With the PS5 and Xbox Series X prices and release dates imminent as well as a host of upcoming games from both first and third-party developers, both Sony and Microsoft are also priming their subscription-based offerings. From a consumer standpoint, the short-term benefits of the likes of Xbox Game Pass, Xbox Live, PS Plus, and PS Now are obvious, at least in developed markets like the US and UK. In countries like India however, these services are beset by their own challenges such as pricing. And it’s not limited to consoles either. Game subscription services on mobile are far from ubiquitous right now. We spoke to several industry leaders to find out more.

“India has a large and diverse population of gamers; we’re always looking for new ways to engage with the community wherever they play, across both console and PC,” says Microsoft’s Parimal Deshpande, Global Director of Marketing for Xbox Game Pass when asked of the issues faced by the company to grow its marquee subscription service in India. From September 15, Xbox Game Pass Ultimate users will be able to play Xbox games via their Android smartphones or tablets via Project xCloud. Unless of course you reside in India.

Right now, Xbox Game Pass Ultimate for PC and Xbox One costs Rs. 999 while purchasing it for just Xbox One or PC is Rs. 699. Microsoft has an ongoing promotion for Xbox Game Pass PC users, dropping it to Rs. 329 a month.  Regardless of the plan you choose, the first month is Rs. 50. Deshpande claims that Microsoft’s Xbox Game Pass pricing strategy for India is focused around “looking for new ways to provide games with the best value and choice”.

Xbox Game Pass India price needs to be lower

This appears to be in line with what industry analyst Piers Harding-Rolls Research Director for Games at Ampere Analysis thinks. Ampere Analysis is a data and analytics firm focussing on the global games business.

“I think the platform holders will be examining all types of pricing models for important, high-growth potential markets such as India,” he says. “Local pricing is likely but I think the extent of discounting depends on specific service, partnerships and device support. For example, if and when PS Now launches I think there will be local pricing but because it is PS4 and PC based I’m not sure it will be vastly different to other markets. However, if Microsoft partners with Reliance Jio and the mobile-only nature of the cloud version of Xbox Game Pass Ultimate, gives it the framework to offer a significantly cheaper offer to Indian consumers.”

The possibility of a mobile-based framework for subscription services hitting mainstream adoption isn’t far off according to Daniel Ahmad, Senior Analyst at Niko Partners, a research firm that tracks the China and Asia games markets extensively.

“Subscription services are offering far more value to gamers than purchasing games individually,” he says. “Subscription services like Game Pass are reaching not only existing gamers, but new gamers and lapsed gamers, and driving engagement and spend across the market. We view subscriptions as additive to the video games market. We believe that there is room to experiment with pricing and offers for certain markets. In regards to Game Pass, while players in the West may find a $15 Ultimate subscription affordable to use console and PC, players in South Korea and India may benefit from a lower cost package that is designed for mobile devices.”

Xbox Game Pass and PS Now need mobile to grow

Even platform holders like the aforementioned Reliance Jio concur that an acceptable baseline price is the way forward. In a recent industry panel Ashish Gupta, General Manager – Lead Games Ecosystem for Reliance Jio stated the need for setting expectations right between game companies and users.

“As an ecosystem, we can connect the user to you,” he says. “We can distribute a game from a developer to an end consumer. But then expectation between dev and user needs to be set right. We talk every day to a lot of gaming partners and what I have realised is their mindset is even if it is an India studio is ’Latin America se itna paisa aatha hai, uthna yahaan se nikhal lenge’ [translates to: ‘we’re making so much money from Latin America, we should make at least make the same amount here’] but that doesn’t happen and this is not going to happen. You have to establish the relationship with the users and the expectation has to be set right. We have gamers? Yes. We have paying gamers? Yes. Do we have a payment mechanism? Yes. But still we have to see our pricing correctly, our strategy correctly.”

And it just might be a scenario where subscription providers like Sony and Microsoft may need the likes of Jio to grow their base beyond what they already have.

“Subscription gaming services remove barriers to entry for most and can reach a broader gaming audience beyond console,” says Ahmad. “If these services can achieve scale they can become profitable fairly quickly. This will require uptake beyond console players. Sony and Microsoft have already been successful with subscription services on console such as PS Plus and Xbox Live.”

Gupta revealed that Jio saw 28 to 30 percent growth in data consumption on mobile over the last three months. He also claimed that the telco giant has as a 144 million user base that play 22 minutes of games a day. The Mako Reactor reached out to Gupta to clarify if he was referring to Jio Phone users, which he confirmed was indeed the case. Considering Jio is working with Google and Qualcomm to develop an entry-level smartphone, we won’t be surprised to see its existing Jio Phone user base migrate to what it has in the works.

What Xbox Game Pass and PS Now can learn from PUBG Mobile

One way for subscription services to scale for a wider audience could possibly involve adding free-to-play games.

“Shifting services into the cloud environment changes the commercial framework and places further constraints on the model, but also potentially reaches more people,” says Harding-Rolls. “Operators have to think closely about including free-to-play titles in their cloud gaming services and I think will be looking at games on a case by case basis to better understand monetisation.”

Turns out platform holders like Jio have been keeping an eye on the space. Specifically thanks to a rather popular Tencent-published battle royale shooter.

“If you look at PUBG [Mobile] as an example: for initial six to seven months they did not make anything,” Gupta says. “They never monetised through ads. They just wanted to have more and more engaged users and just focussing on the product.”

It’s a relevant example when you consider that most of PUBG Mobile’s revenue comes from its Royale Pass, which is essentially a subscription service.

What this would mean is, subscription services like Xbox Game Pass and PS Plus are up against quality free-to-play experiences like PUBG Mobile and Fortnite (Sony India declined to participate in this story citing “global mandate”, odd when you consider that its PS Plus service is a part of the PS4 success story it’s been talking to the press about).

Nevertheless, Microsoft’s Deshpande pointed to Xbox Game Pass’ curation as being a major plus point.

“We offer a highly curated library of titles that is regularly updated so that gamers can always find something new to play, including Xbox Game Studios titles from the biggest franchises like Gears of War, Halo and Minecraft the same day as their global release,” he says. “Members can always find what’s new and additional benefits they may receive like the Xbox Game Pass Ultimate Perks program in the Xbox Game Pass mobile app, the Xbox Game Pass tab on their console dash, or within the new Xbox app for PC.”

Although these features make sense for Microsoft’s biggest markets, with Deshpande claiming that “more than 10 million members from 41 countries including India” have signed up for Xbox Game Pass, the overall target audience is “two billion gamers world wide” that transcends PC and console users and would include mobile.

Adapting subscription services to China and India

With a global audience, it will be interesting to see how the likes of Xbox Game Pass are tailored to different markets like China and India.

“With free-to-play being the dominant distribution model for gaming in China, subscriptions that offer multiple games are not hugely popular yet,” says Ahmad. “Instead we see value-added subscription services built into app stores or games themselves which offer additional perks and member benefits in various titles. Subscription is one of the models being experimented with in the cloud gaming space in China, along with a pay for time model which was popularised by early PC games.”

Don’t expect the landscape of gaming to change overnight though. Subscription services will add an additional revenue stream for game makers rather than be the de facto standard.

“Subscription services will play an increasing role in the total opportunity for games content monetisation,” says Harding-Rolls. “However, we won’t see the wholesale changes we have seen in the music and video spaces. For example, subscription revenue will continue to be dwarfed by in-game monetisation. Subscription services increasingly act like marketing platforms, giving games that want more exposure a platform to reach new audiences. Games can then monetise further through micro-transactions or premium sales outside of the service.”

This has been the situation with Xbox Game Pass at least. Microsoft cuts deals with developers and publishers on a case by case basis. An IGN Unfiltered Podcast featuring Sean Krankel, founder of indie studio Night School suggested a minimum guarantee was paid upfront for bringing its debut title, Oxenfree to Xbox Game Pass.

In a now deleted tweet, he said the game had “one million sold, three million plus installs via Game Pass and some other giveaways.”

What PS Now and Xbox Game Pass could learn from caller tunes

Granted this could be the upside for a niche indie title geared towards a mature audience that grasps what a narrative-led title like Oxenfree is about, it’s far from ideal for developing, mobile-first markets like India.

“If you look at Google Play or App Store you have monthly subscriptions only,” says Gupta. “For a small application to modify photos, they have subscriptions for a month or a year. Why can’t we have subscriptions for one week or one day? Why don’t we have daily passes? If I know I am paying Rs. 50 to play this game for one hour I would like to give it a try rather than paying Rs. 500 and I don’t if I’d keep playing. Sachet pricing needs to be introduced in subscriptions.”

Many a developer or publisher would view lower pricing with concern, assuming it devalues content. Gupta is of the opinion that it would be necessary to hit mass market pricing. He points to the success telco operators had with caller tunes.

“For the mass market we have to introduce such models where they pay you Rs. 15 every month,” he says. “If you remember we had a VAS business where people were paying Rs. 30 for a caller tune. That is basically one rupee every day and no one was bothered. Everyone was paying Rs. 30 for a month right? To Airtel to Vodafone. And what was the value of it? If someone calls me he will listen to my favourite song. That’s it right? And they were paying one rupee every day for that service. If I tell you the overall revenue for that business, it is huge, it’s big. We’ve not crossed those numbers ever…For mass audience where the entire nation lives, you need to find a unique model.”

The general takeaways are obvious. For the likes of Xbox Game Pass, PS Now, or even other subscription services to thrive in developing markets like India, a mobile-first approach with the right pricing is necessary. Assuming the cost of data stays the same, it could result in the optimal conditions to see more of the world jump into video games. Though this isn’t the first time game companies have tried to make subscriptions a success in India.

A decade ago Indiagames and Nazara partnered with local telcos for their subscription services like Games on Demand and Nazara Games Club respectively. How it worked was: signing up for either service waived any data charges incurred while using them (disclosure: I’ve worked on Games on Demand for PC in the past).

While this could alleviate some pain points, I’m not too sure it would be well received in a market where users are now vocal about net neutrality violations.

That said, the concept has already seen some high-profile failures like Apple Arcade with a content pivot mere months post-launch and while some are talking up the creative and financial freedoms some deals have offered, like most services in the country, a lot of it hinges on execution for it to be sustainable.