PlayStation’s Game Pass competitor is a smart bet

A PlayStation rival to Xbox Game Pass, code named Spartacus, appears all but assured to happen. Bloomberg’s Jason Schreier leaked details of the subscription service in December. Sony recently pulled PS Now retail cards from U.K. retailers, suggesting Sony could announce Spartacus details soon.

The Bloomberg piece lays out Spartacus’s offerings, a multi tiered subscription service that improves the popular PS Plus and PS Now services Sony already runs. For me, the more interesting question is less about the what and more about the why and how. Why would Sony take a gamble on a Game Pass competitor now, when their brand is the market leader? Also, how will Spartacus differentiate itself from Game Pass, especially in light of Microsoft’s mega acquisition of Activision Blizzard?

PlayStation’s revenue strategy helps answer these questions. Unlike Microsoft, Sony hasn’t deviated much from a traditional console sales plan: sell hardware at a loss, and make up the loss through software revenue. For PlayStation, a key profit source comes from first party brands like The Last of Us, Uncharted, and God of War. PlayStation studio games regularly top sales charts, are critical darlings and can be effective “system sellers” to draw newcomers into the PlayStation ecosystem.

Of course, Sony gets a lot of revenue elsewhere, most prominently through a cut of third party sales (at least 25% of each game’s purchase price) alongside the millions of PlayStation owners that subscribe to PS Plus and PS Now. But when you look at where Sony invests its time and money, it’s clear that the company values its first party games the most. Sony views its exclusive property as a gateway to new PlayStation fans while keeping PS4 and PS5 owners loyal to the brand.

To draw a crude culinary analogy, if gaming ecosystems were steakhouses, first party games are the steak for Sony. Everything else – sides, appetizers, dessert – are meant to complement and enhance the main dish. Services like Spartacus are a perfectly cooked side of fries. They can be filling and memorable, but in the end, customers are there for the beef, not for a starchy side. Microsoft flips the menu on its head: Game Pass (as clear from their marketing and investments) is their steak, while everything else, from individual brands like Halo to consoles like the Series X, complements the one subscription service.

Under that approach, Sony wants an appealing subscription service, but not one too appealing. It should be a resource that keeps fans happy within the PlayStation ecosystem but not to the point it dissuades people from buying $70 first party PlayStation games. Microsoft, in sharp contrast, has bet their success on the subscription service; Game Pass appeal – more subscribers, less churn – trumps all other concerns.

Given Microsoft’s and Sony’s differing revenue strategies, Game Pass and Spartacus will differ, most notably in how they include marquee first party releases. Microsoft first party releases appear on the service the same day as their sales debut, no exceptions. Sony probably won’t do this, given the risk of first party sales cannibalization.

Still, day and date releases are on the table, and premium brands like Spiderman and God of War should eventually grace the service. The differentiator between Microsoft and Sony will be timing. I suspect we’ll see a lag of a year or more before the biggest Sony studio games join Spartacus. By that logic, a game like Spiderman: Miles Morales might be a perfect marquee launch title for the service this spring.

I expect Spartacus’s back catalog from earlier PlayStation generations (PS1, PS2, PS3) to be extensive in both quantity and variety. There’s a lot of room for innovation that Sony could invest in this space to keep older games feeling fresh, like bonus content, CRT visualizations, and added multiplayer. To offset the lack of flashy day one releases, I could see the back catalog being a big selling point, easily outclassing similar options on Game Pass and Nintendo Online.

While focusing on the past hasn’t been Sony’s playbook for a while, it does play into PlayStation’s strengths: a rich history of classic games, nostalgia for longtime fans of the brand, and done at a fraction of the cost of releasing $100 million AAA first party titles on Spartacus.

Spartacus otherwise should overlap heavily with Game Pass offerings, at least at its highest price tier. That includes plenty of third party games that debut on the service every month, especially those well past their initial launch date and at a smaller budget. Recent Game Pass examples that fit this mold include Spelunky 2 and Among Us. These titles are inexpensive for Sony to pick up, provide a healthy long tail for indie developers, and can generate a lot of enthusiasm across niche audiences. Even if these smaller, older games don’t attract everyone, the sheer quantity of new content helps establish an impression of value.

Spartacus, like Game Pass, should also have the occasional day and date launch with a higher budget, less buzz worthy third party games like Outriders, MLB The Show, or Rainbow Six Extraction. Sony’s recent partnership with Jade Raymond’s newly formed Haven Studios might be a perfect vehicle for these kinds of launches, releases from industry veterans that likely are a bit lower budget and under the radar compared to your average AAA blockbuster.

Overall, I expect Spartacus will be a genuinely appealing package to PlayStation fans and generate Sony a lot of money. That still doesn’t explain why Sony would bet on the service now. Microsoft’s acquisition of Activision Blizzard will give a formidable bump to the Game Pass library in a way that will make it hard for Spartacus’s library to go toe to toe against a new Call of Duty, World of Warcraft, and Overwatch. Furthermore, Spartacus today could arguably be a costly distraction from a playbook that’s working: an upcoming 2022 with show-stopping exclusives, games regularly near the top of sales charts, and the PS5 still virtually impossible to get thanks to overwhelming demand.

I’ve read several opinions like that of the games journalist Jeff Grubb that suggest Sony should move in a different direction: make amends with their console rival and bring Game Pass to PlayStation. This position argues that given Game Pass is relatively young and PlayStation is the market leader, Sony has leverage to negotiate a decent share of Game Pass’s PS5 revenue. Sony’s strong hand could even force restrictions on what Game Pass could offer on a PlayStation console. Gamers get the best of both worlds on PS5: Sony’s desirable studio exclusives, alongside Microsoft’s many offerings on Game Pass.

As much as I value Grubb’s hot takes, I see Game Pass on PS5 as a poor decision over the long run. Bread and butter games sales would fall to the extent that a Game Pass windfall couldn’t counterbalance. Game Pass would also be a huge distraction away from the next God of War or any other service on PS5. Even if Sony could find a way to make the numbers work, Game Pass on PS5 is a nonstarter, given how much Sony values end-to-end control of the PlayStation ecosystem.

That’s why I find Spartacus an exciting addition now: it’s a foundation to compete with Game Pass. Stress foundation; Spartacus will likely be a weaker alternative to Game Pass out of the gate, but an alternative on gaming’s most popular platform is a stronger hand than no alternative at all. Game Pass keeps growing in popularity and stature, and at some point, Sony has to realize the appeal of the Game Pass library is a growing reason for gamers to pick Xbox over PlayStation. Game Pass’s momentum becomes especially pertinent if eventually subscription services overtake la carte purchases as the predominant way to play.

Also, COVID and associated supply chain delays make a new subscription service especially appealing. Many PlayStation fans still can’t readily buy a PS5. Studios are delaying hotly anticipated games, including Sony’s biggest first party titles. Spartacus, in the interim, can deliver a stream of new content to keep otherwise restless gamers happy to stay within the PlayStation walled garden.

All of Spartacus’s benefits boil down to one overarching theme: diversification. Like I wrote almost a year ago, the greatest danger for Sony long term is complacency. Back then, I suggested Sony’s pivot shouldn’t be in the form of another subscription service. But months later, the Game Pass library is titanic. Almost all future Bethesda and Activision games will debut day and date on Game Pass while being entirely locked away from PS5. A Sony counterpunch in the form of their own service feels critical.