Microsoft recently announced its Xbox Game Pass program. It will launch in spring 2017 with over 100 Xbox One and Xbox 360 backward compatible titles. The subscription program was quickly dubbed the “Netflix” for gaming. However, its effects are a significant game changer for the video game industry.
1 – Value Proposition
It seems that gamers are willing to pay reoccurring fees to gain access to extensive digital games library. The proposition becomes more enticing if games are regularly added to the library. This creates a new value proposition for gamers that can be further justified by providing additional discounts on titles and early access for upcoming games.
2 – Increases Pressure on Bricks & Mortar Stores
Traditional bricks and mortar stores have taken hits with the advent of digital games. In fact, Gamestop shares dropped 7.8% following the announcement of Xbox Game Pass. The drop suggests that Xbox’s subscription service will negatively impact stores like Gamestop, that rely heavily on used video games. Gamestop is trying to respond to the changes in the videogames industry by creating their “Circle of Life” policy that focuses on preowned games, game preorders, and PowerUp Rewards.
3 – Provides Games from Multiple Publishers
EA Access was initially met with some hesitation, but over time, its value proposition improved. Additions to the Vault, regular discounts and early access to upcoming releases cemented EA Access in the videogame industry. Xbox Game Pass is undoubtedly inspired by EA’s program, but looks to cross the threshold by offering games from multiple publishers such as 2K, 505 Games, BANDAI NAMCO Entertainment, Capcom, Codemasters, Deep Silver, Focus Home Interactive, SEGA, SNK CORPORATION, THQ Nordic GmbH, Warner Bros. Interactive Entertainment and Microsoft Studios.
4 – Microsoft takes the Fight to PlayStation Now
Sony acquired game-streaming service firm Gaiki for $380 million in 2012. The acquisition led to PlayStation Now, which was available across multiple platforms. However, Sony recently scaled down PlayStation Now, leaving PS4 and PC as supported platforms. Microsoft leveraged that gamers would prefer to download games rather than stream them, which is why they explicitly mentioned this aspect in Xbox Game Pass’s announcement.
5 – Shows the Value of Backward Compatible Games
As of the end of February 2017, Microsoft’s catalog of backward compatible Xbox 360 rests at 337 titles, with more added every month. EA took note and placed their own Xbox 360 backward compatible games on EA Access. Sony too is stepping up its efforts to make sure PS3 and previous generation games find their way on PlayStation Now. This goes to show that older titles are still relevant for gamers.
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