Games As A Service and the Power of Subscriptions
Updated: Jan 6, 2022
Every few years, the game industry adopts a new business strategy that sees increased profit across the board. Part of the reason gaming has seen such dramatic success over the last decade is game publishers finding ways to increase revenue, with online gaming becoming the norm. Starting with the online pass, which required users to purchase a digital pass to play games online. Another was the season pass, which guaranteed access to all additional content that would be released for a game in the future. These ideas generally lasted for 2-3 years until it becomes unsustainable and the industry moves on to something else. Currently, we are seeing the success of the games-as-a-service business model. This is where instead of releasing new titles in a game series, a company will continually update one game ad infinitum with revenue coming in the form of microtransactions within the game. Unlike other strategies over the years, it seems like the game industry has finally found its golden nugget.
Games as a service (or GaaS) has seen industry profits skyrocket since 2018, as reported by CinemaBlend. In 2018, Activision saw its take grow from $10 billion to $60 billion in 6 years alone. Similarly, Electronic Arts saw an increase from $4 billion to $33 billion due in large part to its FIFA franchise. This GaaS model has only seen an increased growth since 2018 as games like Fortnite took over the world to become one of gaming's biggest success stories of all time. Fortnite created its own revolutionary business model that would soon be within GaaS games known as the “Battle Pass”. This quickly caught on all across the industry and would soon be found in almost every GaaS game. The “Battle Pass” is a subscription-based service in which users pay a set amount of money for a set of bonuses in a game that allows players to earn more than if they were playing without paying more.
GaaS games seem to be the future of the industry, as subscription-based services have become the norm for the entertainment world. There's a subscription for basically anything now. Mexican-inspired food chain Taco Bell even released a “Taco Lover’s Pass'' in Arizona, letting taco-enthusiastic eat a taco per day free of additional charge. Subscriptions are the future of business and video games are helping usher that in. For most services, it’s largely cheaper for the consumer and provides more value, while also increasing brand loyalty. You’re no longer a consumer paying for a company for a product, but a member giving the community value. It makes the consumer feel special and, if they’re happy with your service, they’ll be happy to tell others. Since these services are cheaper upfront, it becomes easier to get more to sign on board and try it out. It has become far more profitable in the long term than anything seen before.
At its heart, GaaS is an evolution of subscription-based services like Netflix, just adapted for video games. What begins with a small fee every month ends in massive profit and loyalty to the brand. The success seen by these business models cannot be understated, and, as time goes on, we will no doubt see more of these services spread throughout the world.
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