The video game business is finally adopting the Netflix model – Business Insider
In most ways, the video game business exists on the bleeding edge
The processors powering modern games are the most powerful
processors available. The display technology for games
is the screen technology powering tomorrow’s phones and
TVs. The list goes on.
In one major respect, though, the video game business is behind
that of other mediums: subscription services.
The Netflixes and Hulu Pluses of the world have become such big
hits with customers not only because of their original and
licensed content libraries, but because of their business model.
Paying a flat fee monthly for a massive library of available
content is quite appealing for consumers, it turns out.
In 2017, the game console makers are finally realizing how
important subscription services are.
In the past few months, both Microsoft and Nintendo introduced
subscription services that resemble Netflix in direct ways.
Microsoft’s is known as the “Xbox Game Pass”; Nintendo’s is
(tentatively) called the “Classic Games Selection.” Both offer
access to a library of games for a fixed monthly (or annual)
Microsoft’s Xbox Game Pass
Microsoft is offering access to an ever-expanding library of Xbox
360 and Xbox One games through Game Pass.
Pay $10 per month month, and immediately gain the ability to
download over 100 games. Unlike Netflix, you’re
not streaming games — you outright download them.
As long as you remain subscribed, you retain access to those
The library includes a healthy selection of games that
Microsoft published for the two game consoles, as well as a
smattering of third-party games. “Halo 5: Guardians” and the
“Gears of War” series are there, for instance, as well as
third-party classics like “Spelunky” and the “BioShock” series.
Like the ever-changing Netflix library, the Game Pass library is
expected to evolve over time — stuff from Microsoft will likely
remain permanently, while third-party stuff could swap out over
time (much like Netflix originals never leaving the service).
It’s a major change for Microsoft — and the games business in
general — to move to the subscription model.
Video game development is wildly expensive, which makes it
unlikely that we’ll see brand-new games show up on Xbox Game Pass
(at least for now). The majority of the library, like early
Netflix days, is made up of recent classics. It’s a killer deal
if you’re not the type of person who needs to play the latest and
Nintendo’s “Classic Games Selection”
Nintendo’s taking a different approach with its subscription
For $20 per year, you’ll gain access to what Nintendo is
tentatively calling its “Classic Games Selection.” Thus far, that
selection only includes three games: “Super Mario Bros. 3,” “Dr.
Mario,” and “Balloon Fight.” You’ll download each game (rather
than stream it), and you own them as long as you remain a
subscriber. It’s nearly identical to the Xbox Game Pass service,
but the difference here is in the library. Nintendo is offering
its oldest, most “classic” games. It’s a nostalgia play, where
Microsoft’s is a sheer numbers play.
While the first three games announced are NES classics,
Nintendo’s going to need a much larger selection of
games before it can call its service worthwhile. For years,
Nintendo fans have dreamed of a subscription service that offered
access to Nintendo’s vast classic games library. This is the
company that created the NES, the Super NES, the Nintendo 64, the
GameCube, and the Game Boy. There are dozens of classic games to
choose from in Nintendo’s history.
With the “Classic Games Selection” service, Nintendo is taking a
step in that direction. Whether the company will go all-in is
another question. Nintendo is notorious for moving carefully. The
Japanese game-maker’s first smartphone game, for instance, was
only released in the last few years.
The determining factor in both Nintendo and Microsoft’s cases
will be how consumers respond. Will these services cannibalize
the digital storefront sales of a la carte games? Will the
content libraries attract enough people to sustain the
subscription business model? Only time will tell, but the 100
million-ish Netflix subscribers are assuredly bolstering
Microsoft and Nintendo’s hopes.