Reuters
Sam Nussey and Dawn Chmielewski
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TOKYO / LOS ANGELES – The upgrade of the PlayStation subscription service by Sony Group Corp. is an important step towards equalizing the competition with Microsoft’s rival Game Pass, although the suspension of new releases may dampen the excitement, analysts say. Sony said its expanded PlayStation Plus service will offer hundreds of games, including recent hits such as “Spider-Man: Miles Morales,” for a fixed monthly fee when released in the United States, Europe and Japan in June. The service will not include new releases, Sony Interactive Entertainment CEO Jim Ryan told Reuters, but users can still find big budget titles like “Returnal” and “God of War”.
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“There will be more than PlayStation Studios and all the major publishers will be represented,” Ryan said. Sony is widely regarded as a leader in console warfare, selling 17 million PlayStation 5 (PS5) units even when chip shortages hit production, but it has been pressured to respond to the development of Netflix-type gaming subscription services. Sony’s refreshed service combines the current PlayStation Plus, which has 48 million subscribers and offers online games and just a few free games each month, with the PlayStation Now, which has 3.2 million users and a gaming library for download and streaming . There are three levels, priced from $ 9.99 to $ 17.99 per month or $ 59.99 to $ 119.99 per year. The lower priced level, the PlayStation Plus Essential, is similar to Sony’s current offering.
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PlayStation Plus Extra adds a list of PS4 and PS5 games. The PlayStation Plus Premium offers a further library of older titles, cloud streaming to major markets, and limited-time gaming testing. Such a rationalization is “delayed,” said Lewis Ward, head of gaming research at IDC. “The number of PlayStation subscribers to the top two… levels will increase over time, which is undoubtedly a key reason for this change,” Ward said. Given the high cost of developing new games, analysts have expressed concern that pushing to group more content with subscriptions could lead to a profit for Sony’s coveted gaming unit. Sony will seek to maintain sales of new games in parallel with its subscription service. “I believe this move will improve profit margins, as more players will be driven to higher-cost subscriptions,” said Piers Harding-Rolls, head of game research at Ampere Analysis.
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“If the cost of acquiring content increases, Sony will have to balance it with the additional revenue it will generate from the PS Plus subscriber base,” he added. HIGH STAKE GAME Microsoft is aggressively developing Game Pass, which has 25 million subscribers, adding new titles on the day of their release, while buying studios to expand its offerings. In January, the Redmond, Washington-based company struck a $ 68.7 billion deal with Call of Duty publisher Activision Blizzard. Sony, which has set up its own studio network, responded by buying publisher Destiny Bungie for $ 3.6 billion, with many analysts expecting further deals. Microsoft has gained an early lead in subscriptions, accounting for 60% of gaming subscriptions in North America and Europe, up from 7% for Sony, according to Ampere Analysis. Subscriptions make up only 4% of total gaming costs.
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“PlayStation believes it is smarter for them and third-party publishers to place older games in the subscription program so that new games can maximize their revenue potential during their release windows,” said Ward of IDC. This reluctance means that Sony’s offer “will not have the appeal of Microsoft’s service,” Ampere’s Harding-Rolls added. Sony ‘s recently announced pricing is considered competitive. The annual charge of $ 120 of the premium level is comparable to the $ 180 for the Game Pass Ultimate. Both offer cloud gaming, with Sony users being able to stream titles to their consoles and PC. Cloud gaming is considered the future of the industry because it does not require downloading or installing games on a console or computer. This is a potential threat to the console business, whose operators have acted as industry watchdogs.
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An annual subscription to the mid-range PlayStation Plus Extra, which does not have this cloud gaming feature, costs just over $ 8 per month, compared to $ 9.99 for the Game Pass. “Value and pricing of this nature simply would not be possible if we put our new games in service after they were released,” said Sony’s Ryan. Microsoft has said that Game Pass subscribers play more games and spend more on games, too – a view that echoes Sony. “It all ends in engagement,” Ryan said. “If you attract people to your platform, it usually comes down to monetization.” (Report by Sam Nussey in Tokyo and Dawn Chmielewski in Los Angeles; edited by Gerry Doyle)
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