Beyond Call of Duty: Subscriptions & Cloud Gaming

 From GamePass to PlayStaton Nown: subscription servises are in. 

The acquisition of Activision Blizzard by Microsoft has been quite the rollercoaster. From the initial shock announcement to all the investigations from regulatory bodies all around the world to even that FTC lawsuit. A lot of focus during all of this has been on Call of Duty, one of the biggest gaming series in the world that with this deal will be owned by Microsoft, a platformholder. Because of all this Call of Duty attention, what I feel is the first and foremost reason that Microsoft bought Activision Blizzard got snowed under. 

In this companion piece to "The importance of Call of Duty to PlayStation", my explanation of why Call of Duty is so important exactly, I dive into those reasons. Game subscriptions and cloud gaming, are two booming markets that could very well forever change the gaming landscape. 

Let's dive in. 

Embrace, Extend & Extinguish

Once the FTC lost their appeal to block the deal and the UK CMA agreed to re-enter negotiations, Sony signed that 10-year Call of Duty (COD) deal they were offered way back. Said deal is for COD and COD only. All other Activision-Blizzard titles both big and small, from the Let's Dance series to former PlayStation pseudo-mascot Crash Bandicoot, have no security to come to PS5 in the coming decade. 

Nintendo will finally get COD on Switch which is certainly nice, but a few years from now I think we'll see that the majority of Activision Blizzard games are Xbox exclusives. Microsoft might have screamed that they want to bring games to more platforms, and more people but that's not the end goal. I think that with many of these COD 10-year types of deals, they're pulling their old 'Embrace, Extend and Extinguish' strategy. 

Wiktionary describes the strategy as: 

"A strategy of marketing that involves extending widely used standards of product categories with proprietary capabilities, and then using the differences to disadvantage its competitors." 

It´s a term and strategy pioneered and used by Microsoft a-plenty. You can describe the strategy thusly: create a tool using open and/or popular standards, then create a proprietary extension that quickly gains popularity and finally use this extension to control the market and extinguish their competitor.

It aims at creating a certain standard in a certain product field by throwing one full capital weight behind it. Introduce or expand upon features that become standard and widely adopted but you keep the keys to and then slowly but surely cut off support for competitive services, devices etc. It's about obstructing the competition and getting away with it. 

In this case, I think they're trying to make game subscriptions the standard and make GamePass the market leader. Bring it to other, non-Microsoft, devices and ingrain the service to their instal basses. Do stuff like day one drops so people expect those to become the standard even though they know fully well they can only do this because of how much capital Microsoft has. 

After all, Netflix and the movie streaming wars show that these types of services can be very profitable. Especially if you are the Netflix. Are the first and therefore biggest. 

It's a strategy they have, allegedly I have to add, used before. Just look at the Microsoft and Sun Microsystems lawsuit. A suit in which Sun Microsystems alleged anti-competitive practices and anti-trust of Microsoft when it came to Java. A suit Microsoft settled out of court with Sun, paying them 200 million dollars for the breach of contract. 

GamePass and subscription services

Services like GamePass rely on quantity. The more titles are on there, the bigger and wider the appeal. That 90% of these titles will barely be played by anyone is beside the point. With the Activision Blizzard acquisition, Microsoft gets a whole bag of games to play with outside of Call of Duty. Diablo, Overwatch, Spyro, Tony Hawk, World of Warcraft and Candy Crush. Quite the grab-bag of games across consoles, PC and mobile. Games they can put on GamePass to sustain that service. 

This is where a Microsoft-owned Call of Duty is another big win for them. COD going day one into GamePass would be quite big. Many people, erroneously, see this as getting the game for "free". It isn't of course, you have to pay for that subscription, but to those who already have GamePass and who play COD, it does save them 70 bucks a year. That could eat into COD sales on PS5 and might very well pull people over to the Xbox side of things. 

It all depends on whether Microsoft thinks that putting these games on PlayStation will help achieve their goal and is worth the risk to Xbox sales. If we look at the traditional hardware battle of console vs. console, it's in Xbox's best interest to keep as many games away from PlayStation as possible. Even if they decide to play ball with, like, Crash Bandicoot 5 I can see them making the title a timed exclusive. Xbox & GamePass first, then PlayStation a few months later. Since video game sales are front-loaded that could ensure the game will sell on Xbox and potentially sell consoles to those who can´t wait to play those titles. 

PlayStation has its own subscription service that it reworked not that long ago, PlayStation Plus, but it's not on the level of GamePass. It doesn't have the same quantity of games and Sony doesn't have the financial reserves to put big AAA titles on it day one like Xbox can do nor do I think they should with their AAA outings. I see that hurting their efforts, their financial stability and the game's quality more than helping them. Keep it to indie stuff like Stray for now. They will have to step their game up, however, if they want to compete in this category and perhaps this acquisition is the motivation they need to do so. 

Nintendo, the 3rd platform holder, also has a subscription service but I don´t feel it´s in the same league as the competition. Nintendo Switch Online (NSO) is a subscription for online features and a bunch of games but the way Nintendo positions and handles it is different from the competition. It's not about letting people play current-gen games but about giving players access to its legacy content. The NES, SNES, N64 games etc. With the shutdown of the 3DS and Wii U Virtual Consoles can't be legally accessed anymore outside of the original hardware.  

Outside of the platform holders, we have some 3rd party game companies with subscription services: EA Play and Ubisoft+ respectively have access to around 100 games from their publisher's libraries. They exist but they're not competing in the 'game subscription' market I feel. They are too small, only have games from EA and Ubisoft respectively, and have to rely on other services. EA Play, for example, is bundled with GamePass for no extra cost. 

How EA makes money and markets their games like that, I don't know. Perhaps they're hoping that people get so invested in the EA stuff that when they pull out of GamePass, they will then also subscribe to EA Play? Just a thought. 

Streaming & Cloud Gaming

Streaming is yet another subscription-based battleground. Game streaming could very well become the same revolution that movie and film streaming has become, with people playing these games from everything from a PC to their phones. It's a market that both Sony and Microsoft companies have shown interest in. 

Microsoft has been ahead of the curve when it comes to the cloud. Think Microsoft Azure, launched in 2008. This, of course, has extended to Xbox. Their Xbox Cloud Gaming or XCloud service, a part of Game Pass Ultimate, has quite some things going for it. 

I couldn't find hard numbers on the amount of games you can play through XCloud but Microsoft themselves state that "most titles" of Game Pass Ultimate can be streamed. As of the time of writing, there are more than 400 games in Console and PC GamePass so I'd wager around 300 titles can be streamed. An impressive library. On the more technology-heavy front, XCloud provides a relatively seamless console-like experience on mobile devices, complete with bespoke touch controls, and the latency is some of the best in the market.

It has to be said though that, Nvidia's GeForce Now offers more games and outmatches XCloud in the latency department. It must also be said that the limitations of Nvidia must be taken into consideration. The service aims to give access to top-notch PC gaming experience for those who can't invest in a high-end PC. Over 1500 titles are compatible with the service. In terms of latency and data streaming, NVidia outmatches Xbox as well.

NVidia is also convoluted and expensive. On top of the subscription free you have to buy and launch each of the compatible games separately through one of their partners, like Steam. GeForce Now might be the 'best' provider of cloud gaming but with how much of a hassle it can be to game through it and, again, its expensive price tag it is far from perfect and leaves plenty of room for competition. 

When we look at PlayStation's cloud efforts we find a company that was ahead of the competition but, due to a lack of interest, gave this headstart away. In 2012 Sony bought a start-up company named Gaika. Gaika had one dream: to create a platform that would allow quick and seamless streaming of video game demos anywhere, everywhere. See an ad for a game on YouTube? With a simple press of the button, you load up a streamed demo of the game to try out. 

Sony tends to be very strategic with their acquisitions. They bought Bungie not for Destiny but for their expertise in live service titles. Expertise they're putting to work with their ambitious 12 live service titles they're currently developing. 

They bought Gaika, and later its nr. 1 competitor OnLive, not because they saw potential in their vision of Demo streaming but for the streaming technology they were developing. The idea of immediately booting up a game´s demo is nice for a consumer but not as wanted from a developer's point of view. You can make your game look as good as possible in advertisements. With demos not so much. Just look at Balan Wonderworld.

Once Sony had Gaika and this tech, however, they did very little with it. They incorporated the tech into its cloud gaming service PlayStation Now, which has since been integrated into PlayStation Plus. A rather underwhelming effort. A service which, originally, you had to rent PS3 games to stream them for more money than it would cost you to buy a PS3 disc at the store. It got expanded later with PS2 and PS4 games which you could download and PC streaming but it never reached any heights to speak of. Sony demonstrated that cloud gaming worked but that was as far as it went. 

Gaika founder David Perry stated in an interview about his time at PlayStation that he felt that Sony didn´t quite know what to do with streaming and lost interest in it when VR came along. Looking at it from the outside that does seem to be what happened. Because of this, while they had laid the groundwork early, they let the competition sidestep them with their cloud efforts. 

Had they had a plan, perhaps they would be the leader in the cloud gaming market right now. They've been working on cloud gaming stuff again. PS5 streaming is now in Beta and the PlayStation Portal, a streaming-only handheld device that is its own can of worms, will launch later this year. They're not the only ones in the cloud gaming market, however.  

Xbox has XCloud, contracts with NVidia and now also Ubisoft+ (a concession to get the acquisition approved by the CMA) and others for streaming deals. I also haven't forgotten about that Xbox streaming box they once worked on. They've been working on getting a foothold in that still-developing market, one of the reasons it's now a part of GamePass I imagine. Put it in front of more people and increase the value of GamePass while they're add it. 

..........

That's where the subscription and cloud gaming markets now stand in terms of the large players. Microsoft's acquisition of Activision Blizzard isn't just about Call of Duty. It's about getting more games and IP to put into GamePass. Subscription and cloud gaming services such as GamePass, NVidia and PlayStation Now might ultimately define the future of gaming. Gaming companies are well aware of this and are all working towards becoming a, if not the big player in this new gaming landscape.