Subscription-based services like Xbox Game Pass are trending as one way to balance the rising costs of game development. However, Shawn Layden, former president of Sony Interactive Entertainment America, is not entirely sure if Game Pass-like services hold all of the keys, at least not yet.
Speaking with Games Industry in a recent interview, Layden pointed out that while PlayStation 4 games took between $100 to $150 million to develop on average, PlayStation 5 games will hit an excess of $200 million fairly soon.
He expressed concerns that it will be “very difficult for more than a handful of large players [companies] to compete” once current-generation games reach their peak in terms of development costs.
Layden then shifted to the current size of the console market and how the games industry needs to use the available platforms to find new ways for increased revenue growth. Xbox Game Pass provides a cheap way for gamers to access games, while making it easier for developers to reach and established audience. Layden however is skeptical about Xbox Game Pass-like services being able to recoup ballooning development costs.
“It’s very hard to launch a $120m game on a subscription service charging $9.99 a month,” began Layden. “You’re going to have to have 500 million subscribers before you start to recoup your investment. That’s why right now you need to take a loss-leading position to try to grow that base. But still, if you have only 250 million consoles out there, you’re not going to get to half a billion subscribers. So how do you circle that square? Nobody has figured that out yet.”
What Layden said about Xbox Game Pass or similar subscription-based services is an interesting take on the matter. Microsoft has reportedly been focusing on doubling its subscribers before even thinking about scrapping the Xbox Live Gold requirement for online multiplayer. Layden however suggests that even if Microsoft doubles its Xbox Game Pass subscribers to around 50 million, the number will still not be enough to tackle the rising costs of game development.
It is true that development costs are hardly going to be recovered through just the number of subscribers. Xbox Game Pass is only one part of a machine. Publishers have other avenues for recoveries as well like the post-release sales, microtransactions, full retail sales on other platforms, and such. What Xbox Game Pass-like services do is add more revenue on top.