Business of Esports TV: Sony Takes a Shot at Game Pass

(Podcast #130)

In this segment, we discuss Sony preventing the next Resident Evil game from appearing on Xbox’s Game Pass.

The Business Of Esports brings you news, debates, and all the information you need to know about the gaming sector, the world’s fastest-growing market. With Paul “The Profit” Dawalibi leading the charge, and a variety of special guests, BoE TV is the only place to find insider information on the esports industry!

Check out the full podcast here:

Paul Dawalibi 48:28
No, and it’s like, to me this is classic, like pre IPO playbook also, right? It’s a big sort of big brand kind of deal that it’s gonna push big growth numbers to your point Jimmy right. Like I That, to me, this feels a lot like we’re gunning for that $30 billion IPO that $30 billion public valuation and this is one of the ways we get there. It makes me even more confident by the way in my $30 billion valuation prediction on Discord. Guys, let’s let’s stay on the Sony theme here because there’s there’s more Sony news this week. And and this one was interesting. This one the headline was, let me just pop it up here. The headline was sometimes these don’t work. If this is not working. I’m just going to tell you guys what the headline was. The headline here was Sony reportedly preventing Resident Evil village from being on Xbox game pass. So this is not like one of the most anticipated titles of the year. It’s a you know, it’s the title that Sony’s putting out.

William Collis 49:37
But it’s not your Resident Evils a pretty big franchise. I think it’s safe to say this is one of the largest releases at least this month, if not this. Sure, sure. Yeah.

Paul Dawalibi 49:45
But according to leaked documents, the deal between Sony and and an Xbox is that Microsoft is prevented prohibited from distributing the game through Xbox game pass. Now, on this podcast we’ve been huge fans of Xbox game pass I think William is fair to say right. And I think

William Collis 50:13
it’s the one of the major drums we beat is that game passes a huge force in the industry and it’s only going to grow more in importance in range.

Paul Dawalibi 50:22
And so this this to me, I think is the first time I think publicly I’ve seen a story like this where a publisher in this case, Sony, is actively saying, look, Microsoft, we’re willing to have our game on Xbox, but you cannot put it on Xbox game pass. Is this is this a red flag for game pass?

William Collis 50:44
I don’t know how you’re This is the power of game pass. Paul, this is the power of game paths how dangerous it is in the industry is a force for control for Microsoft and because Sony is willing to let it go to let what was previously the ultimate taboo like cross system now they’re happy to let the game go to an Xbox so Xbox users can buy it, but they are not willing to let it be part of game pass right there. They’re essentially saying that to some extent, debut game pass as more of a competitive threat than the Xbox console or at least an Xbox console launch right? And the reason for that is pretty simple. Why do they not want an on game pass? Let’s just be explicit here. It’s because they don’t want Resident Evil to drive game pass adoption. They don’t want people who Sony’s put a lot of money it’s this resin evil seven right the village right put a lot of money in developing it. This is a you know, yeah. Eight what I can’t keep track whatever. resin evil everything everything past three for me the franchise didn’t know it’s not sure everything past four, four was with the franchise stop. Right. But um, yeah. But like, Look, they because their fear is that people want this game. You know, I do think this is a game with a strong niche audience. If you are a Resident Evil fan, you have been a fan of it for a long time. Right? It is one of the few sort of marquee action IE survival horror games that scratches that itch. It’s basically this and Silent Hill. And they don’t want a game that they’ve worked hard developing to be driving the adoption of a major service for their competitor, right? That they are scared is actually, as I said earlier, more threatening to them in terms of this lock in subscription model than the actual Xbox platform. So they’re fine if you buy an Xbox to play this game, but they do not want it to be that hook that gets you on the subscription game pass model.

Paul Dawalibi 52:31
Jimmy, you had some thoughts on this.

Jimmy Baratta 52:33
I just keep nodding my head. I wholeheartedly agree with William, I want to add you know that something that’s interesting to me, and we’ll get to in the next story as well, I’m sure. You know, on one hand, you have Sony doing these deals that you think enhanced cross platform play. And then here you wonder, Well, why why are they preventing, you know, use of this title on Xbox. And Paul to your point, you can still buy it on the Microsoft Store, right? You just can’t use it on game pass. And William just hit it on its head. Right. It’s this is Microsoft’s most innovative initiative for the past few years. And certainly the next several. I think we all agree it’s it’s, you know, we’re keeping a close eye on this. I know I am I’m excited to see where it goes. And in what kind of users it It grows, and more importantly, also what games it gets. Because currently, it’s not enough for me personally. But um, but the fact that Sony is okaying, certain cross platform things and then pulling back in other areas. I think they’re scared of game pass. Not Not a lot more honestly, to add. I think William said it pretty well.

Paul Dawalibi 53:35
Let me just, you know, there’s one thing neither of you guys mentioned, which is, I get that Sony scared that Microsoft’s game pass product could be too successful, right? They don’t want to encourage the growth of game pass. But it could just be that I think one of the things factored in here is maybe they just believe long term, the economics of being part of game pass are worse for them than selling more box copies, right in the same way that the music went through the same thing. They all you can eat, you know, Spotify $15 a month service, I think has resulted more in a in a decline in artists revenue, not an increase in artists revenue, right? Like artists made more money in the 90s selling lots of CDs. Now, I agree that game passes success and other all you can eat services like this are probably inevitable. But do you not think that Sony just looked at this and said, Wait a second, like why would we cannibalize box copy sales by giving this away giving it away? Obviously, they’re getting paid for everything that gets downloaded on game pass, but maybe not as much. Why? Why distribute this through game pass and cannibalize our own sales. Do you not you guys not think that maybe that factors in and if that is the reality, that game pass could end up getting quite a bit of pushback from publishers long term right? As gamepass gets bigger and bigger and more and more successful, you may get publisher saying, Wait a second, like, Matt, now now I’m forced to be here, or no one will pay well, by my play my game.

Jimmy Baratta 55:13
You know, I would sooner I think anyone that doesn’t go the free to play route or a cheaper subscription route is kind of missing the boat here on what gaming is opened up for the world. I agree with you, obviously, you know, musicians in the 90s compared to today, but opening up lowing lowering the barrier at the point of entry, right that paywall feature expanded gaming into 10s of 10s, if not hundreds of millions more households of middle Americans that couldn’t afford a $60 desk in hand. And I don’t think Sony doesn’t get that I would sooner believe that Sony has their own game pass competitor that they’re in the works with and that they’re protecting this from to us, they’re then to think that they just want to make, you know, a couple of $60 sales here and there. So

Paul Dawalibi 55:59
you don’t think we will ever see pushback from publishers on mass, like in quantity against game pass type services? You,

William Collis 56:09
you might bet it’s different than what’s happening here. Right? I think this is really a war of strategies to there’s a transition in the industry from consoles. As the walled garden, you try to lock people into subscription services. That’s what’s really happening here. And I think that it’s most apparent would like that Sony is firing a volley in the early stages of that war, there could be another war about subscription services, eating the revenues and pricing power away from publishers. And we might see that war too, it’s certainly a possibility because subscription services are appealing to consumers because they get the cost out right. Like you get more games for less money. It has to come from somewhere. Spoiler alert, it’s coming from people who make the games, right. I mean, that’s simplification, you make it up with volume and everything. But you see my point, right? So we may see that war coming, but I don’t I think that’s a later stage war that takes place. And I think the war now is around which subscription platforms locking consumers and Microsoft has a huge lead is way far ahead. has a really awesome offering. I mean, game pass is just awesome. What’s on it. It’s incredible. And it gets better every day with like the editions of Bethesda and everything. Now it’s just, this is a competitor seeing another competitor with a product that is too strong and market and saying I’m not going to let my hard work accelerate your traction here. Plain and simple.