Technology

Ex-Xbox executive says he’s ‘afraid’ of Game Pass’ potential impact | VGC

Ex-Xbox executive says he's 'afraid' of Game Pass' potential impact |  VGC
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Ancient Microsoft exec Ed Fries has expressed concern about the potential impact the company’s Game Pass subscription service could have on the games industry.

Speaking in a wider interview with Xbox Expansion PassFries – which was part of the original Xbox launch team before he left in 2004 – he was asked what he would do if he was still part of Microsoft’s gaming team today.

Fries didn’t give an explicit answer, but said he was “afraid” of the impact Game Pass could have, should it become a mainstream business model like Spotify’s in the music industry. He also made sweeping claims about Spotify’s impact on the music industry, some of which have been disputed by experts.

Xbox Game Pass launched in June 2017 and has become a central part of Microsoft’s gaming business, giving members access to over 100 titles for a monthly fee.

As of January 2022, Game Pass has over 25 million subscribersaccording to Microsoft, it therefore still has a long way to go before it reaches the level of Spotify (182m) and netflix (222m). In fact, it has recently been estimated that subscription services represent only 4% of annual game revenue in Europe and North America, compared to 65% of global music revenues.

Xbox – May 2022 Games with Gold

Both Microsoft and PlayStation said they don’t believe subscriptions will ever be the dominant model in video games. However, the former head of MS Fries encouraged platform holders to be “cautious” about the business models they create.

“The only thing they do that makes me nervous is Game Pass,” he said. “Game Pass scares me because there’s a somewhat analogous thing called Spotify that was created for the music industry.

“When Spotify took off, it destroyed the music industry, it literally cut the music industry’s annual revenue in half,” the former Microsoft executive said. “It’s done so that people don’t buy songs anymore.

“People don’t buy songs on iPhones for example, why would you? They are all on your subscription service app. Apple‘s said they were going to withdraw the purchase of songs because no one buys them anymore.

“So we have to be careful not to create the same system in the gaming sector. These markets are more fragile than we think. I saw the game industry destroy itself in the early 80s. I saw the educational software industry destroy itself in the mid 90s…they literally destroyed a multi-billion dollar market in a few years.

“So Game Pass makes me nervous. As a customer, I love it. I love Spotify as a customer: I have all the songs I want…it’s a lot as a customer. is not necessarily good for the industry.

Fries went on to wonder if it’s possible for game developers to embrace subscription platforms as seen in the music business.

“At some point it flipped and everything had to be [on Spotify]. The percentage of all games that are on Game Pass is still tiny, and there are a lot of games. 200 games per week are released on Steam and more than that are coming out on mobile.

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Some of Fries’ claims regarding Spotify have been strongly disputed by music industry journalist Tim Ingham, editor of The music industry around the worldwho told VGC that the impact of streaming on the music industry overall has been extremely beneficial.

“Spotify didn’t halve the music industry – piracy did,” he said. “Spotify and the cloud-based technology it’s built on have actually given music fans a more convenient, legal, and monetized alternative to piracy.

“And then, once consumers got comfortable with it, Spotify (and its rivals) performed another miracle: selling hundreds of millions of music consumers to a subscription via monthly billing…despite the keeps the same free alternative, music piracy, available in any browser!”

He added: “Perhaps the biggest issue the music industry faces with Spotify today is whether its free tier remains fit for purpose, as consumers are so accepting of the paid subscription paradigm. And make no mistake: subscription as a model is cherished by the modern music industry; it has taken the entire industry back to commercial heights that many thought Napster and Limewire had extinguished for good.

Ingham pointed to the figures of IFPI which show that since 2011, when Spotify was launched in the United States, the global recorded music industry has grown by 73%, from $15 billion in annual revenue to $25.9 billion in 2021.

In response to Fries’ comments, ReedPop’s head of B2B games Christopher Dring acknowledged concerns about the impact subscription models could have if they ever reach Spotify’s scale, but wondered. if they ever would.

“Right now, there are a lot of stories about how subscription services have been additive for game creators. to millions of people,” he said.

“There are many examples of games entering a subscription service on one console, becoming extremely popular, and this has caused normal sales to increase by $60 on other platforms.

The former Xbox exec says he has

“The industry is concerned about what might happen if subscriptions become dominant, as they have in music and television,” he added. “The subscription model doesn’t necessarily generate the revenue needed for AAA games, especially single-player games without microtransactions…you can see why sony is reluctant to put its latest releases in PS Plus.

“However, games are very different from music and television. These linear forms of entertainment are much shorter and more digestible. How many songs or TV shows do most people consume versus games?

“If you’re someone who only plays a few games a year – like FIFA and Call of Duty – how likely are you to subscribe to a service with hundreds of options? It remains to be seen how well the services game subscriptions will become important.

Microsoft argued that the additional monetization opportunities in games differentiate it from streaming services for other mediums, such as video on demand.

Unlike video streaming platforms, Game Pass users continue to spend money through in-game transactions, expansion content and the purchase of additional games, the company said.

Microsoft CEO Satya Nadella claimed last year that Xbox Game Pass subscribers play about 40% more games and spend 50% more than non-members.