The shift from full-game sales to live services has fueled significant growth in the video game industry. As publishers look for new ways to monetize their products, subscription services could have a similarly transformative impact on the state of gaming.
In a previous post, we noted that revenue models such as MTX and DLC have not only expanded the video game market by lowering up-front costs for prospective gamers, but have also allowed successful publishers to increase monetization and retention throughout the lifecycle of a game.
A key attribute of our data is that we track customer spend across millions of users at the individual player level, which allows us to analyze spending behavior for very specific cohorts of players.
Is Game Pass a threat or an opportunity?
M Science’s data solutions help video game publishers and platform operators track customer spend across all major storefronts, publishers, and 1,300+ games in near real-time. We track a variety of KPIs, including daily customer spend across full-game sales, microtransactions, downloadable content, and subscriptions.
To shed more light on this question, we applied insights from our work with Xbox Game Pass data. Specifically, we analyzed a cohort of users who subscribed to Game Pass in 2021. We then tracked which games they spent with outside of the Microsoft ecosystem.
According to our data, these users most commonly transacted with platform exclusives (like Nintendo games) or indie games (created by smaller development teams and independent studios) released exclusively on the Steam platform. As the Microsoft PC Storefront and PC GamePass product continue to mature, we expect intensifying competition between Steam and Microsoft for the PC gaming ecosystem.
Steam has cemented its status as the top indie storefront due to its massive user base (130mn+ MAU’s in 2021), large library of 50k+ games, history of supportive programs, and its established indie ecosystem. These factors have attracted viral indie hits like Valheim and Phasmophobia and created a competitive moat that will be difficult for Microsoft to overcome in the short term. While Microsoft’s more generous revenue share will be helpful, it will be interesting to see what other strategies Microsoft adopts to attract the PC category in the future.
These factors have attracted viral indie hits like Valheim and Phasmophobia and created a competitive moat that will be difficult for Microsoft to overcome in the short term.
Our data below shows that nearly 1 in 5 of total customer orders on non-Microsoft platforms come from Game Pass subscribers, pointing to a missed opportunity for Microsoft.
In the chart below, our data shows that 2021 Game Pass subscribers accounted for 12%-21% of total customer orders on non-Microsoft platforms with popular games like Elden Ring, New World, Pokemon Legends, Phasmophobia, and Valheim. In other words, Game Pass subscribers still comprise a meaningful percentage of total customer spend on games outside the Microsoft ecosystem, but that could change as the Game Pass portfolio evolves.
In other words, Game Pass subscribers still comprise a meaningful percentage of total customer spend on games outside the Microsoft ecosystem, but that could change as the Game Pass portfolio evolves.
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Important Disclosures
© 2023 M Science LLC. All rights reserved.
All material contained in this blog post is the property of M Science LLC (“M Science“) unless otherwise indicated. All trademarks, service marks, logos and trade names used in this blog are proprietary to M Science or other respective owners. All research notes, blogs, data and other information obtained from M Science are proprietary to M Science and may not be redistributed to or shared with any individual, company or entity without the express prior written consent of M Science. All such information obtained from M Science is the property of M Science unless otherwise indicated and no portion may be directly or indirectly copied, published, reproduced, modified, displayed, sold, transmitted, or redistributed in any medium without the express prior written consent of M Science. Specifically, and without limitation, such information may not be disclosed to members of any sell-side research team, within or outside of your organization. M Science monitors and takes seriously our responsibility to protect the assets and value of our products and services.
This blog is intended for informational purposes only. Under no circumstances is this blog to be considered as an offer to sell or solicitation of an offer to buy any securities of any company. M Science provides the information and data contained herein on an “as is,” “as available” basis, without representations or warranties of any kind whatsoever, expressed or implied. The information in this blog may be incomplete and may not contain all material information relating to the subject matter of the blog. M Science has no authority whatsoever to give any information or make any representation or warranty on behalf of the company or companies that are the subject of this blog, any of its shareholders or any other person in connection therewith and this blog has not been authorized or approved by said company or companies.
This blog is provided solely to clients or potential clients of M Science. The recipient assumes all risk and liability with regard to any use or application of the data included herein. The data provided herein is not intended to be used as the primary basis for investment decisions and nothing contained herein is, or is intended to be, predictive of the movement of the market prices of the securities of the company or companies discussed in the blog. Nothing in this blog is, or should be construed to be, designed to meet the particular investment needs of any investor. This blog is being furnished on a confidential basis and is provided for information and discussion purposes only and is not, and may not be relied on in any manner as, legal or tax advice. It is the responsibility of each recipient of this blog to satisfy itself that its receipt and use of this blog is in full compliance with the laws and regulations of the relevant jurisdiction(s) and, if in doubt about such compliance, to seek appropriate legal advice.
All proprietary analyses provided by M Science in this blog are derived from M Science’s analytic expertise, market knowledge, and use of the data it collects and licenses.
This blog reflects the results of our research as of the date of this blog. Our research results are subject to change at any time as new or additional data and information is received and analyzed. M Science undertakes no obligation to update this blog, or to provide supplemental information to any client receiving this blog, absent a specific arrangement to the contrary between M Science and individual clients. Specifically, M Science provides custom research blogs to certain of its clients which may be distributed on different frequency schedules from syndicated research blogs. Such custom blogs may provide different depths of analysis or a different specific focus and more frequent updates based on levels of service and fees selected by clients. Furthermore, these custom research blogs may reach conclusions that differ from this blog which could impact the price of a security.
Any opinions, forecasts or estimates in this blog may present a possible outcome on the basis of assumptions set out herein and represent only one possible outcome and are the independent view of the author(s) of this blog only. These opinions, forecasts or estimates are subject to risks, uncertainties and assumptions and there can be no assurance that future results or events will be consistent with any such opinions, forecasts or estimates.
This blog is not directed to, nor intended for distribution to or use by, any person or entity (1) that is not a client or potential client of M Science or (2) that is a citizen or resident or located in any locality, state, country, or other jurisdiction where such distribution, publication, availability, or use would be contrary to law or regulation or which would subject M Science or its affiliates to any registration or licensing requirement within such jurisdiction.
In a previous post, we noted that revenue models such as MTX and DLC have not only expanded the video game market by lowering up-front costs for prospective gamers, but have also allowed successful publishers to increase monetization and retention throughout the lifecycle of a game.
But first, a bit about our data.
M Science’s data solutions help video game publishers and platform operators track customer spend across all major storefronts, publishers, and 1,300+ games in near real-time. We track a variety of KPIs, including daily customer spend across full-game sales, microtransactions, downloadable content, and subscriptions.A key attribute of our data is that we track customer spend across millions of users at the individual player level, which allows us to analyze spending behavior for very specific cohorts of players.
∙ A common question video games publishers ask is how subscription services like Game Pass affect video game player spend on non-participating games and competing storefronts ∙
Is Game Pass a threat or an opportunity?
Where are the gaps in the Game Pass offering?
M Science’s data solutions help video game publishers and platform operators track customer spend across all major storefronts, publishers, and 1,300+ games in near real-time. We track a variety of KPIs, including daily customer spend across full-game sales, microtransactions, downloadable content, and subscriptions.
To shed more light on this question, we applied insights from our work with Xbox Game Pass data. Specifically, we analyzed a cohort of users who subscribed to Game Pass in 2021. We then tracked which games they spent with outside of the Microsoft ecosystem.
According to our data, these users most commonly transacted with platform exclusives (like Nintendo games) or indie games (created by smaller development teams and independent studios) released exclusively on the Steam platform. As the Microsoft PC Storefront and PC GamePass product continue to mature, we expect intensifying competition between Steam and Microsoft for the PC gaming ecosystem.
Steam has cemented its status as the top indie storefront due to its massive user base (130mn+ MAU’s in 2021), large library of 50k+ games, history of supportive programs, and its established indie ecosystem. These factors have attracted viral indie hits like Valheim and Phasmophobia and created a competitive moat that will be difficult for Microsoft to overcome in the short term. While Microsoft’s more generous revenue share will be helpful, it will be interesting to see what other strategies Microsoft adopts to attract the PC category in the future.
These factors have attracted viral indie hits like Valheim and Phasmophobia and created a competitive moat that will be difficult for Microsoft to overcome in the short term.
Our data below shows that nearly 1 in 5 of total customer orders on non-Microsoft platforms come from Game Pass subscribers, pointing to a missed opportunity for Microsoft.
In the chart below, our data shows that 2021 Game Pass subscribers accounted for 12%-21% of total customer orders on non-Microsoft platforms with popular games like Elden Ring, New World, Pokemon Legends, Phasmophobia, and Valheim. In other words, Game Pass subscribers still comprise a meaningful percentage of total customer spend on games outside the Microsoft ecosystem, but that could change as the Game Pass portfolio evolves.
(Source: M Science) Video Games Dashboard, Transactional Data
Outside of PC, our data suggests that the Xbox team might also want to examine how Game Pass subscribers are transacting with Microsoft’s key console rival, PlayStation.
As seen in the chart below, our data indicates that two of the top five PlayStation games that 2021 Game Pass subscribers transacted with were PlayStation Exclusives – Spider-Man: Miles-Morales and Ghost of Tsushima – with over 10% of total PlayStation transactions for these two games being made by Game Pass subscribers in that year. Meanwhile, the other top games that our cohort of 2021 Game Pass subscribers transacted with on PlayStation were common multiplayer games like Fortnite, Call of Duty/Warzone, and Grand Theft Auto.(Source: M Science) Video Games Dashboard, Transactional Data (Playstation only)
Contact us to find out how leading companies are leveraging M Science data to conduct consumer and competitive intelligence in the video games industry and beyond.
About M Science
M Science is a global data-driven research and analytics firm, with nearly 20 years of experience uncovering new insights for some of the world’s largest corporations and financial institutions. We revolutionize research by discovering new datasets and pioneering methodologies to provide actionable intelligence. Learn more at: mscience.com/corporate intelligence. M Science is a portfolio company of Leucadia Investments, a division of Jefferies Financial Group Inc. (NYSE: JEF).Interested in talking to a member of our sales team for a demo of our solutions?
Reach out to our team!
####
Important Disclosures
© 2023 M Science LLC. All rights reserved.
All material contained in this blog post is the property of M Science LLC (“M Science“) unless otherwise indicated. All trademarks, service marks, logos and trade names used in this blog are proprietary to M Science or other respective owners. All research notes, blogs, data and other information obtained from M Science are proprietary to M Science and may not be redistributed to or shared with any individual, company or entity without the express prior written consent of M Science. All such information obtained from M Science is the property of M Science unless otherwise indicated and no portion may be directly or indirectly copied, published, reproduced, modified, displayed, sold, transmitted, or redistributed in any medium without the express prior written consent of M Science. Specifically, and without limitation, such information may not be disclosed to members of any sell-side research team, within or outside of your organization. M Science monitors and takes seriously our responsibility to protect the assets and value of our products and services.
This blog is intended for informational purposes only. Under no circumstances is this blog to be considered as an offer to sell or solicitation of an offer to buy any securities of any company. M Science provides the information and data contained herein on an “as is,” “as available” basis, without representations or warranties of any kind whatsoever, expressed or implied. The information in this blog may be incomplete and may not contain all material information relating to the subject matter of the blog. M Science has no authority whatsoever to give any information or make any representation or warranty on behalf of the company or companies that are the subject of this blog, any of its shareholders or any other person in connection therewith and this blog has not been authorized or approved by said company or companies.
This blog is provided solely to clients or potential clients of M Science. The recipient assumes all risk and liability with regard to any use or application of the data included herein. The data provided herein is not intended to be used as the primary basis for investment decisions and nothing contained herein is, or is intended to be, predictive of the movement of the market prices of the securities of the company or companies discussed in the blog. Nothing in this blog is, or should be construed to be, designed to meet the particular investment needs of any investor. This blog is being furnished on a confidential basis and is provided for information and discussion purposes only and is not, and may not be relied on in any manner as, legal or tax advice. It is the responsibility of each recipient of this blog to satisfy itself that its receipt and use of this blog is in full compliance with the laws and regulations of the relevant jurisdiction(s) and, if in doubt about such compliance, to seek appropriate legal advice.
All proprietary analyses provided by M Science in this blog are derived from M Science’s analytic expertise, market knowledge, and use of the data it collects and licenses.
This blog reflects the results of our research as of the date of this blog. Our research results are subject to change at any time as new or additional data and information is received and analyzed. M Science undertakes no obligation to update this blog, or to provide supplemental information to any client receiving this blog, absent a specific arrangement to the contrary between M Science and individual clients. Specifically, M Science provides custom research blogs to certain of its clients which may be distributed on different frequency schedules from syndicated research blogs. Such custom blogs may provide different depths of analysis or a different specific focus and more frequent updates based on levels of service and fees selected by clients. Furthermore, these custom research blogs may reach conclusions that differ from this blog which could impact the price of a security.
Any opinions, forecasts or estimates in this blog may present a possible outcome on the basis of assumptions set out herein and represent only one possible outcome and are the independent view of the author(s) of this blog only. These opinions, forecasts or estimates are subject to risks, uncertainties and assumptions and there can be no assurance that future results or events will be consistent with any such opinions, forecasts or estimates.
This blog is not directed to, nor intended for distribution to or use by, any person or entity (1) that is not a client or potential client of M Science or (2) that is a citizen or resident or located in any locality, state, country, or other jurisdiction where such distribution, publication, availability, or use would be contrary to law or regulation or which would subject M Science or its affiliates to any registration or licensing requirement within such jurisdiction.
