What is the LTV based on then? It's not based on making COD exclusive. It's based on current spending habits of the current userbase.
Which is based on actual purchase data of current users on X/S. It says this in the CMA documents:
That's what I'm saying. The point is that MS doesn't need to miss out on it if it increases price of the sub and changes the currently low LTV for everyone significantly.
I agree with all this. To estimate a
switcher's LTV you would base it on current Xbox user's LTV.
But you would not weigh the entire Xbox userbase's LTV against a decision's costs that only gave you a fraction of your userbase.
No you're not because decision B's benefit is not static and gives you market power. You would only just cancel it for that year but you've moved people to that ecosystem and made it attractive for new user growth. Something you don't measure with only full market coverage analysis either. Any subsequent hike would result in even greater gain with your 'cheap' in comparison subscription. There is no upstream dilution of COD. Those users could pay their lost cost multiple times over if, like Netflix, over the course of 5-6yrs the price goes from $9 a month to $14. The benefit is that you've locked them in to the ecosystem/sub and you can now turn the LTV up. $1.45 is only the break even point, you can end up making those who have switched spend more yearly through gamepass than they were before.
Your $1.45 break even point relies on using the LTV of every single Gamepass user, not just the new users gained from CoD being exclusive.
If you're saying that you believe the
% of CoD switchers would increase year over year, then yes, eventually the benefit of making CoD exclusive would outweigh it's costs.
However, the research the CMA has done gives us a static percentage range on how many CoD gamers would come to Xbox in the event it's made exclusive.
I don't know why we're going back and forth on this, the CMA has made it clear that their calculations include any incremental growth of Gamepass and they've still under all scenarios reached the conclusion that Microsoft would lose billions if they made CoF exclusive.
