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.

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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!

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