PlayStation's problem: third-party royalties... or PS+ revenue?

It's a red pill/blue pill issue, really.

[The GameDiscoverCo game discovery newsletter is written by ‘how people find your game’ expert & company founder Simon Carless, and is a regular look at how people discover and buy video games in the 2020s.]

Well, it’s definitely a new week here in the Discoveryverse(TM). We hope you spotted our San Diego Comic Con announcement that Phase 6 of our cinematic universe will conclude with a ‘Gabe vs. Tim(s): Platforms Of Madness’ signature event? Excellent.

Oh, and a little milestone. We’ve reached 12,000 free subscribers to this newsletter, and are approaching 1,000 in the Plus paid sub - including comps & group subs. Given this a) isn’t a light read b) is a B2C newsletter, we’re delighted with these results!

[Reminder: support us and grab our current Plus paid sub discount, only around for another week. It’s 22.2% off yearly subs - less than $10/month - for extra newsletters, a Steam data back-end with vital stats on 75,000+ games & tag genres, a member-only Discord & more.]

PlayStation’s biz model: did they just choose a pill?

We already devoted a newsletter to Sony’s multiplatform future - and its prioritization of first-party GaaS (Games as a Service) revenue - a few weeks back. But with Sony’s latest financials coming out late last week, we can take a broader look at their biz.

Derek Strickland over at TweakTown has done his customary good job on multi-year graphs for wider context. But a YoY 2% revenue drop and 37% profit drop isn’t a good look for PlayStation as a division. There’s good detail shown here on ecosystem:

Sure, you can argue that ‘full game software’ is an outdated metric to use in today’s IAP or F2P-centric market? But either way, it’s a poor performance vs. Q1 fiscal 2021, when Sony at least had Returnal and Ratchet & Clank: Rift Apart launching.

So, if I was in PlayStation management, and the stock market was seeing this view of my company, I’d probably… be encouraging my third-party partners to launch more full-priced games for my 30% cut? (While prepping HQ first party titles myself!)

But that’s running into an issue that NPD’s Mat Piscatella vocalized a few weeks back. AAAA PC/console releases are either a) being delayed or b) being commissioned less:

Mat Piscatella @MatPiscatella

If you follow me you know I've been saying this for a while, but I'll say it again. The slowdown in big, mass market friendly new premium game releases has become a significant market challenge over the last few months. The consumer demand is there, but it's not being satiated.

Of course, underlying all of this stress is the COVID pandemic. There’s a ‘lockdown hangover’ from all that game playing in 2020 and 2021 - you can see it in Microsoft’s results too, where Xbox was the poorest YoY performer of any Microsoft division. (Sony’s CFO Hiroshi Totoki agreed post-COVID issues were an issue for PlayStation.)

And there’s the PS5 hardware supply issues. As DomsPlaying noted on Twitter last week: “PlayStation 5 lifetime shipments are now at 21.7M, after selling 2.4M in the quarter ending June 2022. Compare that to PS4, which was 25.4M after 7 quarters on market, and it's clear how much supply is impacting current gen.”

The ‘only on PS5 can we provide these unique experiences’ pitch was a little outdated, even when Sony started pitching it. But the continuing pandemic hardware supply issues have put another nail in that coffin. Why? Sony needs PS4 players to keep playing the hardware for years longer than they originally intended.

PlayStation Plus Game Catalog: it’s for old(er) games, silly…

So, to the ‘either/or’ discussion. As you can see above, PlayStation Plus users are fairly stagnant - at around 47 million. And the current financial reporting doesn’t split out the PS+ tiers. Thus - even if there are upgrades to PS+ Extra/Premium in subsequent quarters, it won’t show clearly.

So, to boost numbers? PlayStation could go ‘full-on Xbox’, devoting an entire, more prominent blade of their OS to PlayStation Plus. They could sign small, medium, and even large third party titles for ‘Day 1 PlayStation Plus Extra/Premium’ deals.

But, following Sony’s dev conferences held in the U.S. and the U.K. recently, that’s not what GameDiscoverCo is hearing. We wondered if Stray’s PS+ Extra & Premium appearance was part of a greater trend. But Sony seems to be saying it was a one-off, and its PS+ ‘Game Catalog’ is looking for 12-18 month old games, first and foremost.

Backing this up, August 2022 has a range of Yakuza games hitting ‘Game Catalog’ - the latest of which launched in 2020. That title is also in the base PS+ layer for August, alongside the Tony Hawk’s Pro Skater 1 & 2 remake, which launched in September 2020 on PS4/PS5. Perhaps you’re seeing a pattern here? (It is called ‘Catalog’, after all.)

So, we’re not saying there won’t be a ‘Day 1 on PS+ Premium’ indie game cadre at some point in the future. Sony’s still taking pitches for that. Personally, we think they’re missing a trick by not doing it. Titles like Lawnmower Sim (!) or Tunic were perfect Day 1 Xbox Game Pass games & wouldn’t sell oodles standalone.

But perhaps Sony is stuck in the quandary - ‘if we put great new third-party games in PS+, people will buy even less new third-party games’? To which I’d say… if there are less third-party AAA titles coming out in the future, where are all the catalog AAA titles to put in your Catalog(ue) coming from? (There is no clear answer here, btw.)

More info: data on Steam tag age & DLC stats

We had some helpful follow-ups from recent GameDiscoverCo newsletters to hit you with. And we’ll unspool them a little something like this:

• Steam tags over time: after he read our piece on the evolution of Steam tags, xPaw was kind enough to make a new ‘Steam tags over time’ page on SteamDB, with data back to 2017. It’ll be updated in real-time as tags get added, too! So now we all know that, uhh, Snooker was the latest tag to be added to Steam. Oh, and Jump Scare was added in the last few weeks, too….

• Steam tag weighting: we said you can ‘View Source’ on a public Steam page for a game, and see the number of votes a tag for your game had received. Evolve PR’s Christian Laventure ended up testing it with me, and… it turns out the numbers get semi-arbitrarily ‘fudged’ if you move your own tag ordering. So the stats, while existing, aren’t directly representative of real human votes. (Sorry!)

• More DLC data: we had a question following our piece on paid DLC about where you can get more data about DLC success. Well, three ways. First, there’s a Steam real-time ‘top DLC revenue’ chart we find very handy. Secondly, our Friday Plus newsletters often shout-out big new or upcoming DLC. Finally, SteamDB’s ‘Upcoming’ page recently added a heads-up for DLC if it’s in top-selling or most-wishlisted.

It’s interesting - the more you look around for DLC, the more you realize it’s ‘secretly’ quite big for some games. The Montana DLC for American Truck Simulator is due out this week, for example, and we’re imagining it will sell super-well.

The game discovery news round-up..

Finishing off for this newsletter, there’s really a semi-spectacular amount of platform and discovery news incoming. So let’s sort it all into buckets for you, like this:

• Valve has announced new rules for Steam graphical ‘capsule images’. So all base images now must have “No review scores… award names… discount marketing… text or imagery promoting a different product… other miscellaneous text.” You can still temporarily promote updates via capsule artwork over-rides, though, as long as you localize text and only describe new content. Sounds… sensible?

• In-person game biz event organizers are quizzed by the Game Conference Guide newsletter, and some good points on physical events and hybrid options are made, such as from DevGAMM’s organizer: “More attendees prefer offline to online, on the other hand, there is a demand for remote meetings tied to in-person events.”

• Platform update microlinks: PlayStation 5’s latest Beta includes 1440p HDMI video output, ‘gamelists’ to organize your games; Steam Deck update adds “favorite and popular guides to the Steam Overlay for easy access”; Xbox is testing a new set of logos that will appear as "badges" over titles in your game library - for disc games where the disc isn’t inserted, etc.

• More uncertainty in the mobile games/ads space: Google’s new Play ads rules on Android clamps down on ‘unexpected’ ads & generally restricts excessive ad appearances. And as MobileDevMemo notes, Apple’s IDFA hobbled other ad networks, and now it’s adding more sponsored placements directly to the iOS App Store. Fun times, etc…

• Following up that ‘Meta x Within acquisition FTC challenge’ news from last week - the New York Times provides context: “Rebecca Haw Allensworth, a professor of antitrust law at Vanderbilt University, said the F.T.C.’s arguments would face tough scrutiny because Meta and Within did not compete with each other and because the virtual-reality market was fledgling.” Another commentator suggests ‘chilling effects’ for acquisitions by big tech companies are quite possible.

• Talking of acquisitions and competition, third-parties weighed in in Brazil on the Microsoft x Activision deal, with Sony officially concerned, noting that “Call of Duty is so popular that it influences users' choice of console.” Whereas Microsoft, talking to New Zealand regulators, is less so: “there is nothing unique about the video games developed and published by Activision Blizzard.”

• It’s possibly going to be resolved for Steam soon, but the Indonesian gov blocked Steam - as well as PayPal and Epic Games Store - “for failing to register under a controversial licensing regime” in which “All registered platforms must take down content that ‘incites unrest’ or ‘disturbs public order’ within 24 hours of receiving a ministry instruction to do so.” Not an amazing-sounding law, btw.

• You know how TikTok is good for talking about games? Well, ‘actually playing games on the platform’ is still moving forward, too: “TechCrunch… has now confirmed TikTok’s new gaming pilot quietly launched just weeks ago with a variety of new partners, including game developers Voodoo, Nitro Games, FRVR, Aim Lab and Lotum.” Wonder if HTML5 games will take off on the platform?

• Microlinks: Meta’s Mark Zuckerberg sees Apple as a big ‘philosophical’ competitor re: the metaverse; mobile non-gaming Apps for the first time in the history of the U.S. App Store(s) earned more than games; 52% of surveyed U.S. gamers believe the metaverse will change the game industry.

• Veteran producer Alan Dang updated his (extremely useful) ‘game dev resources’ spreadsheet - “now with over 300 publishers, as well as Loc, QA, and Porting!” and he’s also looking for a gig, if anyone can help him out with that.

• The latest streaming stats for June 2022 are here, courtesy of SteamElements & Rainmaker.gg, and “While Twitch dropped a meager 4% - going from approximately 1.8B to 1.7B in hours watched, Facebook Gaming soared 21% when it jumped from 350M to 425M hours watched.” Also: YouTube’s Top 10 most-played ‘live’ games have a lot more mobile games in it than Twitch, interestingly.

• Microlinks, Pt. 2: IGN posted its most-visited unreleased game pages for June 2022 on its Playlist app; more info on Bored Ape x Improbable’s Otherside metaverse plans, if you care; Steam Deck orders are zooming through the reservation queue, as “many of the supply chain shortfalls that affect Steam Deck are gradually clearing up.”

Finally, and not just cos they Twitter tagged us as ‘inspiration’ for this video, the Introversion crew (Prison Architect) launched the Steam page & playtest for The Last Starship, their next game. Here’s 28 mins of stats & analysis on its performance so far:

[We’re GameDiscoverCo, an agency based around one simple issue: how do players find, buy and enjoy your premium PC or console game? We run the newsletter you’re reading, and provide consulting services for publishers, funds, and other smart game industry folks.]