| Price elasticity of demand | −0.75 |
| Income elasticity of demand | 1.8 |
| Platform | Market share (%) |
|---|---|
| PlayStation Plus | 42% |
| Xbox Game Pass | 35% |
| Nintendo Switch Online | 12% |
| EA Play | 4% |
| Ubisoft+ | 3% |
| GeForce Now | 2% |
| Apple Arcade | 1% |
| Others | 1% |
Microsoft’s Xbox Game Pass currently has over 25 million global subscribers, who typically pay £10.99 a month to the US-based multinational. At this price, players can download and play hundreds of games from an active library. The demand for these platforms grew rapidly as players sought alternatives to purchasing individual packaged games. PlayStation Plus is a major rival, offering a very similar game library catalogue to its 40 million subscribers.
However, to play these subscription games, consumers must first buy physical system hardware, such as an Xbox Series X/S console (costing around £450) or a PlayStation 5, alongside wireless controllers.
When Microsoft raised the price of its ultimate subscription tier by £1 a month in 2023, independent surveys showed that subscriber demand remained highly price inelastic. Only 4% of respondents stated they would definitely cancel.
Using examples from the information provided, explain what is meant by both 'substitutes' and 'complementary goods'.
