It S Welcome And Long Overdue Analysts On Playstation S New Subscription Service

Companies in this article The news that PlayStation is restructuring and merging its subscription services is long overdue and is expected to lead to a significant improvement in revenue, say leading industry analysts. Experts from Ampere Analysis, Creative Strategies, Strategy Analytics and IDC gave their views on Sony’s proposed new subscription service and how it copes with Microsoft’s Xbox Game Pass alternative. “It’s too late for Sony to combine these two products, because that’s where the market is today,” said Michael Goodman, director of television and multimedia strategies at Strategy Analytics. “They have created an attractive product. It is important to give consumers a choice of hundreds of games and to combine the multiplayer game. It is essentially a price reduction for the subscription game. Instead of having two different products at $ 9.99, one is very successful on the PlayStation Plus, which has about 72% of its base installed compared to the PS Now product, which subscribes to about 5% of its console base, so it’s clear to the consumer , the current product Now has not had value for consumers. “40% of their installation base is the reference point [for PS Plus Extra or Premium] But even if they reach up to 20% […] would be really successful ” Michael Goodman, Strategy Analytics “Adding hundreds of games, integrating the web section and lowering the price … significantly increases the value.” Carolina Milanesi, president and chief analyst at Creative Strategies, adds: “It makes their subscription clearer for consumers to understand. The annual subscription pricing is quite aggressive, which I think will make many people choose it rather than the monthly one. “This of course allows for more consistent revenue and reduces the risk of subscriptions due to content releases rising and falling.” Lewis Ward, IDC’s Director of Research for Gaming, eSports and VR / AR, says the goal is clearly to get PS Plus subscribers to some of the highest levels. “The bottom line is that the PS Plus upgrade has been delayed and is a welcome change. We expect it to achieve its primary goal, which is to push a larger share of PS Plus subscribers to the most expensive levels. Carolina Milanesi, Creative Strategies “Nomenclature simplification is realistic, although ‘Extra’ is not exactly an exciting choice of branding. high bar to keep Premium subscribers at the limit or over four million [IDC’s current estimate for PS Now subscribers] in 2022, while at the same time landing a fairly large new base of Extra subscribers just for download. “ One of the big questions surrounding the offer concerns Sony’s decision not to launch brand new versions on the day of their release. Analysts believe this will make the PS Plus Extra and Premium less attractive than the Xbox Game Pass, but have not decided how important this is to PlayStation gamers. “It will not have the appeal of Microsoft,” said Piers Harding-Rolls, director of game research at Ampere Analysis. “What I think Sony will try to be more aggressive is the window between the release of its new games and their addition to the service and the addition of new releases by third-party developers and publishers.”
“I believe that gaming subscriptions will go the same way we have seen in video content” Carolina Milanesi, Creative Strategies Goodman adds: “This is a question that will ultimately dictate the market. The choice of Microsoft that day and date was a critical factor in its success, and I think it was. We need to see how important this is to its fans. PlayStation There is definitely an argument that it is not critical. Nintendo has done a great job with Nintendo Switch Online – it was terribly successful just as a catalog product. “However, the great growth of Microsoft happened when they went day in and day out. It is worth noting that they do not compete face to face in this. They speak mainly with the existing installation base.” Goodman says there is a huge growth opportunity for the PlayStation. The current PS Now audience is about 5% of Sony’s console base, he says, while the Game Pass has attracted over 40% of the Xbox fan base. “40% of their installation base is the reference point [for PS Plus Extra or Premium]He explains. “But even if they reach 20%, or even 15%, I would argue that this would be really successful. Maybe not comparatively, but definitely in terms of revenue. ” One of the main advantages of the new PS Plus offer is that it is simpler to understand. There are no longer two different subscription services with two different names. However, Ward says that beneath the surface things are still complicated. Piers Harding-Rolls, Ampere “While the new service is simpler in many ways, it is still confusing under the covers. For example, at Premium level, subscribers will be able to download original PlayStation, PS2, PS4, PS5 and PSP games but not PS3 games. , Subscribers will not be able to stream PS5 games, just download them via the new service. “The PS Plus Premium service will also not be available in all countries where PS Plus is offered. Countries / regions without cloud streaming access will not receive a Premium, but a download-only service called Deluxe. “All these transfers, plus the upgrade path messages for current subscribers, are sure to create some short-term and possibly long-term confusion.” “While the new service is simpler in many ways, it is still confusing under the covers.” Lewis Ward, IDC All analysts agree that there is an increased revenue opportunity here for Sony in terms of upgrading customers from PS Plus to Extra or Premium. But they are not so convinced that it will lead to more subscribers overall. “This is an opportunity to increase the ARPU [average revenue per user] subscribe and build on the success of your current PS Plus service, ”Harding-Rolls believes. Plus. Overall, it should create a stronger marketing framework for the subscription list proposal, which over time will allow it to introduce more exciting games to the service. “Ampere analysis data show that Microsoft owned 60% of Western’s share [North America and European] game content subscription market in the 4th quarter of 2021. By comparison, Sony had a 7% stake in PS Now. “The western market was worth $ 3.7 billion in 2021, which was 4% of total gaming spending in these areas.” Finally, what impact can this have in the long run? Milanesi believes that “gaming subscriptions will evolve in the same way we have seen in video content”, which has become the dominant business model. However, not everyone agrees. And Harding-Rolls believes, at least in the short term, the service will not cannibalize the rest of the PS5 offering. “Most of the games included in PS Now are list titles, so cannibalism is not an issue and I do not expect this to change significantly with the new service,” he says. “It is worth noting that a growing share of gaming revenue comes from in-game sales, which will continue to be available for subscription games, so there is more than one revenue stream to consider when assessing cannibalism. service scale, can serve as a useful marketing platform and UA for games struggling to gain exposure against the biggest games. “ For more on the new PlayStation subscription service, take a look at our interview with PlayStation CEO Jim Ryan.