Xbox and PlayStation have competed since I can remember. One of the strategies used by these gaming giants to entice players to purchase their consoles is by partnering with studios (or buying studios) to make games that would be exclusive to their platforms, aka platform exclusivity. It has worked for many years, but it appears that the strategy is due for change.
For those who are new to the word, platform exclusivity is when PlayStation’s first-party studios or partner studios only launch games on PlayStation consoles. Likewise, Xbox will launch its platform exclusives on Xbox consoles and PCs.
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While there are pros and cons of platform exclusives, the big question at the moment is which one outweighs the other. As much as I would love to disagree with platform exclusivity, some believe it still has a place in the game industry.
Speaking recently on the What’s Up PlayStation podcast, Shawn Layden, former CEO of Sony Interactive Entertainment America and chairman of Worldwide Studio, said platform exclusivity is still important and highlighted how first-party games continue to impact the market. Most importantly, he stressed the scope of its relevance.
” Exclusivity will always be important, it helps focus and highlight the features of your platform. What can you do here technically that you can’t do someplace else,” Layden said. “But, as your platform becomes established as the market recognizes where you sit in that pantheon of gaming options, I think the necessity of exclusivity becomes a little bit less.”
The rising cost of making games doesn’t favor platform exclusivity
No doubt, there was a time when platform exclusive games were the real deal. Just as Layden mentioned, console makers used platform exclusive games to showcase the power of their consoles. However, today, all the major consoles in the same generation match each other in terms of performance and features.
For example, what the PS5 can do is not significantly different from what Xbox Series X can do. At this point, the pros of platform exclusive games dwindle. However, the most important reason that questions the relevance of platform exclusive games in today’s gaming industry has to do with cost.
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The cost of making games is ballooning by the day, with game workers demanding higher wages to meet up with the economic realities of the present day. From tens of thousands a few years ago, the cost of making AAA games now runs into hundreds of millions (marketing budget inclusive).
When you consider the rising cost of making games, it only makes sense that the developer tries to cover as much of the developmental costs as possible. The more platforms that the game is launched on, the greater the chance that its development cost will be realized.
“When your costs for a game exceed $200 million, exclusivity is your Achilles’ heel,” Layden said in an interview with GamesBeat. “It reduces your addressable market. Another platform is just another way of opening the funnel, getting more people in.”
Platform exclusivity limits the potential of live service games
Some developers are shifting their strategy from single-player experience to live service games. Warner Bros. Discovery boss JB Perrette recently said the company will shift focus from “volatile AAA” games to live service games.
Developers switching to live games believe it will offer them a steady stream of income as players continue to spend on those games after the initial purchase. However, the success of live service games depends on the number of steady players.
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In February, Xbox boss Phil Spencer also opined that platform exclusivity will diminish over time. During the business update podcast, the Xbox executives also announced that two Xbox exclusive live service games will be coming to PlayStation, including Sea of Thieves.
What they simply did with that announcement was to broaden the audience for their games which will also help the company to earn more money from players. Live service games need as many players as possible to make sure that players always find people to band with in co-op mode.
“In a free-to-play world, as we know, 95% percent of those people will never spend a nickel,” said Layden. “The business is all about conversion. You have to improve your odds by cracking the funnel open.”
Here is a practical example of how platforms can improve their revenue odds by shelving the platform exclusivity rule. Before Helldivers 2, PlayStation has never launched a first-party title outside a PlayStation console. A PC port is usually created after two or more years of the game’s release.
On February 8, they shelved that policy when Helldivers 2 by Arrowhead Game Studios launched simultaneously on PS5 and PC. In addition to the simultaneous launch, it also allowed crossplay between both platforms.
It turned out to be one of the best decisions the company has ever made. Helldivers 2 hit a peak concurrent player count of 456,709 two weeks after its release—and there are indications that it could have been higher if not for the persistent server issues that plagued the game’s early days.
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When you look back at all the games that Sony has released on PC over the years, Only Horizon Zero Dawn, Marvel’s Spider-Man Remastered, and God of War (2018) crossed 50,000 concurrent players on Steam.
In fact, when you add up the peak concurrent players of all the other Sony’s first-party games that were ported to PC, it still doesn’t come close to the number that Helldivers 2 has pulled in. Assuming Helldivers 2 did not launch on PC, Arrowhead may not have been able to cash in from the nearly half a million concurrent players on Steam.
“Helldivers 2 has shown that for PlayStation, coming out on PC at the same time,” said Layden. “Again, you get that funnel wider. You get more people in. If you’re spending $250 million, you want to be able to sell it to as many people as possible, even if it’s just 10% more.”
The verdict
While I don’t expect platform exclusivity to go away today or tomorrow, console makers need to decide on what is really important to them; whether it is selling more consoles or selling more games.
Interestingly, selling consoles doesn’t guarantee that the player will purchase every first-party title that emerges on that console. However, when you focus on selling games, even when the game is not super successful, you can limit the damage by widening the player net.
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