Subscription, a business model that is more used in the music, film and television industries, has become more and more popular in the game circle in recent years. Especially in the console space, Microsoft Xbox and Sony PlayStation have become big fans of subscription systems.
In the field of mobile games, which occupy half of the market, the subscription system is also quietly popularizing. However, unlike hosts/PCs, because most mobile games allow users to play for free, the subscription system of mobile games is more manifested in the form of monthly passes, battle passes, etc. After purchase, users can receive rich rewards by logging in every day or completing corresponding tasks.
With the subscription system taking root in mobile games and even cloud games, its current status quo and possible future development have also become the focus of the industry. At GDC Game Developers 2022, George Jijiashvili, a senior analyst at Omida, shared a discussion on the evolution of subscriptions to free-to-play and cloud-based games.
Here's the full talk compiled by GameLook:
Popular subscription model in the gaming industry
Looking at the gaming industry, we find that all the subscription models that currently exist can be broadly divided into six categories:
1. Subscription based on the game platform, covering the games of various game companies on the platform;
2. Based on the subscription of the game developer, covering the games of a single manufacturer;
3. Based on the subscription of the game operation and publisher, the scope is limited to the games operated by or operated by the player;
4. Subscription based on a single operation game;
5. Subscription based on meta-universe games, where the game is only part of the product;
6. Based on the game live broadcast platform.
Although the subscription model of the game is so diverse, its expansion effect on the scale of the game industry is not obvious, mainly because the subscription model is not popular enough in the game industry. Taking the music, film and television industries as a comparison, the data shows that since 2010, the subscription model has developed rapidly in the two industries, and it is expected that by 2025, the subscription model will account for 85% of the revenue in the music industry, and the revenue in the film and television industry will account for a higher proportion of 89%. In fact, throughout the 2010s (2010-2019), the subscription model has barely developed much in the gaming industry.
There are five main reasons for this:
1. The industry's exposure to the subscription model is insufficient;
2. There are technical limitations in terms of platform
3, the penetration rate of the Internet in the world is too low,
4. In the games available to play, there is a lack of attractive AAA masterpieces
5. Physical media such as game discs still occupy a strong position
But now it seems that these five problems have been well solved. In order to popularize the subscription model, many large game platforms have invested a lot of money, and the global Internet environment has also been improved as a whole. Although game discs still have a strong dominance in buyout games, on mobile and PC, online downloads are the most basic option for most people. As a result, the subscription model has become an option worth considering for publishers.
In fact, the number of players opting for a subscription system today is growing rapidly. The conclusions came from a survey we conducted covering 13,000 samples. The data shows that 1 in 5 modern players is a subscription player. However, it should be noted that this data will vary from country to country, such as the popularity of subscription models in the United States, while in France and Germany, which are far behind the standard, the subscription penetration rate in these countries is only about half that of the United States.
Mobile games and subscription models
The subscription system is becoming more and more popular in different terminals, and the most rapidly developing ones are mobile terminals, especially those mobile game products that are mainly free-based. Judging from the 2021 global mobile game revenue rankings, 9 of the top 15 products include in-app purchase options for "in-game paid subscriptions".
In addition, the preferences of different affiliated games for subscription systems also vary. Judging from the top 100 products in terms of revenue, those medium and heavy games that occupy revenue weights are subscription-based "regulars". In terms of game types, the proportion of RPG and strategy games using a subscription system exceeds 50%. These data not only reflect the in-app purchase tendency of the top 100 products, but also show the compatibility of different products with the subscription system to a certain extent.
In those free mobile games, it is actually not in line with the reality to say that the subscription system is its only profit model. Even with a subscription system, it's not hard to see that in those medium- and heavy-duty games, subscriptions are usually taken in parallel with season passes. In casual games, this situation becomes a combination of subscription and advertising monetization.
Cloud gaming services and subscription models
Another thing to watch in the gaming industry in recent years is the rise of cloud gaming. Obviously, the continuous popularity of subscription models such as Microsoft XGP has promoted the rise of cloud gaming.
Like the subscription model, there are different categories of cloud gaming. Judging from the cloud games currently on the market, they can be roughly divided into 4 categories:
1. Cloud gaming services that can play AAA games and various independent games
2. Cloud game service that can play casual games
3. Provide cloud gaming services for cloud computers
4. Provide cloud gaming services for a specific game
As far as it is pointed out, free-to-play games are usually concentrated in categories 2 and 3.
Some people may wonder, like ultra-casual such a light and small game, as for deliberately going to the cloud game to play? This suspicion is indeed justified. But in reality, "click-to-play" has a big advantage in cloud games. For example, in the Chinese market, this advantage is very significant. On this point, I once pointed out in a lecture on cloud games in Germany that the traffic of "cloud casual games" is actually very large, and the number of people who "play casual games on cloud PCs" is very large.
In addition, in the process of infiltrating mobile games into emerging markets, mobile cloud gaming services have a very significant effect. In these emerging markets, smartphone configurations are generally lower. And if you want to popularize mobile games that require high configuration, cloud gaming technology is obviously an ideal tool.
And even in emerging markets, internet penetration is increasing, in other words, the likelihood of cloud gaming adoption is also increasing. With cloud gaming, we expect more than 12 billion devices worldwide to be used as terminals for playing games by 2025. As a result, the trend that cloud gaming is becoming more widespread to non-gamers cannot be ignored.
However, it should be noted that the market structure of cloud gaming services is extremely complex, and there is obvious diversity in user needs.
Subscriptions are not a panacea
At present, the proportion of products using subscription models across the game industry is still low, only about 6%. But until now, the monetization mode of the game cannot be summarized by a single component such as "the profit from the in-app purchase of props is the total profit of the game".
In fact, the current game business has combined a variety of monetization methods, such as packaged game DLC, season passes, as well as mobile game in-card purchases and advertising monetization, and the subscription system will also become one of the "multiple monetization tools".
In addition, in our survey of participants in GDC 2020, 56% of developers believe that "the value of the game will decrease after the introduction of the subscription model", but by 2021, the proportion of this option has dropped to 47%. This is clearly a watershed moment for changes in 2020 and 2021.
What's more, subscriptions can be combined with other monetization methods to maximize revenue potential, especially in free-to-play games. In other words, players who start playing for free will first pay a small amount, then buy a season pass, and finally choose to subscribe, which may be the best evolution of the subscription system.
Therefore, when introducing a subscription model in free-to-play games, only by taking appropriate measures to make all players in these 4 stages satisfied can we ensure that the subscribers maintain their subscriptions for a long time.
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GameLook Daily Game Industry Report
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