Over the years, the gaming industry has gradually transitioned from a linear model of selling products to gamers, to a dynamic subscription model. Subscription services seem to be the face of the new era of games.
Thanks to gaming subscription services, the revenue levels of the industry have been on the rise. According to Forbes, gaming industries accrued billions of dollars in profit and over 2.5 billion gamers worldwide in the past few years. This contributed to the expansion of gaming platforms into subscription business models in 2020.
Check this out: Subscription services provide access to various games while collecting recurring revenue over some time. Most subscription services charge either monthly or yearly; either way, there’s a guarantee of payment.
With the emergence of video game subscription services over the past decade, developers are afraid it is the future gaming industry. As such, they’re quite worried about the revenues that will be generated. There is an ongoing debate among developers on whether or not subscription services will affect game values.
Subscription services act as a bridge between providers and gamers in the modern gaming industry. Unlike the previous models and monetization skills employed by the industry, subscription services have succeeded in meeting up better with gamer’s needs. With an average of 3 billion people playing video games worldwide, quite a significant percentage are subscription-based users.
The Argument
In 2020, GDC had released its annual state of the industry survey of 4,000 developers. According to the study, 27 percent of developers believed that subscription services would hurt individual games. On the contrary, 26 percent said that they wouldn’t. An additional 28 percent stayed neutral to the argument. A smaller percentage were unsure of their decisions and kept their tabs open to see how the new model would affect the gaming industry.
In the words of a developer, in the quote: “The payback rates for most content creators in subscription-based models cannot justify the cost to make the products subscribers use. This is true in every medium that has taken this approach in the last decade. Music artists do not make enough from Spotify to finance future music production, even the top tier artists. So why should games be different?
“Unless the lion’s share of the revenue from a subscription service goes to the game creators, it’s untenable in the long term. Even if the bulk of revenue diverts to the creators, it will still create a situation where large AAA studios able to create blockbuster-style hype will end up succeeding. At the same time, indies will receive even less than they already do.”
Is There a Chance Then for Subscription Services in the Gaming Industry?
By now, you will have realized that other significant industries are thriving well on subscription-based models: Netflix, Microsoft, etc. According to a Google blog, they have seen global growth in-game subscriptions of 70 percent year over year. According to the post, game companies with integrated subscriptions experience 20 percent higher retention and increased revenue. The subscription model promises a lot for the industry and its customers: The Huge and Steady Customer Base.
Here’s the kicker, the subscription model has proven to create a vast customer base in the gaming industry. Unlike the free-to-play model, its flexible nature offers gamers options to choose their experience while spending within an individual budget.
Of course, fixed revenue too! While attracting new gamers, the subscription-based revenue model is also designed to maintain and keep these gamers as steady customers for the industry, thus fixed revenue. Of course, with the hope of recurring revenue!
It’s undeniably true that most gaming companies are interested in helping their customers enjoy an immersive gaming experience. So the recent insight from Statista on the cloud gaming subscription market shows that the subscription model gives the industry a precise insight into gamer’s preference of what they enjoy now and what they will likely enjoy in the future.
Moving Forward
The future is now, and with subscription services hitting the gaming industry we should expect a big boom. With a subscription, we’re able to see the kinds of games customers like to play most regularly. As well as the kinds of experiences within games they might want to play more frequently. By virtue of that, we can tailor an offering to provide types of game experiences that might be more relevant.
But that’s just the tip of the iceberg. Should subscription prices increase to satisfy the game makers’ revenue, will a new monetization model be developed?
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