From what I’ve heard and read, the subscription model isn’t sustainable, for tv and movies at least, because of every company’s need to constant growth in order to always increase stock prices (which is all anyone cares about these days).
So you’ll notice there is more stuff being offered on streaming services with commercials these days. And I think it’s because subscribers are ultimately finite. And you can’t continue raising the subscription fee because there is enough competition, and overlap in terms of content, that people will just cancel your service.
So what they’re finding out is that the way things used to be, when most of the networks’ revenue came from ads, was actually working really well. Ad space is not finite. And they probably have more wiggle room as to what they can charge for that space, and are able to increase prices as needed.
So I wouldn’t be surprised if we eventually see streaming services mirror cable and satellite tv services in the future, in that there will be more ad space sold, and the ads will be unavoidable. The only difference will be how the content is delivered - streaming instead of broadcast.
That's not a sustainability issue.
Guaranteed revenue is the most sustainable thing in the world. Costs exceeding revenue isn't inherent, and the need to grow subscribers isn't inherently required. All the entertainment companies are prioritizing growth because they're in a footrace to claim as much of a global market share as possible before the market is saturated, fully matured, and they sort out how much milk the cows are going/willing to produce. Then they'll adjust their expenditures needle depending on how much of the pie they sliced for themselves.
Commercials aren't necessary. They're just greedy businessmen. Why turn down free money? As soon as cable & OTA broadcasting were pushed out as relevant competitors, they started putting commercials into the baseline tiers. They'll always do this. Not because it's necessary to be profitable, but because why on earth would you as a businessman forego a revenue stream? But on the other hand, no, there's no reason they will take away more expensive ad-free tiers. Technology afforded them this new option. In the past, everyone received the same signal. You couldn't customize an ad-filled broadcast for one consumer, and an ad-free one for another. Now they can. The closest thing that used to exist for this was the premium channels like HBO/Showtime to which only a portion of cable users subscribed. Those always had a place in cable. And ad-free tiers will always have a place, now.
The question of Game Pass viability isn't about sustainability. All reported profit/revenues indicate it is profitable, and therefore sustainable. The question is of
opportunity cost. In other words, would they make
more money if they used the alternative, older model of just selling games rather than a subscription service. We'll see. For TV, and movies, this question has been answered. Subscription services are more profitable. But video games aren't TV or movies. Games cost a lot more than movies: $70 vs. $25. But, unlike movies, which can be easily consumed in a matter of hours, many games will be played by gamers for dozens or even hundreds of hours. So, as a consumer, if you only play one or two games a year, or sometimes for many years, then it can make more sense to just buy the games, especially if you wait 6-18 months for the games to go on sale, than to shuck out $15/mo for a vastly greater value that you never actually tap.
Because it was never about Game Pass "cannibalizing sales". What a silly, ignorant concern. It's about revenue. If a developer makes more combined money through what Microsoft pays them for putting the game on the service, plus whatever they sell, then why would they care if they sold fewer total units? Especially if the subscription models means they're growing their base of actual players interested in their IP. That's future revenue.
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