Consumer spending on subscriptions such as PS Plus appears to be slowing significantly.
Part of this generation’s discourse has revolved around subscriptions. Also, about Sony’s reluctance to offer its first-party releases on day one with PS Plus. Many felt that the PS5 was starting to lag behind its rivals. This is because it was supposed to offer insufficient value compared to competing services such as Xbox Game Pass. But now it looks very much like the reality is that the whole segment is starting to flatten out – at least in the US.
According to Circana analyst Mat Piscatella, “subscription spending growth is slowing”. This obviously does not mean that growth has stopped entirely. But it does suggest that, unless something dramatic changes, it will start to fade. Sony has insisted from the outset that PS Plus is merely an additional revenue stream to its traditional business model. Unsurprisingly, this still means full-price game sales both at retail and through the digital store.
PS Plus has peaked at around 50 million subscribers in recent years. However, the platform holder has successfully increased the service’s revenue per member by introducing new, higher-value tiers through Extra and Premium. However, it seems that unless trends change dramatically in the coming months, subscriptions may not be the future of the industry after all. This makes sense to us. After all, video games are not as passive as television and music, where it is easier to consume large amounts of content in a shorter period of time. On the other hand, it may be time for the industry to re-evaluate the potential of similar services seriously. And how they can be most effectively applied in the current economic climate.
A few US VG market takes:
– PS5 driving console market
– Big new games selling very well, just not enough of them
– Subscription spend growth is slowing
– Market is stabilizing, expect mostly YoY single-digit % changes going forward
– Engagement returning to pre-pandemic levels
— Mat Piscatella (@MatPiscatella) April 19, 2023