Analyst: Highest-Priced PlayStation Plus Video Game Tier Will Drive Subscriber Growth

Sony Interactive Entertainment’s newly consolidated PlayStation Plus subscription digital video game platform should see an uptick in subscriber growth, thanks in part to the features afforded on the most-expensive ($17.99) monthly ($120 annual) PlayStation Plus Premium Service option, says a Wall Street analyst.

Kota Ezawa, with Citigroup Global Markets, suggests that access to more than double the number of games (340) offered on the $9.99 monthly ($60 annual) PlayStation Plus Essential plan will entice gamers to spend more.

“We think the number of subscribers who will opt for the pricey PS+ Premium package will rise,” Ezawa wrote in a note.

In 2020, the worldwide online gaming market generated about $21.1 billion in revenue, a record 21.9% uptick from 2019, due in large part to the pandemic.

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This week, Sony consolidated its PlayStation Plus and PlayStation Now digital platforms to better compete against Microsoft’s Xbox GamePass and Nintendo’s Switch Online subscription-based digital gaming services.

The rebooted PlayStation Plus enables subs to play PS, PS2, PS3, PS4 and PS5 titles online, while also offering multiplayer functionality at no additional cost. Ezawa says the PlayStation Plus platform offers “greater quality and quantity” of games than its predecessors.

“On the [Premium] contract plan, users can freely play up to 740 titles,” Ezawa wrote.

Futuresource: Video Games Entering ‘Netflix’ Moment

With the pending arrival of new-generation video game consoles from Sony PlayStation and Microsoft Xbox, the transition toward online gaming, including subscription-based platforms, is heating up.

New data from Futuresource Consulting said worldwide consumer spending on game software, hardware and accessories reached $194 billion in 2019 — excluding another $17 billion spent on in-game ads, video streaming sites and e-sports.

Specifically, London-based Futuresource contends gamers will increasingly switch to subscription-based platforms such as Fortnite, PlayStation Plus, Google Stadia, GeForce Now and Xbox Live Gold and Game Pass.

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“Gaming may be on the verge of having its Netflix moment,” analyst Morris Garrard said in a statement. “We’re seeing it transition from one-shot content sales into all-you-can-eat subscription-based content access.”

Garrard said widespread adoption and consumer spend on subscription-based games will drive platform adoption.

“As these platforms gain more extensive content catalogs, consumer traction will increase, accelerating the transition towards all-you-can-eat gaming subscription services,” he said.

Software, which includes packaged media and digital game titles, remains the “golden child” of gaming, generating $143 billion in revenue in 2019, or 74% of total gaming spend across software, hardware and accessories, according to Futuresource.

As increases in connectivity and on-device storage have facilitated a move to digital content, software monetization strategies have evolved accordingly.

“Games publishers have adopted innovative ways to profit from content, from the sale of downloadable content, to in-game sponsored advertising [i.e. Wordscapes] and wider entertainment opportunities such as in-game concerts and e-sports,” Garrard said. “All of these additional revenue streams are helping extend the lifecycle and increase the profitability of a title beyond the initial purchase.”

Parks: U.S. Online Video Game Market to Generate Nearly $3 Billion in Annual Subscription Revenue

Online video games are growing in popularity, especially among multi-player formats. New research from Parks Associates finds the U.S. cloud gaming market could generate nearly $3 billion in annual subscription revenue, as 30% of domestic broadband households currently express interest in this service.

Dallas-based Parks reports 74% of U.S. broadband households play video games for at least one hour per week. Gamers play for an average of 22 hours per week, a number skewed towards heavy gamers, and PC gaming shows the biggest gains as a result of COVID-19 pandemic.

“There is a renewed interest in offering cloud gaming services that replicate Netflix’s value proposition by allowing consumers to stream games over the internet, across multiple platforms, and without having to download files or use local processing power,” senior analyst Kristen Hanich said in a statement.

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Hanich estimate the cloud-based gaming market could generate more revenue via service stacking and add-on sales as multiplatform gamers are the key consumer segment to target for initial rollouts.

The research also notes the average number of hours played per week has increased since the COVID-19 outbreak. PC gaming in particular saw a large increase in the number of hours played weekly, while gaming consoles were the only platform to show a decline in usage among heads of household from Q3 2019 to Q1 2020.

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“Cloud gaming services enable providers to leverage this increased gaming on connected devices, including smart TVs and streaming media players, where gaming is often secondary to their main value proposition, Hanich said. “The continued improvement of Internet networks and the cloud, as well as the rollout of 5G with its promises of improved latency, enables companies to offer high-performance cloud gaming solutions across multiple platforms without taxing their limited processing power.”

Analyst: Netflix, YouTube Bandwidth Throttling Not Enough to Prevent Network Overload in Europe

The agreement of video streaming giants Netflix and YouTube to reduce streaming quality in Europe over the coronavirus crisis is not enough to prevent network overload, according to a director at data analytics company GlobalData.

Gaming services must also pitch in.

“Netflix and Alphabet have demonstrated superb industry leadership with this compromise and gesture, but online gaming service providers must now follow suit,” Emma Mohr-McClune, tech service director at GlobalData, said in a statement.Although video streaming represents the lion’s share of residential Internet traffic in Europe, interactive online gaming is a substantially greater threat in network overload terms. Any mass market spike in activity will have significant consequences for vital government and functions for markets in COVID-19 lockdown mode.”

Modeling impending network use during the crisis is uncharted territory, she noted.

“We are anticipating significant network challenges as millions of families spend the next foreseeable weeks in lock-down mode,” she said in a statement. “Problematically, there is no forecast template for the situation in which we find ourselves today. The quantitative industry has always reckoned with network traffic management scenarios with standard peak/off-peak times based on the standard movement and school-attendance time profile of the average online gamer. The COVID-19 lock-down will throw all that to the wall.

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“All European telcos are now putting capacity boost and traffic management processes into place, as a response to the ongoing crisis, but their efforts will be hampered without an honest dialogue between OTTs, state bodies and the network services industry.

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“At the same time, consumers must heed the call of their service providers to exercise responsible usage of the Internet. Staying at home will be particularly taxing on the discipline and patience of millennials and the digital native generation. However, exactly this generation need to show their solidarity in terms of restraint.”

Google Stadia Online Gaming Platform Set to Launch Nov. 19

The new dawn of online gaming is upon us as Google readies the Nov. 19 launch of Stadia, the broadband-based platform affording users cloud-based access to games.

The platform promises to allow users access to major games heretofore only available on disc and playable on traditional consoles. Indeed, users will actually be playing games streamed to their PC, TV or mobile device from Google servers. Whether that ubiquitous access will actually be present at launch remains to be seen.

Online previews of the platform have been underwhelming with complaints ranging from limited titles available (about 22, but reportedly including Destiny 2: Shadowkeep, Doom Eternal and Rockstar’s Red Dead Redemption 2, among others; poor 4K resolution, no multiple user play yet; no LTE network service, among other issues.

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At the launch, the only way to use Stadia will be through the sold-out $130 Founder’s Edition, which includes a controller, 90 days of the Stadia Pro $10 monthly subscription service, and a Google Chromecast Ultra streaming media device to connect with the TV.

In a media interview last week, Phil Spencer, head of Xbox, said the next-gen Xbox Project Scarlett console coming from Microsoft next year would not be inferior to Stadia.

“I would say a learning from the Xbox One generation is we will not be out of position on power or price,” Spencer said. “If you remember the beginning of this generation we were a hundred dollars more expensive and yes, we were less powerful [than PlayStation].

“For us, the console is vital and central to our experience. A console should be designed, and built and optimized for one thing, and one thing only – gaming. This decisive moment of discovery is etched in your gaming history.”

Xbox Project Scarlett is set to launch for the winter holidays in 2020.

Cinedigm Launches OTT Gaming Network

Cinedigm April 9 announced the over-the-top video launch of WHAM, an ad-supported digital gaming and e-sports platform. The service is available on XUMO, an Irvine, Calif.-based online TV service, Amazon-owned Twitch.tv and Web and mobile devices.

Cinedigm is partnering with WHAM founder Gary Kleinman on the 24-hour channel driven by increased consumer interest in online gaming and e-sports-driven programming. Original content includes, “UMG Gaming,” showcasing game tournaments and highlights; compilation series, “Clip Blip,” and “e-sports Central Live,” broadcasting e-sports news, industry developments, new releases, and tournament results.

“Gaming lifestyle and e-sports content will be a multi-billion- dollar industry within the next two years,” Erick Opeka, EVP of Cinedigm Networks, said in a statement.

WHAM also features “Retro Gaming From The Strong Museum,” showcasing classic video games, commercials, and gameplay; and “Game Bytes,” a look at the bar/restaurant gaming scene.

Cinedigm says the XUMO platform is accessible on more than 45% of the smart TVs in North America and will help WHAM content reach more than 20 million homes.

XUMO is available on iOS and Android mobile devices, as well as on LG, Vizio, Hisense and Sharp TVs in May.

“WHAM is a significant addition to the XUMO channel lineup as we continue to broaden and deepen our offering of gaming content,” said Stefan Van Engen, SVP of content programming and acquisitions at XUMO.