The implications of library subscriptions on video game marketing : featuring case study of Xbox Game Pass
von Nandelstadh, Oscar (2024)
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2024061122837
https://urn.fi/URN:NBN:fi:amk-2024061122837
Tiivistelmä
In recent years, subscription services have become a prominent business model, including for entertainment. However, the suitability of the model for video games is less frequently discussed.
The video game industry – alike other entertainment industries dealing with information products, such as, TV, films, theatre, and literature – is a risky industry. A common characteristic these industries have is their “hit-driven” nature, meaning only a small share of productions are profitable, and the proceeds from the successes must cover the failures. The current videogame market is relatively stable, but the cost of both making and marketing games has increased, accentuating the riskiness of the business.
The development and marketing of video games take place in parallel. The business environment and profit requirement set the parameters for what games can be made. Understanding the risk mitigation strategies companies have employed in the past gives a reference point from which to view the strengths and weaknesses of the subscription model.
The FTC v. Microsoft Corp. et al. trial resulted in the leaking of internal company documents concerning Microsoft’s plan for the Xbox gaming platform. The documents, released in September 2023, amount to hundreds of pages, and includes strategy documents, internal chats and emails, and more. The leaked information, alongside other court files, served as a case study of the business reality behind a subscription service. The aim of this thesis and the selection of Xbox Game Pass as a case study was to form an understanding of the economic realities of video game subscription services.
Through a qualitative document analysis, the leaked information was analyzed with the intent to extract a consistent narrative explaining why Game Pass has taken the form it has today, where it might go in the future, and what opportunities it and similar subscriptions offer third-party game developers.
The findings show that Microsoft’s plans revolve around much more than merely a “Netflix of Video Games”, with the creation of a “Universal Store” being equally if not greater in importance in their plan of pivoting their game business in anticipation for a world in which access to video games will be more ubiquitous than ever before and in which established hardware platforms and their proprietary stores play a diminished role. Based on the findings recommendations for small- and independent developers are provided.
The video game industry – alike other entertainment industries dealing with information products, such as, TV, films, theatre, and literature – is a risky industry. A common characteristic these industries have is their “hit-driven” nature, meaning only a small share of productions are profitable, and the proceeds from the successes must cover the failures. The current videogame market is relatively stable, but the cost of both making and marketing games has increased, accentuating the riskiness of the business.
The development and marketing of video games take place in parallel. The business environment and profit requirement set the parameters for what games can be made. Understanding the risk mitigation strategies companies have employed in the past gives a reference point from which to view the strengths and weaknesses of the subscription model.
The FTC v. Microsoft Corp. et al. trial resulted in the leaking of internal company documents concerning Microsoft’s plan for the Xbox gaming platform. The documents, released in September 2023, amount to hundreds of pages, and includes strategy documents, internal chats and emails, and more. The leaked information, alongside other court files, served as a case study of the business reality behind a subscription service. The aim of this thesis and the selection of Xbox Game Pass as a case study was to form an understanding of the economic realities of video game subscription services.
Through a qualitative document analysis, the leaked information was analyzed with the intent to extract a consistent narrative explaining why Game Pass has taken the form it has today, where it might go in the future, and what opportunities it and similar subscriptions offer third-party game developers.
The findings show that Microsoft’s plans revolve around much more than merely a “Netflix of Video Games”, with the creation of a “Universal Store” being equally if not greater in importance in their plan of pivoting their game business in anticipation for a world in which access to video games will be more ubiquitous than ever before and in which established hardware platforms and their proprietary stores play a diminished role. Based on the findings recommendations for small- and independent developers are provided.