A recent survey from DFC Intelligence reveals how games as a service (GaaS) titles (also referred to as live services or living games) drove the video game market growth during the last several years. The report states that one of the industry’s leading companies, Electronic Arts (EA), has experienced exciting growth in customer demand – from US$4 billion to US$33 billion between 2012-2018. EA’s success stems mainly from GaaS-based games such as Origin Access, Pogo, Sims 4, Star Wars: The Old Republic, and more.
Meanwhile, another giant gaming corporation, Activision Blizzard, had also been flourishing during the same period and increased its sales from US$10 billion to more than US$60 billion. The company also attributes this growth to its living games such as Destiny and Overwatch. Let’s find out what makes GaaS so beneficial today.
Previously, players would buy a game and complete it in days, weeks, or months. After finishing the game, there was nothing left but to repeat it. The advent of SaaS (software as a service) business model has expanded the use of cloud gaming and led to a dramatic shift in gamers’ habits. Thus, ready-to-use online games allowed players to play anytime and anywhere.
Cloud games also spurred market growth in other ways. While earlier publishers and developers created a sequence of games to make profits, now the GaaS model allows them to update the game with downloadable content (DLC) on the go and deliver these DLCs to players almost immediately. GaaS games are gaining momentum and slowly replacing the traditional business model of selling video games for a fixed price.
GaaS implies delivering video games to customers on a regular revenue-generating model. Publishers sell the updates of the title, engage ad monetization, or in-app purchasing, instead of developing the next episode of the game. GaaS products are mostly free-to-play and gamer-centric.
Several types of monetization apply to the GaaS business model, while some of them can be combined to work even more efficiently. Most GaaS companies use CRM systems to target users, analyze actions, and reshape the monetization method, if necessary. However, another vital CRM function is to process and validate all payments received through the sources described below.
Gaming companies release games for free, but they make money by selling content within the game. Publishers offer gamers the ability to enhance their experience with paid additional features. This way, users remain loyal and involved in the gameplay. AppAnnie predicts that over the next two years, people will spend $ 156.5 billion on in-app purchases.
As a result, all stakeholders are happy – company executives with growing consumer demand and income, and players with the opportunity to omit some parts of the game or win by purchasing new features. In addition, gamers save time it may take to get the desired promotion, upgrade character stats, or to grind (repeat user’s actions in the game to achieve a specific goal).
Instead, gamers buy what they want through microtransactions and keep playing. However, developers should consider carefully the timing of micropayment processing. If the processing takes too long, the game may be paused, leading to some confusion. This, in turn, can lead to an unpleasant gaming experience, loss of user loyalty, and, as a result, loss of income.
With the increase of advertising inside games, developers no longer want to earn their revenues solely by using a traditional, pay-to-play, or P2P business model. Moreover, people generally don’t mind in-game ads at all. The recent Ipson study shows that almost half (47%) of the users can recollect the ad they saw during play. In comparison, the same number (50%) of surveyed respondents consider the ad watching as a pleasant activity.
These figures drive the adoption of this monetization method, but developers should pay attention to the UX and not overwhelm players with too many ads.
The world-renowned subscription-based titles are Dragon Quest X by Square Enix, World of Warcraft by Activision Blizzard, or Wizard101 by KingsIsle Entertainment. This business model implies paying a recurring price monthly or at another interval to gain full access to a game.
The subscription services aim to grow the players’ engagement. Nevertheless, such titles can also contain paid content not included in the fixed recurring price.
Seasonal Digital Pass
This form of monetization involves purchasing a season pass that enables users to access multiple DLCs and add-ons. Rather than paying for each DLC individually, players can pay in advance for upgrades throughout the year. Plus, the season pass holders can get discounts on new downloadable content and exclusive features. Again, a great way to retain and engage users.
In recent years, loot boxes have become a popular in-game monetization type, that brought the industry US$30 billion in 2018.
Loot boxes typically contain randomized virtual treasures, which can be redeemed after player purchases them. The items from these virtual crates can significantly contribute to the user’s achievement during the gameplay. They can obtain new skins, accessories, and more elements to customize character or make it more powerful. Also, loot boxes can be offered as a reward for players who achieved the next level or as a promotion provided by the publisher.
However, arguments arise around using loot boxes in games. This monetization type is considered to be a controversial mechanism of earning money due to some regulatory inconsistencies. The deal is that when players buy a loot box, they pay for randomly picked items from a list. In most cases, these items are precious and uncommon for players, but sometimes they may be common elements from the store.
With games as a service model gaining significant traction among developers and publishers, we decided to define the benefits of GaaS-based games for players and picked the most prominent ones:
The survey conducted among gaming community pages demonstrated that GaaS has also affected the players’ experience.
They like to play the GaaS-based titles, get fresh DLCs, and 63% of surveyed are fond of playing the favorite games for as long as they want.
Games as a service market size can be measured by fast-paced distribution of cloud gaming. The latest forecasts predict that the GaaS approach will be gaining popularity and pushing the industry forward.
The recent ABI Research states that 5G technology and upcoming cloud gaming services will drive the market to US$4.5 billion and 42 million online gamers by 2024, with over 2-fold CAGR between 2018 to 2024. Another survey projects the online gaming industry will reach US$8B dollars in the next five years, which would be an 8-time increase since 2018. The key factor of such growth could be the rise of 5G technology, which allows high transmission speeds of over 10 Mbps.
GaaS has transformed the gaming industry and appeared to be a beneficial business model for developers, publishers, and players. The following key factors drive the success of the GaaS model:
The switch from fixed price for the game to multiple available monetization types enabled businesses not only to earn more but to create permanently developing and evolving products. GaaS titles live through years, keeping players engaged for as long as games are designed properly.
Plus, gamers attached to their games can create communities to share their experiences, cultivating loyalty to the brand’s products.
The benefits of games as a service model have revolutionized the gaming sector, fostering the adoption of this model by multiple modern companies across the globe. Custom software development outsourcing can be helpful if you seek a trustworthy partner to build an effective GaaS-enabled product.
Game development with Innovecs allows our clients from all over the world to create a game from zero, improve ongoing products, enhance the game design with cutting-edge technologies and solutions. By outsourcing the team of highly-performing professionals, our clients save tons of time and budget, without compromising the quality of the product.
Our expertise can help complete many tasks and overcome various issues in game development, including and not limited to:
Innovecs has great experience in delivering services for small, mid-size, and even large-scale publishers. Our developers cooperate with the client’s team to enhance their performance and achieve a desired result. With Innovecs, you can rest assured that the entire development process will be completed as planned and agreed upon.