Hi-Fi Rush has become the first unexpected smash hit of 2023. That’s no small feat in a year that’s supposed to see the release of games like Starfield, Spider-Man 2. Or even a month where a new Fire Emblem, a Dead Space remake, and a hotly anticipated exclusive in Forespoken all drop within a week of each other.
I think it’s worth celebrating Hi Fi Rush and the fact that it’s found an audience, but holding it up as proof that mid-budget games can be sustainable in today’s market is misguided.
This is exactly what Netflix was doing in 2014/15. Microsoft’s inability to do anything other than write a cheque has put mid-budget games in the spotlight because Game Pass. Would Hi Fi Rush have made such an impact and sold well without that subsidy? Probably not.
I’m seeing a lot of “this is how games should be released” type chatter around this game. How do you think games are supposed to sell? You don’t care, you just want good games shovelled in front of you by the definitely-not-going-away-in-5-years model of Game Pass? What an original thought!
I think it’s a rather ill-portent that the only way these kinds of games can crack the mainstream is via the largesse of one of the world’s biggest companies.
My question is whether or not the success of Hi-Fi Rush means that somebody’s willing to take the gamble. As you rightly point out
I think that people who are really invested in games (press and fans alike) are usually caught off-guard by the novelty of a stealth release if only because so much of what the industry does needs a years-long runway. I also think Game Pass eventually turns into a confusing mess of a nickel-and-dime service where you get served piecemeal games so Microsoft can hide the ball on how much money they’re actually making from you
I know it’s easy to just say “ah, they’re just bankrolling this to continue holding up their subscription service that definitely is going to go away any year now”, but it’s worth noting that:
I’d say the game is doing just fine, even if it weren’t being included in a subscription service as well. Saying that the only way these kinds of games get into the mainstream is via Game Pass doesn’t seem very accurate to me.
That’s awesome. Very glad not to have my cynicism justified in this instance!
At the end of the day, a video game that costs $10M to make needs to earn at least $10M and one dollar in retail sales in order to justify its existence. (In reality, it needs to make much more than that.) Regardless of whether you’re an indie studio or part of a megacorp, this is the logic that lies at the heart of capital.
Right now, Microsoft has proposed a different strategy to achieve positive profit. It is betting that funding 20 $10M video games a year for $200M will result in at least $200M and one dollar in GamePass subscriptions (exact numbers made up). Since Microsoft has more cash on hand than a small Balkan nation, it’s able to burn money to test its theory. If you multiplied the total number of current GamePass subscriptions by the maximum amount that GamePass could possibly cost, would that exceed $200M? Maybe, I don’t know the exact numbers.
If successful, it would be a big shift in the way games get funded, and optimistically, it could allow mid-budget games to reappear in the market. Ironically, it would make metrics for success harder to accurately measure and therefore diffuse the responsibility of a “bad quarter” away from any one game. That said, any numbers that Microsoft puts out is just creative accounting to justify continuing the experiment. Netflix found out the hard way that the spending it was doing on original content was not resulting in subscribers gained. Maybe it’ll be different for Microsoft, which has a lot more runway than Netflix to make the numbers make sense. But the axiom at the top of my post still needs to be obeyed. Money in needs to result in more money out, across the business. It remains to be seen if that will be so, once the subscriber numbers reach saturation.
Which is why, although I’m quite pleasantly surprised at the apparent success of Hi-Fi Rush independent of Game Pass, I still stand by my hypothesis that Game Pass is ultimately going to result in a lot of either little slices of game and/or a bunch of other shenanigans that let them still technically offer Game Pass but nickel and dime people to death.
$15 a month (generously - I get discounted time cards at BJ’s) times, say, 10 million subs is $150 million a month or $1.8 billion a year. That’s not chump change! But then you subtract the cost of internal development (I figure most AAA video games probably cost $150-200 million to make at this point, give or take), external licensing contracts…how much is left at that point? A couple hundred million? Less? Are shareholders going to be down for that?
The one thing to note is not all gaming revenue is from Game Pass. Games still sell on Xbox, as well as first party games frequently topping the Steam charts. Despite what the marketing indicates, Microsoft is still very much in the selling games business.
Very true. I guess being an engineer in tech kind of has me in a “capitalism comes for us all” kind of way lately lol
Last stats I saw put active subs up around 25 million. Now some of that is probably in regional/discounted pricing, instead of the full US 15 bucks. But damn, that’s a lot of reliable cash to build a business on.
There’s also been some interesting stats showing a “game pass bump” where games getting picked up on Game Pass increases their sales outside of Game Pass.
IMO: There’s a turn coming, where we will look back at this relatively golden period of game subscriptions fondly. Either MS will monopolize this, or there will be so many walled subscriber gardens…
I might be reading too much into their Redfall announcement, but their Redfall announcement had something to the effect of “You can preorder it now or play it on Game Pass. If you play on Game Pass, for an additional $30 you can upgrade to the Bite Back edition” that has the preorder bonuses and the “Hero Pass” in it. I imagine, as Game Pass goes on, you’re going to start to see two things:
And it’s not hard to imagine in a few years Microsoft saying “We’re revamping the Game Pass experience to give you more choice in how you play,” where it is
or something like that. I mean, Microsoft may wind up just pulling a Netflix/HBO and just jack up the price with a hearty “lol” but I feel like they’d be more inclined to try and hide the ball on how much money they’re extracting to not run afoul of the FTC.
But how reliable is it actually? Do people start and stop GamePass like some people do with Netflix/other streamers? Will more people start and stop it as the value proposition changes with the quality of the service?
It’s gonna get real weird real fast as soon as they figure out which games contribute most to subscription counts and which ones don’t (and how much they cost). Microsoft is a data company, just like Facebook and Google. They’ll know how to do these things. It’s a question of when not if.
Now that you put it in those terms, I could absolutely see Microsoft going great guns on procgen and AI-generated content so they can try to essentially put out a Starfield-sized project a year in perpetuity.
New story about the backend economics of Game Pass: Does Xbox Game Pass hurt a video game’s sales? - Polygon
Seems like the supposed benefits to developers to take Game Pass contracts are a bit of a mirage, like I suspected. Microsoft has deep pockets and is willing to be a loss leader and sign sweetheart deals that won’t necessarily make economic sense when the program has to actually balance its books. In a few years, expect Game Pass to be substantially more expensive and dev contracts to be considerably stingier.
I just read the article and I’m really not getting the conclusions you’re drawing from it. Microsoft’s statements back in 2018 seemed to be specific to first party games, and in those cases I can easily see how sales can be goosed by being a Gamepass drop. At Forza Horizon 4’s launch, the series was seen as niche and a lot of people weren’t willing to spend full price on a racing series. But with a day one Gamepass drop the buzz on that game hit the mainstream, and that buzz could have easily translated to sales on Xbox, Steam, and at retail. I suspect a similar halo effect happened recently with Hi-Fi Rush. Furthermore, this is backed up by Bethesda’s pre-acquisition comments about Gamepass helping to drum up interest in franchises and translating into increases sales when a new entry comes out (i.e. you play Doom on Gamepass and then you buy Doom Eternal when it comes out).
As for the disclosure that Gamepass suppresses sales for games on the service, that’s probably true when looking at third parties. I mean, I would buy Silksong otherwise, but I won’t because I can play it on Gamepass day one. But that’s offset by Microsoft paying Team Cherry for that loss in sales directly from the subscription revenue it gets. I presume some of this money has already been paid, thereby giving an independent developer an income stream before the game comes out. Maybe in the future Microsoft will be less likely to spend that money (although even in the bogeyman example of Netflix, they continue to invest in a ton of new projects), but for now indies and smaller devs are doing fine with the business model. If it ever falls apart, they can always go back to the old way of doing things.
Finally, the third thing that’s asserted in the article is that retail Xbox game sales are falling off because of Gamepass, and this is backed up by UK sales charts. And that doesn’t seem like a surprise. Microsoft is clearly emphasizing digital more than Sony, who still make it quite difficult to find the cheaper, disc less PS5. Ultimately, this isn’t showing a failing on Xbox’s part, they just don’t care as much about the Wal-Marts and Gamestops of the world.
Does this mean Microsoft should acquire Activision? Probably not. But none of what was disclosed recently is all that surprising or shows much shakiness in the subscription model, at least from how I read it.
Yes of course and guaranteeing a paycheck does wonders for an indie dev’s stability and peace of mind. I don’t mean to discount that. What I’m saying is that Game Pass, for now, is an obvious choice for indies because the terms are likely very favorable during the user acquisition phase for Game Pass. Some games have certain qualities that make Game Pass a good choice even if the terms aren’t as good (e.g. Fall Guys and other multiplayer games that get network effects from large userbases), but there will come a time when the majority of devs don’t get sweetheart deals and have to make a tougher choice when it comes to publishing through Microsoft.
Sure, some time down the line it may be less of a no brainer to publish on Gamepass, but that’s just things changing over time, and doesn’t necessarily hurt devs, at least how I see it. I’m just not sure how that translates into a mirage today, necessarily.
I actually agree with @axemtitanium’s broad strokes here. The Netflix model has minted precious few star filmmakers, actors, and production companies, even in its cash-splashing user-acquisition phase. The only way my main man Timo Tjahanto is getting off that drip is through James Wan and New Line.
What happens when Hi-Fi Rush 2 comes out and it isn’t on Game Pass? What if it’s close to full-price? These sweetheart deals do have the effect of tying your company’s brand directly to something people got for “free” the first time around.
I mean, off the top of my head, I can think of Nicole Byer, Millie Bobbie Brown, Maitreyi Ramakrishnan, Hasan Minhaj, and Hwang Dong-hyuk all becoming far more famous thanks to their Netflix shows. But I’m not sure that broadcast or cable TV, or even movies, are all that great a pipeline to minting new stars either. That’s more of a Hollywood pipeline problem than anything.
As for Hi-Fi Rush’s possible sequel, I’d argue it would be in better position to succeed now as a retail full price thing than if the first game released traditionally. I mean, how many people would be willing to pay $70 for a new IP that’s a rhythm-based beat-em-up? I’d wager you’d get something closer to a Forspoken-like flop than the viral hit that HFR is now. Sure, some people will balk at paying for a sequel, but people balk at paying for games all the time. I buy like two full priced games a year, and that was the case before Gamepass. I’ll not buy a full priced game for the pettiest of reasons. But I’d bet that would be offset by the people who loved the first Hi-Fi Rush and would gladly buy the sequel. After all, as mentioned in the article, that’s exactly what Bethesda argued back in 2019 before they were acquired.
