The video game console market has long been considered a strong growth market. Mobile games should take on this role with innovative revenue models. Until the big publishers translated the ideas from smartphones to consoles.
The video game market is growing and growing. Annually there is talk of a growth of up to 10% and at the latest since the advent of smartphones, video games have not only reached PC and console gamers. In Austria, 4.9 million people played video games in 2017 – and the trend is rising.
Games as a service
The sense of a game as a service offering is obvious to developers. Those who retain their players for the long term can sell them more and gain a secure, steady flow of income. In order to turn a game into a service, games have to be changed over the course of their lifetime.
Mobile gaming as a growth driver
The reason for this is no longer consoles and PCs, but mobile gaming. In 2018, the global mobile game market was larger than the PC and console game market combined for the first time – with an annual growth of 25% compared to 2% and 4% respectively in the lagging sectors.
The meteoric development of mobile games goes hand in hand with the approach that video games on the smartphone reach far more social classes, require a lower game intensity and a lower expenditure of time than classic platforms. In addition, unlike a PC and console, the mobile phone is always with you when you are out and about, it is a so-called handheld device. This promotes the opportunity factor and allows short playing times for waiting times. The smartphone did not create this handheld market, it incorporated and expanded it. Where Nintendo’s devices such as the Game Boy or the Nintendo DS, or Sony’s PSP and PS Vita have been picking up gamers for 30 years now, mobile apps could attract the masses in just a few years. This can be seen in the sales of handhelds. During the Nintendo DS,Selling over 150 million units , the Nintendo 3DS that followed in 2001 accounts for around half of the units sold. Nintendo found that adaptations of in-house classics such as Pokémon for smartphones are the new model for success.
Revolutionary sales model
There is also a big difference in the pricing policy. While classic PC and console titles carry a full price of € 70 with them, most mobile games are free. They don’t ask you to pay anything, they just offer purchase options, so-called “in-app purchases”. Mostly this is cosmetic content, extensions or aids to advance faster in the game. As one of the pioneers of these games, the free game “Candy Crush Saga” achieved over a billion dollars in in-app purchases as early as 2014 . The Battle-Royal Shooter “Fortnite” is one of the biggest games of this pricing policy in 2018 and 2019. In May 2019 alone, the publisher Epic Games generated sales of over $ 200 million rejoice – with a free game. The secret behind it is a seemingly endless game. A game that is constantly being fed with new content. A game that the recipient would like to never let go of. A “Game as a Service”, or “games as a service” (Gaas) for short.
Why Games as a Service?
Video games have been finished products since their first appearance, comparable to other media products such as magazines. The customer buys a finished game at full price based on their experience with previous titles and their trust in the game series or the publisher. Manufacturers could cover their costs with a certain number of games sold at a certain price.
Digitization should also provide almost endless new revenue models in the gaming industry. Instead of selling the player a finished product and hoping that he’ll buy the next one again, games as a service regularly tries to keep the player involved in a game for as long as possible with new content via online updates. On the one hand, this ensures that developers work longer on an idea and a concept and can constantly change it; on the other hand, with such a model, customers are often willing to invest money continuously in a game that is constantly improving. Many large publishers have already implemented this model, such as Ubisoft with “Rainbow Six Siege”, Square Enix with “Final Fantasy 15” or EA with “Fifa Ultimate Team” .
Origin on the PC, advancement on the smartphone, future on the console
Blizzard discovered the first games as a service (Gaas) model for itself when the PC game “World of Warcraft” was based on a subscription model with regular payments in the early 2000s . With the introduction of mobile games, a new market developed which quickly showed that short-lived games for 80 cents were not a profitable solution for developers. The free-to-play model with microtransactions quickly established itself as the standard and has provided the largest market growth in the gaming industry for years. In the meantime, the mobile market was even larger than the PC and console market in terms of total sales, but the big publishers have won the new recipe for success for themselves. The console market in particular should still be in the area of service-based gameshave enormous market growth potential. This potential gives the console division a growth forecast for 2019 of over 13% and is thus above the forecast for mobile gaming.
Criticism from community and politics
So if you like a game, you have the opportunity to acquire additional playful or cosmetic content or bonuses to other players. If you don’t like that, you can continue the gaming experience or games as a service in most models in the same way as before. What at first sounds like a fair model can quickly turn into an unbalanced game in favor of the payers. Many publishers make use of people’s psychological vulnerabilities. For example, at a certain point the level of difficulty becomes too high to have fun without financial support. After all the time invested, you don’t want to give up the progress you’ve already made and pay more to keep up.
The currently most controversial model is shown in loot boxes. Loot boxes are a disguised form of gambling and are now dear to the hearts of all major publishers. By buying a loot box, the player receives random items that either help him in the games as a service or are cosmetic in nature. The incentive is the opportunity to get rare or the best items with the first try, often for hundreds of euros.
The problem is that this type of gambling does not stop at children and teenagers. Some states like Great Britain are addressing this problem at a political level and are calling for loot boxes for children to be banned . Shortly before its release in 2017, the game “Star Wars Battlefront 2” from publisher EA generated an unprecedented response to this model. Since unlocking a single character, even if he is the almighty Darth Vader, costs around 70 €, i.e. the full price for a video game, a lot of criticism has been voiced by gamers and politicians. The response from EAon the Reddit platform led to the record for the most negative reviews in Reddit’s history. Due to the great pressure, EA decided to forego microtransactions completely at the start of the game in order to rule out further negative feedback.
Good implementation has a future
Despite many examples of customer disdain, it has been shown that the correct use of microtransactions in connection with a games as a service (Gaas) model can work wonders. The best example is undoubtedly the title “Fortnite” from Epic Games. With daily content innovations and tempting, but not gameplay-changing premium content such as the battle pass, skins or other cosmetic changes, the battle royal shooter has developed into the new playground king of young gamers. In addition to the notorious Battle Royal mode, “Fortnite” also offers other modes that are either competitive, creative or adventurous in nature and grabs as many players as possible at once, now over 125 million .
“Fortnite” is considered to be the egg-laying woolly milk pig among the games, both for players and for publishers. This is exactly what a Game as a Service should look like, because where there are no losers, there are only winners.
