PlayStation just lost a key console exclusive to Xbox Series X

[Windows Central]

Out of nowhere, Hideo Kojima's Death Stranding has launched on Xbox Series X|S, ending PS5 exclusivity.

PlayStation just lost a key console exclusive to Xbox Series X : Read more

 

[Ron-F]

I'm curious whether the rights to Death Stranding were not included in the compensation for Kojima's forthcoming espionage game being developed for Sony. It wouldn't surprise me if he declined any form of exclusivity, except for temporary, for his games. Consequently, it wouldn't be surprising if his upcoming Xbox game were merely a timed exclusive.

 

[fatpunkslim]

Here in Europe the game is €20 on the Xbox store compared to €50 on the PlayStation store. And there is play anywhere in addition, as a reminder that means that you can play on Xbox, PC, the cloud and you can keep your game anywhere.

Yet another exclusivity less for PlayStation which mainly has exclusive games from third-party publishers and ultimately temporary, it's normal that third-party publishers want to make a profit. It's like for Square Enix, they understood that it's not profitable to develop only for PlayStation. It's a safe bet that Death Stranding 2 will also be released on Xbox given the rapprochement between Kojima and Xbox (can't wait to see the next OD on Xbox).

 

[fjtorres5591]

Here in Europe the game is €20 on the Xbox store compared to €50 on the PlayStation store. And there is play anywhere in addition, as a reminder that means that you can play on Xbox, PC, the cloud and you can keep your game anywhere.

Yet another exclusivity less for PlayStation which mainly has exclusive games from third-party publishers and ultimately temporary, it's normal that third-party publishers want to make a profit. It's like for Square Enix, they understood that it's not profitable to develop only for PlayStation. It's a safe bet that Death Stranding 2 will also be released on Xbox given the rapprochement between Kojima and Xbox (can't wait to see the next OD on Xbox).

PS exclusives made some sense when the games cost $40-50M over three years to make and Sony had 100M PS4 owners.

They make less sense when they take 5-7 years and $100-300M to make and have to make the money back from 60M consoles. To make money under those terms they need to sell 5-10M copies and fast. Not exactly doable for every game.

DEATH STRANDING, for all its acclaim sold only 2M copies before its PC release in 2021 and 5M before its console exclusivity expired. It made a profit but likely not a great one. And its sequel has already been reported to be day one everywhere when it arrives. That says it all.

By contrast, STARFIELD sold 3M in its first month alone despite being on GamePass and a year later it is closer to 10M than 5M. Plus its DLC and paid mods are bringing in extra money. Add in new GamePass subs and it is safe to assume that first party games can still be profitable if tied to other revenue streams. (Yes,live service still works. If good enough.) Oh, and STARFIELD plays fine on cloud so once MS brings owned games to cloud, it can sell to older consoles without GamePass if MS allows it. Expect sales for cloud to be an added revenue stream.

Contrary to what many pundits say, there will still be ecosystem exclusives but mostly first party games where "profit" isn't defined solely by launch window sales.

Third party games will be different. The days of third party PS2 games being Sony exclusive simply because they didn't need to port to make a healthy profit and could instead use the time and money to make other games? Those days are gone. No single console platform can support a AAA game anymore. Not at 60M installed base or even 100M if either gets there.

Not only do most current generation third party games need to be crossplatform to make money, many are belatedly cross-gen, needing to reach PS4 and XB1 as well as PC to maximize revenue, which in turn reduces the need to upgrade for those owners. (100M is not coming soon.)

On top of all that, there is the matter of time to market.
When a AAA game took 3 years to develop it was possible to make good money off a quick sequel or me2 game, even if not great (Dragon Age 2 took barely a year). These days it takes so long, a derivative ends up dated and non-competitive more often than not. (Cough*CONCORD*cough)

Of note, it's been 5 years since DEATH STRANDING released. To be competitive, the belated XBOX version is "on sale" at $18-20(or equivalent); a third of the PS price and a third of what it might have made on XBOX in 2019.

Third Party developers need to be very careful with exclusivity deals; we'll still see short timed exclusivity deals (3-6 months) but 5 year deals? Don't see those being too popular. The math no longer works out.

 

[Lurking_Lurker_Lurks]

I'm curious whether the rights to Death Stranding were not included in the compensation for Kojima's forthcoming espionage game being developed for Sony. It wouldn't surprise me if he declined any form of exclusivity, except for temporary, for his games. Consequently, it wouldn't be surprising if his upcoming Xbox game were merely a timed exclusive.

Yeah this is the type of stuff that publishers and developers go back and forth on. I remember seeing an interview that the reason why Xbox passed on Destiny as an exclusive is because they wanted the rights to the IP, but Bungie wanted to retain all rights to the IP themselves (they were willing to make the game an Xbox exclusive but still wanted total control). I feel like Kojima is definitely well acclaimed enough that he's in a position to argue for rights to what he makes and win that argument before the publishing agreement takes place. He probably agreed to timed exclusivity or for Sony to have partial control initially, but wanted something where eventually he'd have total control. I think moving forward from Metal Gear Kojima just doesn't want a situation where he can get screwed like with Konami.

 

[Lurking_Lurker_Lurks]

PS exclusives made some sense when the games cost $40-50M over three years to make and Sony had 100M PS4 owners.

They make less sense when they take 5-7 years and $100-300M to make and have to make the money back from 60M consoles. To make money under those terms they need to sell 5-10M copies and fast. Not exactly doable for every game.

DEATH STRANDING, for all its acclaim sold only 2M copies before its PC release in 2021 and 5M before its console exclusivity expired. It made a profit but likely not a great one. And its sequel has already been reported to be day one everywhere when it arrives. That says it all.

By contrast, STARFIELD sold 3M in its first month alone despite being on GamePass and a year later it is closer to 10M than 5M. Plus its DLC and paid mods are bringing in extra money. Add in new GamePass subs and it is safe to assume that first party games can still be profitable if tied to other revenue streams. (Yes,live service still works. If good enough.) Oh, and STARFIELD plays fine on cloud so once MS brings owned games to cloud, it can sell to older consoles without GamePass if MS allows it. Expect sales for cloud to be an added revenue stream.

Contrary to what many pundits say, there will still be ecosystem exclusives but mostly first party games where "profit" isn't defined solely by launch window sales.

Third party games will be different. The days of third party PS2 games being Sony exclusive simply because they didn't need to port to make a healthy profit and could instead use the time and money to make other games? Those days are gone. No single console platform can support a AAA game anymore. Not at 60M installed base or even 100M if either gets there.

Not only do most current generation third party games need to be crossplatform to make money, many are belatedly cross-gen, needing to reach PS4 and XB1 as well as PC to maximize revenue, which in turn reduces the need to upgrade for those owners. (100M is not coming soon.)

On top of all that, there is the matter of time to market.
When a AAA game took 3 years to develop it was possible to make good money off a quick sequel or me2 game, even if not great (Dragon Age 2 took barely a year). These days it takes so long, a derivative ends up dated and non-competitive more often than not. (Cough*CONCORD*cough)

Of note, it's been 5 years since DEATH STRANDING released. To be competitive, the belated XBOX version is "on sale" at $18-20(or equivalent); a third of the PS price and a third of what it might have made on XBOX in 2019.

Third Party developers need to be very careful with exclusivity deals; we'll still see short timed exclusivity deals (3-6 months) but 5 year deals? Don't see those being too popular. The math no longer works out.

Very true. I'm also going to put out there, I think people are starting to realize exclusivity has only made gaming more daunting to get into. The fact that major franchises keep playing hopscotch on where they're available and who can access their latest games doesn't bode well for incoming gamers looking to get into console gaming. For comparison people don't like having to switch between streaming services to watch X franchise original and then Y franchise original (for example if you like DC, there's DC originals on Netflix, Amazon, and HBO Max). And that's just like the difference between a free trial or 15ish dollars for a month and you can access everything on your hardware of choice. Vs gaming where in the past ATLUS games have had exclusives across Nintendo and PS hardware. Let's say you JUST like persona (not even it's wider franchise SMT), you still would have to jump between Nintendo and PS hardware to play every persona release. It gets far far worse with publishers like Square Enix in the past. I'm really glad we're out of the days of platforms having major content differences to try and sell consoles (early inal fantasy games on Sega vs PS hardware). And it sucks when even within an ecosystem, backwards compatibility isn't well done so you have entire entries to games that can no longer be accessed without an emulator on PC even if you've only ever bought one platform (like PS).

There's so much that's been the norm in gaming, that unfortunately even gamers are still pushing to be the norm that just ultimately stifled the market. Nintendo and PlayStation don't even have free standardized cloud saves. The reality is showing us that cross play, cross saves (or even just cloud saves within a single ecosystem), and general improved availability are leading to more engagement and sales. Largely for multiplayer games, but even for single player. When a game is multiplatform it generates far more buzz and there's far less of an obstacle for people to buy it if they already own a gaming platform (like realistically how many people who only own an Xbox were ever going to go out and buy a $400 to $500 (now $700) piece of hardware for death stranding or any exclusive? Maybe enough that Sony is happy but definitely not enough to support sales of a singular game. Ultimately third party publishers and devs are just eating into their bottom line to fuel Sony's console war (and I specify Sony's cuz I think they're the only ones left who really care).

 

[Lurking_Lurker_Lurks]

It seems to me that third party exclusives are just dead for the most party. At most we're seeing timed exclusives (granted some quite a long time, but still nothing permanent). We're even seeing games never expected to go multiplatform, not just doing so with new releases but back porting games that were once console selling exclusives (like all the Persona games).

This really puts Sony into an interesting position, because they are deeply holding onto the console wars while everyone else is moving on, but the question remains of how they're going to sustain that? We can question Microsoft's strategy with putting games on other platforms, but at least they have first part content to do that with. Getting away from the Twitter buzz "Xbox has no games" Xbox has easily put out more first part developed and published games this generation than Sony did. And that's ignoring ABK and Zenimax which they have also massively built up their first party offering with. Yes there's different conversations about quality and size of games, but it should be noted that Sony themselves want more of the types of games Xbox has put out a lot of more. Sony WANTS more AA and live service games but can't seem to get that off the ground. While on the flip side their massive AAA highly acclaimed games, are getting increasingly thin margins.

Costs are rising and Xbox is trying to offset these costs by expanding the Xbox platform and even where they offer games... Sony is sticking to their guns and just pushing that cost on their customers but really how sustainable is that? And are they seriously going to support it with like one exclusive a year?

 

[fjtorres5591]

Costs are rising and Xbox is trying to offset these costs by expanding the Xbox platform and even where they offer games... Sony is sticking to their guns and just pushing that cost on their customers but really how sustainable is that? And are they seriously going to support it with like one exclusive a year?

One of the most neglected factoids of the FTC Trial (bye-bye, Kahn!) is that the bulk of Sony's actual profits come from 3rd party games. Particularly the multiplatform franchises from the big publishers. (COD, EA Sports, ASSASSIN'S CREED, etc). Exclusives, not so much. Exclusives being more for marketing the console than actual profits. Which is why their net margins are down to the very low 2 figures (12% IIRC). By contrast, MS as a whole runs at a 45% margin despite their massive AI and data center investments. Gaming almost certainly don't go that high but GAME PASS by itself looks to be close.

sony probably cut down to just the 3rd person one-and-done action games because the others don't sell particularly well: it just came out that the oh-so-great ASTROBOT game the gaming press has been pimping sold a whole 1.5M since sept. Out of their 60M installed base. And it was a known quantity from the console launch...

Makes me wonder just how well HI FI RUSH actually sold.
Maybe MS divesting the studio made sense after all?

Along those lines, WB GAMES just announced they would be limiting their output to 4 franchises: HOGWARTS LEGACY, MORTAL COMBAT, GAME OF THRONES, and BATMAN/DC. All known IPs they own/control.

Development costs are getting too high to support lesser or licensed IPs.
The latter might be why Disney is getting back into development themselves.
It'll be interesting to see what MS does after BLADE.

Cost control and ROI looks to be key moving forward. Less experiments, more annualized franchises.

 

[Kaymd]

One of the most neglected factoids of the FTC Trial (bye-bye, Kahn!) is that the bulk of Sony's actual profits come from 3rd party games. Particularly the multiplatform franchises from the big publishers. (COD, EA Sports, ASSASSIN'S CREED, etc). Exclusives, not so much. Exclusives being more for marketing the console than actual profits. Which is why their net margins are down to the very low 2 figures (12% IIRC). By contrast, MS as a whole runs at a 45% margin despite their massive AI and data center investments. Gaming almost certainly don't go that high but GAME PASS by itself looks to be close.

sony probably cut down to just the 3rd person one-and-done action games because the others don't sell particularly well: it just came out that the oh-so-great ASTROBOT game the gaming press has been pimping sold a whole 1.5M since sept. Out of their 60M installed base. And it was a known quantity from the console launch...

Makes me wonder just how well HI FI RUSH actually sold.
Maybe MS divesting the studio made sense after all?

Along those lines, WB GAMES just announced they would be limiting their output to 4 franchises: HOGWARTS LEGACY, MORTAL COMBAT, GAME OF THRONES, and BATMAN/DC. All known IPs they own/control.

Development costs are getting too high to support lesser or licensed IPs.
The latter might be why Disney is getting back into development themselves.
It'll be interesting to see what MS does after BLADE.

Cost control and ROI looks to be key moving forward. Less experiments, more annualized franchises.

I think Game Pass has been a very good hedge against rising costs and the risks of a new franchise.

It is unfortunately very real that I would generally not take a chance on a new 70 USD game I am unfamiliar with. Instead, maybe I'll wait for the inevitable jumbo sales one or two years later. This behavior in a large portion of the gaming audience generally hurts the bottom-line of new games that rely heavily on full-price sales.

With Game Pass on the other hand, I'm more willing to spread the 70 USD over ~5 months, where I can experiment with all titles that are offered during that time on the platform. Sure, I may not find any I enjoy, but the barrier to taking a chance with unknown titles is so much lower. This is very important, and is arguably the key selling point of Game Pass.

So, I still end up spending said 70 USD (albeit over 5 months) which I would otherwise not have spent on the platform if I were strictly searching for a full-price game I was certain to enjoy.
This is the secret sauce of the subscription service. It's the low-commitment, reduced barrier to entry that encourages a lot of experimentation and ultimately increases revenue.

 

[fjtorres5591]

Agreed.
MS constantly harps on this "low friction" aspect of game pass. Most recently in reference to COD. That so much of the gaming press seems ignorant of the economics of subscriptions is turning out to be a big competitive advantage to MS.

The nature of contract-free subscription services means that their biggest weakness is churn; people signing up, bingeing everything that catches their fancy, and unsubscribing for months on end. For example, STAR WARS fans signing up for a season of Mandalorian, watching a few Marvel shows, and then quitting for six months.

The only answer to churn is a steady supply of compelling content.
As in: COD just came out. A committed full year COD player is better off paying $70 rather than $20 each month. But a casual/New player might sign up to try it and/or just play the campaign. Come time to quit they might notice STALKER2 and hang around. Then for Indiana Jones. Then for Avowed. And then...
Next thing they know they've been around a year and see no reason to quit.

Game Pass has a deep mix of permanent first party titles, third party and indie timed features, and a steady stream of high profile releases. It minimizes churn and that $10-20 a month stream is consistent and nearly permanent. $120-240 a year.

Which it turns out is an interesting number...

Sony recently released their quarterly financials reporting good profits.
Of interest, they sold 77.7M games of which 5.5M were first party. Into an installed base of 60M PS5. So, on average in three months, the platform delivered about $23 a month per PS5 to Sony. (assuming zero PS4s or PCs.)

That is good money from software sales but frankly a bit low as it adds up to at most four games-worth per year. And not much better than Game Pass. Not that great a deal for players or platform holder, really.

With that kind of attach rate it is easy to see why third party developers need to look beyond their platform for revenues. Also, as I recall, the low attach rate of Playstation is not a new phenomenon; in the PS3 era it barely reached 2 games a year on average because a lot of PS3s in Japan sold solely as DVD/BluRay players (it was cheaper than the dedicated disk players). More recently live service games and time sinks also limit the attach rate.

With attach rates that low it makes sense that Sony would hype the number of consoles shipped rather than sales (I've seen estimates as high as 25% sitting on store shelves) and why MS hides both numbers.

And with low sales attach rates, subscriptions make more sense than ever, be it Core, Standard, or Ultimate. Likewise, cloud only subscription and cloud sales.

There is good money in console walled gardens, mind you, but the margins are far lower than PC software. Or cloud sales, the next evolution of high.

As I said before, there is still a need for exclusives but the real money is in multiplat. Indeed, in their quarterly, Sony promised *one* annual first party AAA exclusive.
Not sure how that will play with the faithful.

FWIW, MS is promising (and scheduled) to release 4 first party AAA exclusives a year.

2025 should be interested.