New PlayStation Plus Subscription Makes It Easier To Find Value
This week, PlayStation launched a new PlayStation Plus subscription, a simplified subscription service that brings together PlayStation Now and PlayStation Plus. Currently, the two subscription services combined have about 50 million subscribers, most of which subscribe to both services. In the past, users had to choose whether they wanted the streaming service offered by Playstation Now or the online multiplayer capability offered by PlayStation Plus and a handful of free games to download and keep. The new PlayStation Plus delivers a tiered approach to the service, making streaming available only in the Premium offering. Here is what you can get:
- PlayStation Plus Essential costs $9.99 per month (or $59.99 yearly). Players will get online multiplayer access, cloud storage for saved games and two games to download and keep per month. This matches what PlayStation Plus as it is now.
- PlayStation Plus Extra is $14.99 per month (or $99.99 yearly). It grants you everything in the Essential tier, plus access to a library of the “most enjoyable” PS4 and PS5 games for download.
- PlayStation Plus Premium brings together the other two tiers’ offerings and adds cloud streaming of PS3 games and streaming or downloading original PlayStation, PS2, and PSP games. At $17.99 per month (or $119 yearly).
Many are interested in making a comparison with Xbox Game Pass, which right now offers two tiers:
- Game Pass is $9.99 per month ($119 yearly), giving Game Pass access on a PC or console without support for multiplayer gaming. PC Game Pass subscription holders also get access to EA Play.
- Game Pass Ultimate, $14.99 per month ($179 yearly), unlocks Game Pass for Console, PC, EA Play offerings, and online multiplayer.
As tempted as we might be to compare the two services, the reality is that most consumers are not choosing where they game based on the subscription but based on the content and the devices they can use to game.
When it comes to streaming, PlayStation and Xbox see eye to eye. There is no question that streaming will play a big part in the future of gaming. However, as we have seen very clearly during the pandemic, today’s reality is that good connectivity is not yet ubiquitous, not even in the US. Fast broadband and higher data caps are also expensive. These two factors make associating streaming with the premium tier of the subscription the most logical thing to do. Of course, associating streaming with the premium tier also sets these platforms up for a better return on investment in the future, as running these services incurs higher infrastructure costs for them.
Where I see a marked difference is how these two platforms think about the relationship between subscription and content. It seems clear to me that Xbox sees content as driving value to their subscription. Microsoft wants consumers on Game Pass Ultimate, and even better if those subscribers also buy into Microsoft 365. The future for Microsoft is about creating stickiness across all their platform through a value add of subscriptions that also drive additional revenue. Of course, this is easier to do so when you own your cloud to enable it all.
While many AAA publishers are reluctant to add their most recent releases to a subscription, there is an opportunity for further monetization that comes from in-game purchases, which the wider audience of a subscription offering might enable. In addition, including bigger titles to the subscription will also allow for better discovery and ultimately capture more players than those who would have invested in one-off game purchases.
“We feel like we are in a good, virtuous cycle with the studios, where the investment delivers success, which enables yet more investment, which delivers more success yet. We like that cycle, and we think our gamers like that cycle. [In terms of] putting our games into this service, or any of our services, upon their release… as you well know, this is not a road that we’ve gone down in the past. And it’s not a road that we’re going to go down with this new service. We feel if we were to do that with the games that we make at PlayStation Studios, that virtuous cycle would be broken. The level of investment that we need to make in our studios would not be possible, and we think the knock-on effect on the quality of the games that we make would not be something that gamers want.”
While I understand first-party games have always been the pride and joy of PlayStation, I think consumers might be getting more critical about having to wait a couple of years to see the great content included in the subscription. After all, the video content streaming providers are getting them used to have great content as part of the subscription. For example, take Apple and their current lineup for Apple TV+ that now includes Oscar-winning CODA. Or Netflix and HBO Max, including home productions such as Bridgerton and Euphoria.
Considering Ryan also said, “All I’m talking to today is the approach we’re taking in the short term. The way our publishing model works right now doesn’t make any sense. But things can change very quickly in this industry, as we all know.” I am also confident that including PlayStation Studios game might be a question of making the numbers work. As the subscription numbers grow, the economics of adding PlayStation Studios games to it might just make more sense. The aggressive annual pricing for new PlayStation Plus subscriptions bodes well for attracting new users. In particular, the Premium tier offers PlayStation the opportunity to upsell current PlayStation Plus subscribers from the Essential Tier they will be on when the new plans kick in this June. If I am right, Ryan might be reconsidering the distribution of first-party games sooner rather than later.