Xbox wants to create the Netflix of games - here's why that's not going to work
We're in a golden age of television, and it's largely due to the massive popularity of subscription services like Netflix, Hulu, Amazon, and HBO.
Without Netflix, we might never have seen shows like "Stranger Things," "House of Cards," or "Orange is the New Black."
Without Amazon, there might be no "Man in the High Castle" or "Mozart in the Jungle."
Without HBO, well - you get the idea.
It's possible that these shows would've otherwise been funded by TV networks (or other means), but it's certain that there'd be fewer. The money to fund these massive shows comes from millions of subscribers paying monthly subscription fees. Those millions of subscribers stick with these services because of the great original content that they can't get anywhere else (among other reasons, of course). It's a self-perpetuating cycle.
There is no modern equivalent for video games, which have ridiculously high budgets that rival - and often top - TV and movie budgets. And that makes game production a tremendously risky endeavor.
In an effort to offset that risk, many game publishers are moving toward a "games as service" model. Games like "Call of Duty" and "Destiny" are prime examples: You buy the base game, and, in an effort to keep you playing and paying, more and more stuff is added to the game after launch. Maybe you buy a season pass? Maybe you buy a big expansion by itself? As long as you keep paying beyond the initial purchase.
But lots of games are single-player, narrative-driven experiences. And those games also cost a ton of money to make.
"You'll have things like 'Zelda' or 'Horizon Zero Dawn' that'll come out, and they'll do really well, but they don't have the same impact that they used to have, because the big service-based games are capturing such a large amount of the audience," head of Xbox Phil Spencer told The Guardian in a recent interview.
And he should know - he's in the position to do something about it. Spencer sees a potential solution in the Netflix business model:
"I've looked at things like Netflix and HBO, where great content has been created because there's this subscription model. [Microsoft Studios GM] Shannon Loftis and I are thinking a lot about, well, could we put story-based games into the Xbox Game Pass business model because you have a subscription going? It would mean you wouldn't have to deliver the whole game in one month; you could develop and deliver the game as it goes.
"The storytelling ability in TV today is really high, and I think it's because of the business model. I hope as an industry we can think about the same. [Subscription services] might spur new story-based games coming to market because there's a new business model to help support their monetization."
There are a few things to break down here:
- Spencer is positing that a subscription model for games could support the future of narrative-based game experiences.
- He's saying that Xbox already has a subscription model set up, the Xbox Game Pass, which offers access to a variety of games based on a monthly subscription fee.
- And he's saying that games wouldn't have to be fully finished for such a service; you could publish "episodes" (chunks) of a game as they're finished.
He's got some good points, but he's missing some crucial ones as well. The first, and most important, point is glaring: The Xbox One is its own console that costs $300, and any subscription service tied to it comes with a $300 up front cost.
Services like HBO, Netflix, Hulu, and Amazon are easily accessed through pretty much everything. Every phone, tablet, computer, set-top box, and game console can run these services. There's an expectation of ubiquity when it comes to Netflix.
That same concept simply doesn't apply to a console-specific subscription service. It's impossible to create the "Netflix of gaming" as a console-maker like Microsoft unless Microsoft is willing to put that service on competing platforms (like the PlayStation 4, which is the market leader over Xbox One by tens of millions of units).
Even before running into that issue, there's the bigger issue of convincing game developers that this entirely untested way of developing and publishing games is a smart idea. Microsoft could, of course, develop the games itself for such an initiative, but Microsoft's first-party studios are already stretched thin.
- 343 Industries is in charge of "Halo," and is presumably deep into development of "Halo 6."
- Turn 10 is in charge of "Forza Motorsport," and is deep into development of "Forza Motorsport 6."
- Mojang is in charge of "Minecraft," and, well, this could be a potential contender for a studio that could work on such an initiative - serialized, narrative-driven gaming. But using Mojang to work on a risky new business model seems like a misuse of its time considering how gigantic and profitable "Minecraft" is.
There are several others (The Coalition, Rare, etc.) that could potentially work on such a project, to say nothing of third-party developers Microsoft could fund. But that's before you start talking about the realities of game development. It's a tremendously fraught process, with frequent setbacks and budget problems - stuff that can't be fixed through better organization; stuff that's fundamental to the process of game development due to the very nature of how games are developed.
Even though it sounds like a nice idea - subscription-funded, narrative-driven games, on par with the kind of stuff that Netflix makes - it's far harder to actually pull off.