Game Industry Needs More and Better Ways to Make Money, Microsoft Says

Xbox boss Phil Spencer says the movie and TV markets do a good job monetizing their back catalogs, but video games are lagging behind.

To offset the risk that comes along with developing big-budget games, the video game industry needs more and better monetization methods, according to Microsoft's Xbox boss, Phil Spencer. Speaking with Game Informer, Spencer said the movie and TV industries have done a good job monetizing their back catalogs through "meta-subscription" services like Netflix and Amazon Prime, and video games are lagging behind.

"Building big, AAA games is expensive. It's high-risk," Spencer said. "One of the things that we need to do is think about as an industry are the windows of the content and how to monetize better. There are different ways to monetize the back catalog. EA's trying here [with its subscription-based program EA Access]. Us platform holders have Games with Gold and Sony has PlayStation Plus. Movies do a good job of this, TV does a good job of this. I think it's a space the [games] industry has to evolve, because the people who own the content need to continue to monetize in interesting ways. Subscription's a good business model."

Though Spencer said he's optimistic about subscription services for games, he made it clear that this model remains unproven for games; after all, EA Access was only released publicly on Xbox One this week. "Frankly, EA Access is going to be one of those things the industry is going to learn from," he said. The movie and TV markets, of course, are much older than the video game industry and have had time to try new things and learn what works best. Compared to those industries, video games are still in their infancy, and it makes sense that the major players don't have everything figured out just yet.

One major way publishers and developers have attempted to monetize beyond the initial purchase is through downloadable expansions and microtransactions. Those models have been met with some level of consternation from gamers, but that hasn't stemmed the trend.

Also in the interview, Spencer talked about Kinect for Xbox One. He said the standalone Kinect is still coming this fall, though he didn't share a specific release date. Regarding price, he suggested it will sell for somewhere north of $100. "We need to get the prices [set]," Spencer said. "I want consumers to make decisions when they're fully informed. The price difference will be more than between the console (bundles)."

What do you think about monetization in video games? Let us know in the comments below!

Eddie Makuch is a news editor at GameSpot, and you can follow him on Twitter @EddieMakuch
Got a news tip or want to contact us directly? Email news@gamespot.com

Written By

Eddie Makuch is a news editor at GameSpot, and would like to see the Whalers return to Hartford.

Discussion

436 comments
smackdowner360
smackdowner360

The gaming industry makes more than enough money.The problem is the ceo of all these company's.What needs to be done is a 50% pay cut in all of their crazy high pay.No ceo needs to make $40 to $80 million a year.That would fix the problem the first year hands down.That needs to be done with every company not just the gaaming indusrty

Darklurkr23
Darklurkr23

i thought that was GWG and PLus is?  Isn' that showcaing the bvacklog?

jayydee92
jayydee92

This comment section gave me cancer. Seriously, Gamespot has managed to cultivate a terribly annoying community. 

yaintknowme
yaintknowme

The difficulty of monetizing video game back catalogs is the entire industry/media/fans are focusing solely on graphics and players see old graphics and turn their nose up. Its no different than the brain dead dummies that bash Jaws because the shark looks fake. They are missing the point of the movie. Just as gamers who cry about 1080p and think anything less is unworthy. There is more to movies and games than the amount of polygons on your character.


Also as with movies when the great story and gameplay is there we will come back to play them. Star Wars comes to mind. There certainly are some ignorant pin heads that will bash those movies for graphics but the graphics of 1-3 didnt make those movies better than the originals. Far from it in fact. 


TLDR version: focus on gameplay and we will play the game whether they are new or not.

TitanPolaris
TitanPolaris

I for one have seen this coming with digital downloads on Steamworks and the phasing out of discs in general on PC. Now with M$ "boss" bellyaching about not making the crap load of money that Hollywood makes with it's SAME BAD retread uncreative products that they put out like the AAA game makers do for us gamers and charging over $10 a ticket for a night showing at the theater, now they want that same pricing crap that the likes of the movie "rental" places do like Netflix and Xfinity do already for the console industry but decentralized to the various game publishers instead of M$ and get rid of the disc drives for their products like with DVDs instead of buying them used or for cheap so you do not have to have a high speed internet connection for rentals like what PS Now and Streaming has to have now.


Note to self as a gamer and a movie lover, BUY as many DVDs and old PS3/360 games on Amazon.com, and at the local big box store before this transition from discs to full digital "air" media completes. Thanks for the heads up M$ you and EA saved me a bunch of money as now I am officially now a Generation 360/PS3 gamer from now on with your greedy tactics trying to bend the industry to your wishes that will make this console generation the last generation that low budget gamers will ever know for AAA game lovers that do not have a $5000 gaming rig for PC ports! 

Yeah I know that this current console generation has disc drives, but I have noticed that there is no more printed manuals anymore when you get games as they are now digital on-disc PDF format when they started this about a year ago, so what is to stop them from doing this to the consoles as well like they did to the PC?

I just wish that Sony, Nintendo, or some other big hardware maker could stand up to the likes of M$ and EA with their bulling of the other game makers that still want to do disc media without being overtaken by them and being forced out of the industry. I know that money talks but I do NOT believe for one second that the video game industry is in a free fall like in the mid 1980s. Somebody has release the true NUMBERS of units sales sold to the consumer (not the stores) and overall profit margins of these companies and let us see for ourselves if they are making MORE money, or LESS money with a chart over the last 5-10 years in order to clear this up once and for all, because at this point I for one do not believe a single word that comes out of any CEOs mouth anymore with this bad PR as a consumer that has dropped hundreds of dollars in the last decade on PS2/Xbox/GameCube 360/PS3/Wii era games along with PC games and now for the first time I am considering not buying any new games with this new subscription based model akin to Xbox Live.

medooder
medooder

this has to be the biggest load of crap i have ever read. I'm about to trade my xbox in before it's too late. It's stuff like this that makes me not want to buy games. Speaking of microtransactions... how a game like Titanfall can get so much applause and advertisement, sell for $60, come out with some bs map pack for $10 every other month, basically come out unfinished with no other content besides aimlessly killing online, no sense of reward/accomplishment, a campaign disguised as online multiplayer with some dude yelling random sh** in the corner of the screen, I'm just so sick of it. Microsoft, you have truly disappointed me this generation....

hotwog21
hotwog21

These are some of the biggest lies I have ever read. The video game industry has 


grown TREMENDOUSLY over the last two decades. What Microsoft now wants to do is take 


away our rights as consumers to games we purchased. They want a subscription based 


model that steals our ability to play the game forever, loan to a friend, or sell. 


This model Microsoft is trying to implement makes me sick.

hotwog21
hotwog21

i dont get it, cod, fifa battlefield, assassins creed, etc all get reskinned and repackaged and they keep breaking record profits each year, and we are dumb enough to buy every yearly installation and they still complain.


And when they call us gamers ''a  market'' it makes me feel so special.



Sony is trashing you microsoft but your too arrogant

give us a reason to buy your product

make it backward compatible with xbox 360 and xbox live arcade games

enable chat between xbox one and xbox 360

make xbox live gold free or

make online gaming that is superior (sony has overtaken) eg. do something about the lag!!!

you have a chance to bring arrogant $ony to its knees and do something amazing for the gamers, which you claim to always be listening to (more like back pedal when we rage at your next greedy business model)


then you might get back in the race

until then choke on your poor sales

Kiaininja
Kiaininja

Maybe they can save money if they cut back on celebrity voiceovers and big budget hype trailers. And then put some off that money saved into developing the gameplay better to make it worth buying for gamers.

Darknight765
Darknight765

I think the trolls on here don't seem to understand what he is talking about. Movies/tv shows make money off of their products long after the initial release. This is done by resale to new networks, netflixs, DVD release, etc. games on the other hand only make money for the first 6 months to a year. After that profits are almost nil. I would rather pay a $30 a year for something like EA Access with a library of "full" version games instead of DLC. DLC is getting to the point were you literally are buy the same game twice to get all the features. By all means Phil, find a way to get me more content without ripping me off and still turn a good profit.

lcrava
lcrava

I don't get the MS executives. If they just kept their mouths shut the Xbox One would be selling a lot better.

TenraiSenshi
TenraiSenshi

Something tells me that these are the kinds of thoughts best kept to yourself Phil. You're certainly not going to increase your fanbase by sharing them.

pyosisified
pyosisified

Microsoft hasn't released a SINGLE good game since Age of Empires 2

PETERAKO
PETERAKO

"Building big, AAA games is expensive. It's high-risk,"

has anyone ever tried to pour some money on research of ways to streamline and optimise development of games, to find new ways to do stuff? Arent you people smart enough for this? What about all the phds and bachelors and whatever degrees you posses?

jenovaschilld
jenovaschilld

 To offset the risk that comes along with developing big-budget games...


The best way to offset that risk is to just make a damn good game. EA is so busy with tricks and steals, and DLC, and metadata sales, and hidden costs and DRM programs on your pc, they forget the number one way to make money, sale a well made product at a fair price.. people will throw money at you. 

jdc6305
jdc6305

"Game Industry Needs More and Better Ways to Make Money, Microsoft Says" As if milking us on DLC and microtransactions aint bad enough WTF will they come up next? Leave it to M$ they'll figure it out. As for myself I'm about finished with modern gaming. I will not buy DLC for games and it's cutting into my gaming habbit. I'm might just go all retro.

thermalmotion
thermalmotion

Microsoft hasn't had the success it predicted it would have, of course they're complaining. 

There are developers making wonderful and hugely successful games. but nothing is ever good enough for the ghoulish greedy corporations lurking in the shadows behind them.

They flaunt and complain, why the hell do we care what they say.

mr_nee
mr_nee

TRANSLATION: Our last attempt to milk bots failed, because they began to convert to ponies. Now that we've congratuleted Sony, said we are listening and bone is best place to play, our image is restored and they blindly beleive us again, now we can think of new ways to milk them again -- it might work this time.

straightcur
straightcur

A Netflix like approach would be great and a big success.  The problem with EA, is that it's just one publisher. They are too greedy and don't want to cooperate.  Every publisher with their own subscription will become a huge cost burden.   One service with all publishers, and a variety of games would make money for them and a great deal for gamers.   The publishers, and MS and Sony too, need to let go of some of the control.  Let success happen!

crusaderprophet
crusaderprophet

I really hope he meant to add at the end "without losing the fundamentals of ethics, integrity and soul of indie" on the way of becoming rich unlike Hollywood did a long time ago.

deadpen
deadpen

WHAT? Need more ways to make money LOL.

northArrow
northArrow

Attitudes like this is why the original Xbox's policies were so unpopular. "More and better monetization methods" is just another way of saying you plan to bleed your consumers dry, charging more and providing less

hystavito
hystavito

Monetize this, monetize that, stuff like "monetize beyond the initial purchase", this is all for business analysts and investors and such, doesn't really sound so great to gamers :).

quicktim3
quicktim3

and thats why all this timed exclusive stuff is now existing


as AAA get more expensive to make, just releasing it as multi-platform isnt enough.


so to get more money they're now making partners with sony/microsoft and nintendo(to a lesser extent) for all this exclusive crap. 




AyatollaofRnR
AyatollaofRnR

Sony is trying with PS Now, but over priced delivery of old games seems to have limited appeal. I think EA access is a better approach.

qtmew
qtmew

I'm in no mood to say how silly is this within a mature tone... so, fueck ya!

xblorder
xblorder

How about this, instead of upping the price and finding new ways to milk us lower the price instead.  More people inc myself are likely to buy more games new when they are cheaper.  Charging $40-50 for a two+ year old game isn't the way and upping the price won't help.  

xson
xson

Quality game like Tomb Raider still cannot make big earning for SE.

How good we need to make profit for AAA title...?

CruorComa
CruorComa

I got an idea; stop wasting half a games budget on advertising.

b1ank
b1ank

Industry will get more money when we get more decent games

Deingerous
Deingerous

I understand what they're saying but it's the "nature" of the beast that's the problem with video games (as applied to reselling classics). Technology is the problem with video games, same with any other industry I suppose but more so in video games because the limits of the tech at any specific time directly affects what can be made on that system. You'll always have "classics" I suppose but most games of the past as in a solid 80% of them are completely unplayable today simply because the designers didn't have the time or budget to adjust to the tech or they did absolutely everything they could with the tech at the time and to revisit those mechanics would be quite unpleasant today. Movies and music don't have this problem because for a consumer it's completely directed for you. Phones are a good example aswell, for me to use the very first iPhone now would be a complete pain in the ass but at the time it was fantastic.

somberfox
somberfox

"Building big, AAA games is expensive. It's high-risk," Spencer said. "One of the things that we need to do is think about as an industry are the windows of the content and how to monetize better."

Or you could stop the obsessive focus on spending massive budgets on games. Learn a thing or two from indie developers who manage success with a miniscule fraction of the budgets you spend.

Jinzo_111887
Jinzo_111887

@hotwog21 Like I said, MS has already done a lot of damage to the video game industry. I'm glad Valve's bringing PCs to the console arena, would make a good replacement for the Extortionbox brand.

Jinzo_111887
Jinzo_111887

@hotwog21 I'm kind of hoping they'd drop the online multiplayer fee to get Sony to do the same, but that's just me. I'd also settle for them being replaced by what I call the Steam Rollers.

Darknight765
Darknight765

That was truly an ignorant comment. Why do you think graphics get better over time on the same hardware.

lcrava
lcrava

The funny thing is, a lot of movies cost the same or more than AAA games and the studios are doing just fine $$ wise.

What they really need to do is listen to their customers for a change and tone down the arrogance of thinking they know what we want better than ourselves.

bwvictorious
bwvictorious

@PETERAKO 
Of course they have:
You get a license for Unity, Unreal, CryEngine, etc etc etc and then you dont have to bother with this particular part of development.

Most expensive part of dev is actually asset creation -> sound files, 3d models, animation. Specially with the constant need to make it incredibly life like

mr_nee
mr_nee

@straightcur it would be great if I could choose PSN+ game of them month from a huge library

Jinzo_111887
Jinzo_111887

@northArrow Its a shame Sony resorting to mimicking MS with the online multiplayer subscription fee. I hated that policy most out of everything. The always online DRM and no used games were a pretty close second and third.

mr_nee
mr_nee

@quicktim3 and then they cry that they are not quite happy with the sales of Ryse

straightcur
straightcur

@AyatollaofRnR  We'll see what the service is like when PS Now introduces a subscription option.  Might be good, might be bad.  We will see.

northArrow
northArrow

@AyatollaofRnR I'm not going to defend Sony's pricing, but I don't have anything good to say about EA Access either. 4 old games they can't sell anymore is a poor justification for another subscription fee. I'm curious to see what they do with the program

Jinzo_111887
Jinzo_111887

@qtmew Hint: Try imagining Professor Snape from the Harry Potter movies when typing a reply. It worked for me before.