Image source @ Visual China
Text | Gamewower
High frequency, big action, Microsoft and Sony have made moves one after another, and the changing platform ecology stimulates the nerves of developers, players and the industry. After the controversy over the continued acquisitions to expand the camp and the high-profile embrace of the subscription system, the fire of reform continued to spread to another sensitive area - the rare implant advertising of the hosting platform.
On April 16, according to foreign media reports, Microsoft is considering a new way to get revenue from advertising and share it with developers. According to BusinessInsider's report, it hopes to launch a new advertising program that allows brands to place advertising content in free Xbox games.
Coincidentally, a week later, Sony was also revealed to be testing with ad technology partners to help developers create in-game ads through a software developer project and incentivize developers to continue developing free-to-play games through more commercialization.
Both are planning to launch specific plans later this year, and the two sides have not yet responded positively to the news. It should be known that in the middle of last year, EA was sprayed by players because of similar rumors, and immediately denied in the statement that its games would add implant ads.
It is worth noting that both Microsoft and Sony are currently targeting free-to-play games on the platform without involving more sensitive buyout content, but a new round of controversy caused by players is the inevitable result of knowing it. The key to the continuous changes in the ecosystem of the host platform lies in the rapid changes in the market environment, especially the squeeze of the mobile game market and more business models, content manufacturers and platforms are constantly adjusting their development strategies due to the situation, and the pain brought about by higher frequency and larger-scale reforms is inevitable.
01 Environmental changes, competition is forced
Previously, the game value theory in "Sony Embraces Subscription System" mentioned that the slow growth of the console market in the past two years is actually more driven by hardware sales, and there has been a certain bottleneck in content growth. In addition to the lack of new content due to the impact of the epidemic on the construction period, manufacturers choose cross-platform sales strategies and users choose lower-priced purchase methods.
Survival is the top priority, in the absence of large-scale innovation in game products, in order to better generate revenue, commercial payment models (including NFTs) and marketing strategies (such as abandoning exclusive multi-platform sales) have been the core controversial topics in recent years.
Snubbing players and platforms are nothing, but without the continuous support of high-quality content, the platform is not competitive. If we say that embracing the subscription system to alleviate the lack of content, dumping at a low price to serve new users or catering to the market trend of stimulating hardware sales, implanting advertising is to benefit developers, and the change in business model helps them survive and generate better production content, directly hitting the pain points of developers.
Holding high the banner of asking for the lives of developers, this part of the revenue of the advertising business is not the part that the platform side is currently looking at, and the revelations state that Microsoft will not share from these ads, but is more interested in establishing an Xbox advertising network so that developers who produce free games can get income.
02 Step-by-step temptation
There was news last July that a report from Axios showed that video advertising agency Simplmedia had led a platform called PlayerWON, which was trying to bring implant ads into mainstream console games, and that EA and Hi-Rez Studios, the developer of Havoc of the Gods, were already involved.
EA was immediately scolded by players for blood, and quickly denied in a statement that rumors that its games would add implant ads. With this lesson in mind, Microsoft Sony must have foreseen the opposition of players when considering the feasibility of implanting advertising business.
In short, the two key points revealed so far are user privacy and avoiding affecting the original gameplay of the game, so as to reduce the opposition of players who will officially launch in the future.
03 Entry point for free games
The same is true when choosing free games to start first, compared with the buyout system, the player's resistance to implanting ads is naturally lower. At the same time, on the mobile game platform, there is an IAA (rewarded advertising) combined with IAP (in-app purchase) mature revenue-generating model can be learned from. In addition to the advertising revenue itself, the role of stimulating in-game purchase consumption cannot be ignored, and even becomes a common argument.
For example, playerWON's test results on Havoc of the Gods showed that players watched in-game ads, their chances of playing the game increased by 22%, and their in-game payment rate increased by 11%. Quoting the game Gyro before the report, "Thunder Games found that the revenue brought by both Kryptonian and non-Kryptonian players increased after the heavy game Pixel Z used a mixed monetization model of in-app ads + in-app purchases, and the player retention rate increased by 11%. ”
As mentioned above, in addition to the pressure of content scarcity to alleviate the subscription system, the long-term active users brought by free games are also an important choice direction. For host platforms, user competition is not limited to each other, but also exists in the cross-platform category.
EPIC and Apple disclosed the relevant data of Fortnite in court, from March 2018 to July 2020, the PS4 and Xbox One platforms accounted for 46.8% and 27.5% of the total revenue of Fortnite, respectively, for console platforms, successful free games can also create considerable revenue and bring a considerable degree of user activity and usage time.
According to the 2021 PS platform report released by NPD analyst Daniel Ahmad, microtransactions/DLC accounted for 32%, PS5 and PS4 console sales accounted for 24%, physical games accounted for 4%, digital games accounted for 19%, and service revenue (such as PSN subscription fees) accounted for 15%.
The rising importance of revenue from in-app purchases and subscription services indirectly increases the value of free-to-play games on console platforms. For the platform side, it is logical to choose the change of business model to attract this part of the developer to cope with the competition.
GamesIndustry's consolidated 2021 Global Gaming Market Report last year mentioned that the console market was $50.4 billion, down 6.6% year-over-year. In the January 2022 survey released by NPD, hardware sales increased by 22% year-on-year and content software sales fell by 4% under the overall relative stability of the console market revenue. The anxiety caused by slow or even stagnant development is the root cause of the changes that force console platforms to change more frequently and on a larger scale, and subscription systems, implanted ads, etc. are only the beginning, not the end.