind on the streaming service adoption curve, compared to music and video. In Q1 2020, only 11% of monthly active console gamers use Xbox Game Pass weekly, compared to 8% using PS Now as stated by MIDiA Research’s Q1 2020 Survey of 4000 respondents across the US, UK, Australia and Canada). While this makes up for a good news story of high percentage increases and the inevitable ‘who got more faster’, the overall audience size is still very much niche, i.e. Xbox Game Pass now has 10 million subscribers and PlayStation now has 2.2 million subscribers. Both PlayStation (PS) and Xbox have recently announced significant increases in their games streaming service user bases.
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