Take-Two CEO "Highly Skeptical" of Gaming Subscription Business Model Viability

Earlier today, Take-Two Interactive CEO, Strauss Zelnick, talked about his thoughts on the gaming subscription business model.

[ApocalypseShadow]

Think of how much Microsoft would have to pay to put GTA 6 on game pass. Why would Take Two allow gamers to play their games for $1-$10 dollars with how much money it takes to produce and market their games?

Cheap games sure. Millions of users sure. But not big budget games. With SALES of games, you clearly know what you're making back as a publisher. And Take Two knows that.

After sales have depleted, then why not. Which is what they support now.

[dcbronco]

Take two is an exception. But most games don't sell 30 million copies. The vast majority don't sell 2 million copies. Those games are fine on subscriptions. But if you have a subscription service you can do huge business with enough studios and features. It's better to have an ecosystem than a stand alone game. Someone gets Game Pass for a game, but they stay for xCloud. Or EA. Or the exclusive coming in two months. Once you add AAA titles the subscriptions pay for the developer cost and since Microsoft has Azure business customers pay for the servers. Business customers like Sony.

[ApocalypseShadow]

You're talking about the idea of waiting for that big game that justifies paying monthly. Sorry. I wouldn't go for that. It's the same as Netflix. Most of the movies and TV shows are things you already saw or weren't interested to watch it during its movie or tv run. Paying monthly waiting for that one big movie or Netflix original to justify paying. Know what's similar that WILL happen to game pass: THE PRICE WILL GO UP to make up for Microsoft's spending. Netflix just went up again. Game pass is sure to hit your pocket eventually.

With my method, it's simpler. I see a game I want, I buy it. No extra cost. No ties to a subscription. It's mine to keep. No delisting of my purchased game.

Microsoft may be fine playing the long game of spending 500 million making Halo and throwing it on game pass. And because of Craig, they will be spending millions more fixing that title and remarketing its new release window. But other companies want to make money upfront. They spent years making a game. They want to recoup that investment. Not wait for enough users to spend $1-$10 then cancel. What would Take Two make out of that $1?

You saw GTA 5 sold 135 million. You think Take Two is interested in a service with those numbers and those profits? Hell no. Maybe a smaller company trying to get noticed in a sea of games. But big companies aren't interested unless you got a big CHECK.

[rayford15]

@dcbronco Buddy musta felt like the man typing this bullshit 😂

[VenomUK]

It's interesting to read the Take Two CEO's views on this because there has been a lot of chat from all the heads of these subscription services that paints a picture that this subscription business model will be the only way forward for gaming. Obviously Strauss Zelnick leads a major publisher so his views are informed and have weight that perhaps, the subscription promised land might not be the primary way we access games. Time will tell.

[PushaLex]

@ApocalypseShadow,

Hey You can still buy your games on Xbox without being tied down by any subs. What I am afraid of is Gamepass being the drm Trojan horse. I have 300+ games granted not all are installed. I’m subscribed to Ultimate but when I want to play games offline, my game library is not available to me on my HOME console. I have to be online cause of Gamepass to access my library. And I’m sure there are others out there but no one is listening to us cause we’re the minority. Good day 🙏🏾👊
27998;

[ABizzel1]

I see GamePass from both sides. I see the benefit as someone who has a young gamer (my little brother) and allowing them an instant and diverse library of games and only having to buy them a few games per year. In that regard GamePass is a success for us.

But on the flip side, I don't have as much time to play that many games, and I've gotten to a point where if the game isn't up to top tier quality it's almost an instant pass for me if it doesn't execute top tier gameplay and or story/world. So for me, I'd rather just buy around 6 or so games per year and be golden, and use my Gamefly to try games I want to test out.

GamePass is an easy fix for kids and I'd even say many or most Xbox players eventually (we'll see what Xbox studios put out when they hit their stride in 2022). But it's not enticing for PlayStation players when they constantly have GOTY nominees and winners year after year. Until GamePass gets that quality of game and day and date, it's not quite the golden model to get people to buy an Xbox, who prefer other platforms.

And as others have said it's inevitably going to go up in price year after year just like Netflix and others to maintain the cost of those quality games and the quantity of content needed to keep it refreshing, and the thought process of using the F2P model, but heavily entice people that if they really want to win or complete content they're going to have to pay, which is a gaming future I want to hold off on for as long as possible, as it's inevitably going to end up that way.

GamePass is good where it is now, because MS is basically giving it away so they can get as many people on board as possible, but it's the old hook of get them in low, then gradually bill them more, and strategically reduce content or add hidden paywalls to get more money to actually make a profit off the service.

[dcbronco]

@ZeroBlue

Not at all. If you have enough studios it gives you more than enough time to let games be properly fleshed out. They're not going to release 2 or 3 games a month. They'll release one 1st party a month with maybe 4 a year being AAA. With 23 studios that gives you at least two years between games. But since most are Arcade or AA games you can give AAA 3 years each or more because you between those 23 studios you could have more than one AAA team. Like Bethesda.

@Apocalypse

No. I'm not. Most people play a game more than a month especially if it has multi player. But you're also getting 8 other games besides the AAA. It's nothing like Netflix because it's not things you've already played. It's all new content.

And this nonsense that Game Pass is expensive is ridiculous. The most expensive part of it is content and maintaining servers. Microsoft owns the servers and the ones used for xCloud, Live and Game Pass are paid for by business customers who pay high prices for cloud services. Look at what businesses pay. Microsoft laid their own deep sea cable years ago so they get that cheap. They switched to Epyc CPUs which are cheaper to operate. So less cooling and electricity to run them. Most of the content is 3rd party now but much of that will change. You'll still have the older stuff, you'll have older EA for sports and you'll have 23 or more 1st party studios. Btw, last time I checked Netflix was pretty profitable.

[dcbronco]

Abizzel
I understand from your view. But for people with less money or that bounce around from game to game it's a bargain. And people whining about an eventual price hike should be worried about the guaranteed $10 extra Sony will be getting.

Apocalypse bring up Take2 is a joke. The vast majority of games will never hit close to those numbers. I know it works well for your argument but it's unrealistic. The fact that a game can't guarantee those types of numbers is why they go to a Game Pass. Most games barely break even if they do at all. It's better to get financial help from Microsoft in exchange for GP inclusion than to risk going out of business every time you release a game. Currently that's the reality. Most companies could lose it all with each game. GP guarantees income.

[RazzerRedux]

I think the problem with these subscriptions is the constant need to keep folks on the hook to continue paying. That's probably why MS is envisioning a 10 year model for Halo Infinite. And that may be want some people want, but I don't personally want to play the same game for 10 years. And yeah, these services have other games, but I'm staring at the Ubisoft+, Game Pass, and EA subscriptions and still having a hard time finding anything I want to play outside of Watch Dogs Legion and AC: Valhalla.

So I'm subscribed to Ubisoft+ for now, but if I can finish those two games in the next month then I will have ended up paying $15 for two $60 games and then ending the sub. And then the next time a game from Microsoft, Ubisoft, or EA comes along that I want to play, I'll subscribe, play, unsubscribe when done. Great for me as I'm paying these companies a heck of a lot less money than I would otherwise, but as far as these companies sustaining this? Yeah....don't see them continuing to deliver true AAA games at the current subscription price points.

[dcbronco]

But that's where you're wrong. You explain why it works but you think about it wrong. Because you're paying $30 for two games you feel it's a bargain. A lot of people will think of it that way. People who would never have spent $60-70. Or Australian prices. It's such a bargain that a lot more people try it for two months. Offer enough bargains and you have a steady 20-25 million subscribers. You're now making 300+ million a month. That easily pays for all of your exclusives for the year in two months. Another two months cover expenses and the remaining 8 are gravy. How many billions does World of Warcraft make with 10-12 million people? Game Pass is a gold mine. The quarterly earnings prove it.

[potatoseal]

That's where you're wrong. The quarterly earnings were for revenue... NOT PROFITS. Completely different.

GamePass is a money pit, at least right now it is. I can sub to gamepass on pc for 1 month and play Star Field when it comes out, finish the game, and then unsub. All for pennies.

When normally I would have paid full price for that game. But now it will only cost me only a dollar or $10

Majority of people don't like subscriptions in gaming. That's a fact. Only a minority of Xbox's own fans even subscribe to it. 15 mil subs across all of PC and Xbox consoles.

I congratulate MS on GamePass. As a Playstation fan, it will serve me very well in the future. But.... Gold Mine? LOL don't make me laugh out loud

[rayford15]

@dcbronco How much Microsoft paying you ? And is the Series X worth it ?

[RazzerRedux]

"Offer enough bargains and you have a steady 20-25 million subscribers. You're now making 300+ million a month. "

lol....no you are not. Why are you pretending Microsoft is pocketing all that revenue? They have to share it with the publishers and developers of third party games on the service. They have to share with EA in order for EA Play to be available. And we are not even talking about funding their internal projects yet. Oh.....that's probably why they have all these games and all future games for sale on Steam.

You offer a lot of fluff but don't come close to showing me how I'm wrong.

"How many billions does World of Warcraft make with 10-12 million people? "

You mean, how much money does it make that they don't have to share with other companies? No idea and isn't relevant because of that.

"Game Pass is a gold mine. The quarterly earnings prove it."

lol....no they don't. Aaron Greenberg flatly said Game Pass isn't very profitable at this point.

[Chevalier]

"How many billions does World of Warcraft make with 10-12 million people? "

Weren't you just talking about making $300 million a month? 😆.

Because that's what World of Warcraft make each month and unlike gamepass that has to payout each game and publisher, Activision OWNS WoW so they don't have to pay anything really. When a new Expansion comes out they will bank another $500-600 million at launch too.

"You're now making 300+ million a month"

Here's a quote of your idiocy. Then you question World of Warcraft for doing exactly that? Yeah you sound like an idiot.

[dcbronco]

I'm already laughing out loud at the people who think they make their own decisions. Talking about what they do and don't want. I know Steve Jobs was right. People want what they're told to want. They didn't want always on, no complaints now. Didn't want digital games, over half of sales are digital. You guys are always talking about what you don't want or will do and the second Sony pushes it you want it. You hated huge consoles. Now you are willing to play on the biggest one ever. Sony could build an arcade cabinet sized console for your tiny Japanese apartment and you'd applaud it. Maybe you truly believe you choose. But based on most of Sony fans statements you want what you're told you want.

I do my own thinking. I know Game Pass is a success because I know what goes in nto providing it for the most part. Microsoft does hide things in financials like most companies. But they've stated from day one premium business customers pay for the expense of the Azure infrastructure Game Pass is run on. So Xbox isn't paying servers like Sony pays Microsoft. They aren't paying a premium for the games since many are older now. The cost of adding EA Access is cheap just like it is when Comcast bundles a service with your cable. There are only a couple of premium subscription services that can demand premium prices. Disney, HBO, Netflix. EA isn't one of them. I pay a dollar a month for Showtime right now. Most of the content is bought in bundles cheap with a few prime picks. That's why Microsoft bought zenimax. Having 23 studios gives you cheap content but also premium content. You don't understand how business works. There's a reason Microsoft's share price got adjusted to the 250-60 range. People that now know how a Netflix works see it happening again but in gaming and they're buying. Also, Phil Spencer said Game Pass is self sufficient already so we know it makes a profit. But like you don't understand how business works. You don't know the language to listen for. Game Pass is fine. And it's the future. You just don't get it until the right person tells you to.

[EasilyTheBest]

Gamepass is great. Examples of viability based on games like GTA don't really work as for every GTA selling game theres a 100 that sells nowhere near as much & will do well for a publisher on Gamepass.
Examples of such as subscribing to Gamepass for one month because a new game has become available & then unsubscribing doesn't work either, a small minority of ppl do this, most just continue to subscribe. In fact there's data available for things like Amazon Prime, Netflix & Spotify where there's thousands of ppl subscribing & not using the service for months on end.

[dsammy04]

I imagine streaming services like Gamepass, EA Play, Ubisoft+ something similar to a digital Blockbuster/Family Video or even Gamefly rental services but in this instance the publishers gets more of the money (well first party publishers like Microsoft, Ubi, EA get a bigger piece of the pie.) They just eliminate paying someone else and it's all digital.

However releasing day one AAA budget games I fail to see how they recoup that money especially with an extensive library. But that's not in my pay grade so I'll take it.

[Vits]

For Take-Two in particular I can't see that working either: Their 2k brand relays on yearly launches. Rockstar released 3 games in 5 years. And Private Division is a new kid with very little to its name.

[OptimusDK]

Take two is milking their franchises, so yearh that may not work well for them. But i dont case, i am interested in what works for me, and just look at netlix, Disney+, HBO. The amout of movies and series is fantastic. So yarh give me that in the GAMES world - works fine for me!

[EasilyTheBest]

Exactly Optimus. Gamepass works for me to, its brilliant for the money. I have never played so many games. I'm playing games now that I'd never considered buying.
Netflix, Disney+ etc are all doing similar, they have a long term plan. They ain't doing it for fun.

[rlow1]

I guess you get downvotes for saying that the service works for you. All they can do is speculate off of one another. So your comment bursts their inner speculative feeding frenzy.

[OptimusDK]

So was blockbuster when Netflix came along. Wonder why?

[Father__Merrin]

If subs are in addition to your regular model then it's OK as older titles can be flung on