Video Game Subscriptions — A Fad, Or the Future?

The announcement of Apple Arcade, Stadia and Xbox Game Pass show an interest in changing the video game landscape, but will it succeed?

A few days ago, I was debating whether to spend £50 on The Outer Worlds, the space adventure game by Obsidian Entertainment. I had heard great things about it, but still have a backlog of “great” games that I’ve played for less than an hour, so it was hard convincing myself to buy it.

My deliberation was cut short when I found I could play the game for £1 (trial cost in the UK), as it is part of the Xbox Game Pass. I hadn’t heard of Microsoft’s subscription service prior to this, and was pleasantly surprised to find a critically acclaimed game, released a few weeks ago, already available as part of the subscription.

Everyone Has A Subscription

Similar to the abundant options for TV and movies, publishers and platform operators have all jumped at the opportunity of running their own subscription services. Ubisoft has Uplay+, a £12.99 per month service has new and old titles available; EA has EA Access, a less furnished service with only back catalogue.

These two services are similar to CBS All Access and HBO Now — two subscription services available in the United States — which only broadcast their own content.

Then we have our platform operators, in the form of Xbox Game Pass and PlayStation Now. Xbox Game Pass has around 150 titles available, some for PC and others for Xbox, for £7.99 per month. PS Now, on the other hand, has a far larger selection of games (surpassing 700). These include PS4, PS3 and PS4 titles for £8.99 per month.

Sony and Microsoft both own a growing number of game studios, allowing them to leverage back catalogue and new titles (Microsoft owns Obsidian Entertainment; Sony owns Naughty Dog).

Google has also tried to enter the video game industry, with Stadia. It is the latest attempt to make cloud gaming a thing…reviews aren’t great. Attached to the console purchase is a subscription to Stadia Pro, a £8.99 per month bundle that includes higher resolution, surround sound and access to free games.

On mobile, Apple and Google have both committed to subscription services for video games, but Apple has the better approach. It intends to spend millions acquiring the exclusivity rights for more than 100 games, while Google has created an agreement for Android developers to be paid for time spent in game, likely a much lower figure.

All of these announcements have not had much of an impact on the way most people buy their games. There hasn’t been a Netflix-sized juggernaut; most games are bought on the first week of release.

For gaming subscriptions to survive and reach mass audience, three things need to happen:

1. Subscription services debut games first on their platform or make a lot of games available at day one.

2. Add enough new content per month to prevent fatigue. A lot of single player games can be completed within a week, multiplayer games can wear off if they don’t have a large player-base or content variety.

3. Competition from the major subscription services (Xbox, PlayStation on console; Apple, Google on mobile) to acquire exclusive distribution rights and release highly rated games.

One and two are necessary for gaming subscriptions to be viable long-term, whereas number three is the catalyst for the subscription model entering the mainstream. If the big publishers are actively competing for subscribers, it will reinforce the idea that without a subscription, you can’t access new games. That will in turn make providers see subscription services as the future, as we are currently witnessing in the TV and film industry.

There’s plenty of reasons for the subscription model to work going forward. Most video games are too expensive. When the option is £60 for a single game (normally not reduced to below £30 until 12 months) or £10–15 per month for hundreds (if not thousands), I think there will be a shift towards the latter. With a content-rich subscription service, the barrier to entry is lower, while the amount of games playable is higher.

What platform providers have to consider is a balance between single-player titles and highly re-playable, popular multiplayer games. While games like Fortnite and League of Legends are free-to-play, the vast majority of popular online games (Overwatch, Call of Duty, FIFA, Hearthstone) are not. Acquiring exclusivity to those could be game changing.

To use a Netflix analogy: single-player games are the films you watch once, while multi-player titles are the TV shows with multiple seasons available on-demand or coming soon. You need both to provide a complete service.

Striking that balance may make gamers far more willing to pay the first month. But platform providers need to focus heavily on investment and content creation to avoid high churn rate. Netflix doesn’t just have low churn because you can watch The Office fifteen times, it’s because it offers a huge list of original programming (more than the entire TV industry in 2005). While a lot of this programming doesn’t draw in millions of viewers, it only needs a few hits (OITNB, Narcos, Stranger Things) to make it all worthwhile.

Apple is showing its intent to deliver similar investment into the mobile gaming industry. It may be a while before we see equal investment in console and PC gaming, unless one of the big names (Google, Amazon, Microsoft) or a major gaming publisher (Valve, Epic, Tencent) decides to pump in billions.

When that occurs, expect things to move a lot quicker. I expect once two or three publishers are aggressively competing, there will be many that yearn for the days when there was less than 10 highly polished, original games released a year, similar to how many feel about the overwhelming choice of TV shows.

Analyst at Business of Apps. Previously RT Insights, Digital Trends, ReadWrite. Studied journalism at Lincoln uni, currently pursuing a Masters at Leeds uni.

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