Dawn Chmielewski and Sam Nussey

TOKYO/LOS ANGELES (Reuters) – Sony Analysts say that the overhaul of PlayStation’s subscription service by Group Corp (NYSE:) is an important step towards levelling the playing fields with Microsoft’s (NASDAQ:). However, limiting new releases could dampen interest.

Sony stated that the expanded PlayStation Plus service, which will include hundreds of popular games such as Spider-Man: Miles Morales, will be available for a flat monthly price in America, Europe, and Japan when it launched in June.

According to Jim Ryan, CEO of Sony Interactive Entertainment, the service won’t include any new titles. However, users will still be able to find high-budget titles like “God of War” and “Returnal”.

Ryan stated that there will be more content from PlayStation Studios and all major publishers represented.

Sony has long been regarded as the market leader in the console war. It sold 17,000,000 PlayStation 5 (PS5) units despite chip shortages. But, it is now under increasing pressure to react to Netflix’s growing game subscription service.

This revamped Sony service will combine the existing PlayStation Plus (48 million subscribers) and offer online gaming with a limited number of free games per month. It also includes PlayStation Now (3.2 million users, a library, and games to stream and download).

The three levels are priced from $9.99 to $17.99 a month or $59.99 to 119.99 annually. PlayStation Plus Essential looks just like Sony’s current offering.

PlayStation Plus Extra includes a catalog of PS4 games and PS5 titles. PlayStation Plus Premium adds a library of older games, cloud streaming in major cities and limited-time game trials.

Lewis Ward, IDC’s head of gaming research said that such streamlining was “overdue”.

Ward stated that the number of PlayStation subscribers at higher tiers…will increase over time. This is undoubtedly one reason why this change has occurred.

An analyst raised concerns about the cost of new games and suggested that Sony may be under pressure to sell more content through subscriptions.

Sony plans to maintain new game sales in conjunction with the subscription service.

Piers Harding Rolls, Ampere Analysis’s head of games research, stated, “I believe this move should increase margins as more gamers will drive to higher-cost subscribers.”

He said that if content acquisition costs rise, Sony must balance this with additional revenue from its PS Plus subscribers.

HIGH-Stakes Game

Microsoft aggressively grows Game Pass (25 million subscribers) by adding new titles to its launch day and buying studios to broaden its offerings.

The January deal was for $68.7 Billion by Activision Blizzard, based in Redmond Washington (NASDAQ:).

Sony bought Bungie, the publisher of “Destiny”, for $3.6 Billion. Analysts expect more deals.

According to Ampere Analysis, Microsoft holds a 60% share of subscriptions for games in North America and Europe. Sony only has 7%. Subscriptions account for only 4% in total gaming spending.

Ward, IDC spokesperson said that PlayStation thinks it smarter to include older games in the subscription plan. This will allow new games to maximize their potential revenue during launch windows.

This reluctance is a sign that Sony’s offer “won’t have the pull Microsoft’s service,” added Ampere’s Harding Rolls.

Sony’s recently announced pricing has been deemed competitive. The $120 per year premium plan is comparable to Game Pass Ultimate’s $180. Both offer cloud gaming. Sony users can stream titles directly to their PCs or consoles.

Because it does not require installing or downloading games to a PC or console, cloud gaming has been deemed the future of the industry. This is potentially a threat to console businesses, which have had their operators act as gatekeepers.

The annual cost of the PlayStation Plus Extra mid-tier subscription, which does not include cloud gaming, is just above $8, as opposed to $9.99 per month for Game Pass.

Ryan, from Sony said that “Value or pricing of this nature would simply not possible if our new games were put into the service immediately after their release.”

Microsoft stated that Game Pass subscribers are more likely to play and spend more, a sentiment shared by Sony.

Ryan explained that engagement is the key to everything. Ryan said, “If people are engaged with your platform then monetization is likely to follow.”