E3 proved that video game publishers want to become Netflix

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With the first details coming out around the next Xbox and PlayStation, you might expect those upcoming consoles to be the buzz of this year’s E3. But instead, subscription services have become the talk of the show, as seemingly every console maker and game publisher looks to shift the way that games are sold.

Every major publisher is racing to offer the first real “Netflix for games,” selling games to players via a monthly subscription service. Ubisoft is launching its own subscription service, UPlay Plus, and Final Fantasy publisher Square Enix is also looking to launch one too. That’s on top of Microsoft spending millions of dollars acquiring game studios in an attempt to fill out its catalog for Game Pass subscribers; EA’s Origin Access for PC players, which offers EA games for a monthly cost; and Nintendo introducing Nintendo Switch Online last year which comes with classic NES titles for a monthly or annual fee.

This doesn’t even account for new cloud-based services like Microsoft’s xCloud, which will allow Xbox players to stream their games on mobile devices, or Google Stadia, a cloud-based console that can be accessed on any device. Sony already has PlayStation Now, its own game streaming service. Stadia and PlayStation Now both require subscriptions, and xCloud is likely to offer a subscription component as well.

People increasingly want to experience games the same way they experience other facets of entertainment, with instant access to a breadth of options. Demand for physical games has bottomed out, affecting mega chains like GameStop, as more people move to digital. Analysts like Newzoo founder Peter Warman says the gaming industry is also facing a lack of “fresh, innovative blockbuster titles replacing the current, aging top titles.” Giving people a subscription service that includes new games and old favorites addresses that problem and offers publishers a constant source of revenue.

The move to subscriptions is about meeting “players’ needs” and making it “easier to access our extensive catalog,” said Brenda Panagrossi, Ubisoft’s president of platform and product management.

The streaming wars that have circulated TV and film have come to games, and the parallels are similar. Like the brewing battle between Netflix, Disney, WarnerMedia, NBC Universal, and Hulu, game streaming services will have to justify their monthly or annual costs with an impressive catalog of content.

This is partially why the Microsoft gaming team has spent years acquiring game studios, according to Phil Spencer, head of gaming at Microsoft. Spencer announced this year that popular indie games developer Double Fine would be joining the company, for example, as Microsoft tries to bulk up its Game Pass offerings.

“I think you will find that the things that get to scale and offer the most value early will be the long-term players,” Spencer told The Verge. “I don’t think there’s one, but I also don’t think there are 100 different subscriptions [that will be successful]. How do I build my library? Game Pass is a great way for you to secure a bunch of content.”

As more companies like Ubisoft and Square Enix start thinking of entering the race to dominate subscription-based services, Microsoft has one major advantage: a low cost. Xbox Game Pass is only $9.99 on both console and PC. That’s cheaper than Ubisoft’s proposed $14.99-a-month — in fact, for $14.99 players can pick up Xbox Game Pass Ultimate, which bundles PC and console play, and offers a free subscription to Xbox Live Gold for online multiplayer. The only cheaper option available right now is EA’s Origin Access at $4.99 per month (or $29.99 per year), but it doesn’t have the same extensive library offering that Game Pass does.

The advantage that Ubisoft has is its partnership with Google Stadia, the upcoming cloud-based streaming console. Ubisoft will launch UPlay Plus on Stadia in 2020, offering players more than 40 games to play at launch. It’s the first partnership between Stadia and a third-party publisher, but it’s not going to be the last. Google seems to be relying on major partnerships with third-party publishers more so than developing its own games to recruit subscribers. Stadia chief Phil Harrison announced earlier this week that Google is open to hosting other publisher’s subscription services — something that the Stadia team is hoping to leverage on top of its own $9.99 Pro subscription.

What’s obvious, based on comments made during the convention by top executives at major publishers, is that subscription services and streaming has become the future everyone is racing toward. Square Enix CEO Yosuke Matsuda told Game Informer that “everyone is going in that direction,” adding that the company wants “to be proactive in considering these options.”

“We do already provide games for Microsoft’s Game Pass,” Mastuda said. “But at the end of the day, the direction that we’re thinking about is having a channel of our own.”

If those comments sound familiar, it’s because other major entertainment CEOs have used indistinguishable language. Disney CEO Bob Iger told The Hollywood Reporter in September 2018 that pivoting to streaming with Disney+ was imperative. It gave Disney more control in a space that was dominated by people looking for specific experiences. More companies would jump on the streaming bandwagon in order to keep up with a shift in consumer demands, Iger argued. He was right — close to 10 streaming services have either been announced, launched, or are gearing up to launch since then.

Xbox’s Spencer couldn’t agree more. He told The Verge that he doesn’t “think we’re going to end up with 100 successful subscriptions out there,” even though it feels like everyone is trying to launch. That’s why it’s important to start planning big now.

“We think having a great flow of games coming to Game Pass is really important,” Spencer said, talking about acquisition decisions. “We think having first-party teams building games to make that service continue to grow is an important part of our future.”

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