Gamer Lifetime Value

As you worked on PlayStation Plus and PlayStation Now, how did you look at the evolution of lifetime value, for games?

Most of the time, I think I looked at lifetime value as a question about a consumer. It’s not really the lifetime value of the game; it’s the lifetime value of a relationship. There are several ways to look at it. You can look at the lifetime value of that relationship, in a particular service, or as a company. Both of those are valid. It gets very complicated when you are looking at it across the portfolio of services, for obvious reasons, but if you take it just for a particular service, such as a PlayStation Plus, then the lifetime value is really a function of tenure. Obviously, you can think about it in terms of your pricing.

Is it about $80 a year, for Plus?

It’s less than that. It’s in the $60 for the Plus services. It’s about $10 a month for Game Pass and PlayStation Now. Lifetime value is a function of tenure; how long they stay with you and their retention and loyalty and their feeling of value. In some cases, there’s obviously more complexity in the economics, because when you are playing a game, as a member of one of these services, that’s not the end of your economic relationship. You might upsell; you might buy the game that you’ve been streaming, you might buy add-ons. The interaction between these free-to-play or game as a service content and subscription is really very interesting, because the lifetime value then, is not just what you’re getting as a subscription, but it’s what that subscriber is buying.

How did that evolve? £10 per month, on average; what was the lifetime, roughly, of gamers? How did the average revenue, per user, actually split between the subscription and the in-game add-ons?

I think it’s very early days. If you look at most of the play and use cases of subscription gaming, on Game Pass, primarily, people are going in and they are playing those games and it’s the catalogue gaming experience. What’s happening now is that there is the start of this process of playing a game, streaming it, liking it, downloading it. After you’ve downloaded it, you can then get add-ons to it. I think it’s very early days, on the economics of that. It’s certainly growing but the bulk of revenue from a subscriber, at the moment, comes from their subscription. What’s interesting is, most subscribers to a service are also very, very healthy transactors. At the moment, what’s happening is that it’s not that they are subscribing and buying lots and lots of add-ons; that trend is evolving. But those subscribers are still buying day one games and they’re still spending a lot of money buying games, outside of the subscription.

This is where I think we’re kind of following the movie model, where you have theatrical releases and people buying content, day one, and then using their subscription for their catalogue.

How did you think about driving add-ons and in-game services and live services, for the subscribers?