Will Playstation ever offer Playstation exclusives day one on Playstation Now?
I was recently asked by TopSpot123 if I thought Playstation 5 games would appear on Playstation Now, the service from Playstation that allows subscribers to download and steam over 650 games from across three Playstation console generations . Of course they will. Why not? But then I thought more and realized, there’s lots of “whys not” which open up to a larger, and perhaps more interesting question: will Playstation Now ever offer same-day and date exclusives like Xbox’s Game Pass does?
So, to the first question: Will Playstation Now feature Playstation 5 games. Yes, Playstation Now, and I’ll throw in Playstation Plus, Playstation’s online service, will have Playstation 5 games. Eventually. Definitely not at launch. Let’s use history as an example. The Playstation 4 was launched in November 2013. Playstation Now was launched just over 1 year later, in January 2015. And it wasn’t until almost 3 years after that that Playstation 4 games were added to the Playstation Now service. When the amount of money made from games sales, via system sales of course, begins to diminish, that’s when games from that system will fold into the subscription service.
Let’s look at some numbers to highlight this point. In the 50 months between the Playstation 4 system launch and the appearance of Playstation 4 games on the Playstation Now service, Sony had sold 73.6 million consoles. That’s about 1.47 million units per month. In the following 29 months between January 2018 and May 2020, Sony had sold about 1.2 million consoles per month. While not a dramatic difference, and averaging in this way can be misleading, this does point to the inevitable slow down in the second half of a console generation’s life.
Software is where the money is. For Sony, the consoles sell the software. If consoles sales are slowing that means software sales are slowing, which means it’s time to sell the software in a different way. Therefore, Playstation Now and Playstation Plus get current generation games and the marketing team has a sweet, sweet marketing beat they can leverage.
So, my estimate is that we’ll see Playstation 5 games hit Playstation Now and Playstation Plus in the middle of 2022, assuming this coming Playstation 5 generation will be about 5 years, which is shorter than the previous generations, but that’s a topic for a different video (a video that ReviewTechUSA already did, in fact. Watch it here).
If we look at the closest direct Sony competitor, Microsoft, they have been much more aggressive with incorporating next generation games into their subscription service, Game Pass, and by all accounts it seems to be doing really, really well for them. So I asked myself, will Sony ever take a similar approach. Will Playstation ever offer Playstation exclusive games on Playstation Now at the game’s launch?
My immediate response was “of course not.” Consumers have consistently shown that they are willing to spend $60 per exclusive title, so why would Sony risk that revenue for potentially less revenue from a subscription model. But I wasn’t satisfied with a hot-take assumption. So I scoured the internet, crunched some numbers, took some naps, and it turns out, Sony, a company that lives by its exclusive games and their $60 price tags, might actually be better off if they offered exclusive titles on Playstation Now at launch, exactly like Microsoft does with Game Pass.
First, we’ve got to figure out 1) how many exclusives we’re talking about here, 2) how many copies each exclusive sold, 3) the Playstation Now cost to the consumer, and 4) the count of Playstation Now subscribers. Sprinkle in some assumptions about margins, throw out variables I can’t account for because I’m dumb, and in turn add a bunch of asterixis, and voila. We have a tasty business case.
First, let’s figure out how much money Sony has made from its exclusive titles. For my purposes, I’m going to restrict to the top selling exclusives, and also just the exclusives released after Playstation 4 games were added to Playstation Now in December 2017. Yes, it’s true people who buy a Playstation 4 today could go back and buy those pre-December 2017 exclusives, but I’ve got to make a cut-off somewhere.
Between December 2017 and May 2020, Playstation had 6 exclusives that meet the top-selling criteria, with a total of 36,300,000 copies sold according to various sources all documented in Wikipedia..
Take this number, multiply by $60 per game and then again by 55% to account for the platform royalties and Sony’s first party publishing fee, and we get a staggering $1,197,900,000 of net revenue from 6 games during a 2 year period as our baseline. Not bad.
Now, we need to compare this to the revenue Sony could have made if they instead pushed a Playstation Now that offers these same exclusives on launch. There’s going to be a lot of hypotheticals and assumptions and straight-up guessary coming up, so all you data scientists that accidentally found my channel when searching for actual data, get ready to cry.
So first, we need to figure out how many users currently subscribe to Playstation Now. We know that as of May 2020 Sony has sold 111,000,000 Playstation 4 consoles. We also know that as of the same month and year, Playstation Now had 2,200,000 active subscribers. That’s just about a 2% subscriber rate, but for the longest time the subscriber rate was closer to 1%, so I’m going to use 1% as my figure. Now of course, there are plenty of weirdos like me who have purchased multiple Playstation 4s over the years, but we’re going to stick with 1%.
Let’s imagine that 1% of users subscribed to Playstation Now since its introduction in December 2017. We apply 1% to each month’s cumulative console sales, then multiply each of those figures by the respective month’s Playstation Now rate, which was $19.99 until October 2019 when the rate changed to $9.99 per month. This calculates to $471,329,414.50 worth of revenue between December 2017 and May 2020. This, obviously, is far below the non-subscription revenue mentioned earlier. So on the surface, it seems Sony’s is smart to push individual game sales over Playstation Now subscriptions.
Now I know this logic is flawed. I’m assuming people are ignoring multi-month discounts and special promo rates. I’m suggesting that subscriber rates remain constant month-to-month. I’m not considering revenue from non-exclusive titles. And related to that, I’m kinda assuming a false binary here. I’m suggesting Sony can only sell exclusives individually OR they can only offer exclusives through Playstation Now. But I know that makes no sense.
After all, if exclusives were offered at launch as part of Playstation Now, logically the 1% subscriber rate would increase, right? But by how much? Well, to figure this out I took the sales totals of those six aforementioned exclusives and divided by the 111,000,000 install base to estimate an Exclusives Adoption Rate. Surprisingly, the numbers ranged considerably from 4% for Ghosts of Tsushima, which is understandable given how new it is, to 12% for Marvel’s Spider-Man. When I average all of the EARs together I get 5%. So, maybe we should assume an 5% subscriber rate. I plug this in and instead of a measly $471.3 million in subscriber net revenue, we get $2,356,647,072. Now we’re cooking with money covered in gas.
But we could go even further. Let’s pretend Sony could do just as good a job marketing their subscription program as Microsoft has with Game Pass. As of May 2020, Game Pass, which promotes same day exclusives as one of its primary value propositions, is subscribed to by 20% of Xbox One owners (Game Pass subscriber count divided by Xbox One install base). If we then increase the imagined 5% subscriber rate to the still imagined 20% rate of Xbox, we’re then looking at $9,426,588,290.00 in net revenue. Now we’re cooking with pure gold covered in gas.
So, will Playstation Now ever offer Playstation exclusives day one? No, probably not. Sony is weird.
