The rise of video game subscriptions

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Having become the dominant model in other forms of entertainment, we look at how subscriptions are change the way developers reach new audiences.

Accessing vast libraries of movies, TV and music for a monthly fee has become the norm for millions of people around the world, but the practice is still comparatively new in the realm of video games.

The business model is starting to gain traction, however, as many major players offer such a service in some form. Xbox Game Pass is perhaps the most notable, given how many third-party titles Microsoft has managed to secure for it and how quickly it has grown its audience – 18 million subscribers as of January 2021, having launched back in 2017.

Sony has been running the cloud-based PlayStation Now for close to a decade now - not to be confused with PlayStation Plus, the monthly subscription that offers access to online multiplayer rather than a library of games (although subscribers can claim selected free titles every month). Electronic Arts has EA Play – previously known as Origin Access, and now part of Xbox Game Pass’ Ultimate tier – and even Assassin’s Creed publisher Ubisoft got in on the action with UPlay+, now Ubisoft+, back in 2019. Even Apple and Google offer mobile versions, with Apple Arcade and Google Play Pass respectively.

But these services still have a lot of room for growth. Midia Research’s Q4 2020 survey, which quizzed around 4,000 people across the US, UK, Canada and Australia, shows that just 4% of consumers currently pay for a games subscription every month.

Karol Severin

ldquo;That means games subscriptions are still at low penetration rates when compared to video – where 42% of consumers pay for a monthly subscription – or music at 23%,” says senior analyst and product manager Karol Severin. “Having said that we expect games subscription to continue growing. There is also the fact that consumers often currently pay multiple subscriptions for games – for example, PS Plus and PS Now.”

An interesting debate that has emerged alongside the rise of these services is whether they benefit developers. The value for consumers is undeniable; dozens, if not hundreds, of games available to play at will and all for a monthly fee that’s a fraction of the price of a single AAA title. But by relinquishing that direct sale, do developers gain enough of an audience boost to warrant (sort of) giving their game away for free?

Naturally, nobody knows the ins and outs of the deals between service holders and studios; it’s safe to assume there’s a hefty down payment, but the figures involved are unclear. But the sheer range of major studios and titles that have been made available via subscription suggests there are at least some advantages for the game makers.

UK-based racing specialist Codemasters has dabbled in adding selected titles to subscriptions services since 2015, with entries from many of its key franchises found in the libraries of Xbox Game Pass, PlayStation Plus and, most recently, Stadia Pro.

“We still have a lot to learn, but we are happy with the strides we have made as a business with subscription models,” says SVP of publishing Jonathan Bunney. “The biggest takeaway has been how subscriptions have increased the life of a product. The best example of this is DiRT Rally 2.0 – we already had a large, passionate player base who played the game regularly. Adding the game to subscription services saw those numbers grow significantly. We now have new lifelong players of DiRT who came in via that route, and will hopefully return for our next rally outing.

Jonathan Bunney

“We still have a lot to learn, but we are happy with the strides we have made as a business with subscription models,” says SVP of publishing Jonathan Bunney. “The biggest takeaway has been how subscriptions have increased the life of a product. The best example of this is DiRT Rally 2.0 – we already had a large, passionate player base who played the game regularly. Adding the game to subscription services saw those numbers grow significantly. We now have new lifelong players of DiRT who came in via that route, and will hopefully return for our next rally outing.

“Subscriptions enable us to increase the lifecycle of the product. They help build brand awareness and provide the entry point to a title that can then lead to a lifelong player of that franchise. They allow us to get games in front of millions of potential new players who, for whatever reason, missed the title at launch. I’m not sure there are downsides because we take advantage of both angles – traditional game sales plus subscriptions at the right point in the game’s lifecycle.”

Indie publisher Curve Digital has also experimented with releasing its games through subscriptions, with Xbox Game Pass as its biggest partner. Most notably, the Xbox version of strategy game Bomber Crew launched on Game Pass the same day as it arrived on shelves -- a rarity as most publishers want to see how well their title fares at retail before giving it to subscribers. But for Simon Byron, Curve Digital’s publishing director, this is a great tactic to rapidly grow your audience.

“The barrier to entry for those already paying for the service is very low – so you can get real scale immediately,” he says. “Therefore, if your game needs a huge player base then launching it into a subscription service – ideally with cross platform play – is a great way of guaranteeing it. Complement that with an offering of premium DLC and you can have a really engaged active player base. And when you get a load of people playing, you can generate significant word of mouth which can benefit other formats too.”

He adds that – “assuming you’re happy with the revenue model” – there are little to no disadvantages to including your game in a subscription service.

PC-centric publisher Paradox Interactive, best known for its popular strategy games, has gone even further in exploring the possibilities for subscriptions in games. In addition to adding selected titles to services like Game Pass, it has launched subscriptions to specific titles such as Crusader Kings 2 and Europa Universalis 4. The idea is that subscribers will not only get the base game, but the complete library of DLC and expansions that have been added to the game over the years.

Chief strategy officer Kim Nordstrom says this means the developers “don’t need to push harder to release new content,” since players have plenty available to them. And Paradox intends to delve further into the world of subscriptions.

“In the future I'd like to see us being able to commit to more content more often to increase the value of a subscription model, but with this current approach there hasn't been a need for that yet,” Nordstrom explains. “Our games available through Game Pass and similar platforms reach a new audience for us, which is exciting. In general, there are mainly advantages with our current approach to subscriptions and very minor disadvantages.”

That’s not to say every game should be added to subscription services. Just as with film, there are benefits to different types of launches -- some titles, particularly the top tier AAA releases like Call of Duty or FIFA, sell millions at retail, essentially become the equivalent of cinema blockbusters. It makes little business sense to add them to a subscription from day one. 

Even if your title isn’t on this level, there are other considerations to weigh up before joining such a service. As Bryon puts it, you need the right game for the right program – and ideally it needs to be something that keeps players coming back for more.

“Subscription changes the relationship between the game and the player – without anything invested specifically towards the game, the player has no investment in the title, making them less forgiving,” he says. “They’ll try lots of games, bouncing off ones they don’t like immediately. And if it’s a title which can be completed reasonably quickly, you need to ensure the economies of the particular subscription service work – some services which pay solely per player minute won’t necessarily be appropriate.”

Again, Xbox Game Pass is highlighted, with Byron saying Microsoft’s offering has served all of Curve’s titles well – particularly hit physics-based multiplayer outing Human: Fall Flat, which “gets bigger and bigger every year.” 

“Whenever we release new content for Human: Fall Flat, the community re-engages and we see huge player spikes,” he adds.

For Paradox, deciding which titles to add a subscription to – unlocking access to all the DLC and expansions – depends greatly on how extensive that backlog of add-on content has become. Crusader Kings 2, for example, has 15 expansions that would cost over $300 to purchase individually. That’s a daunting barrier for new players.

“Essentially, we want to give a player more ways to consume the content aside from purchasing it,” Nordstrom explains. “When looking at that goal and looking at subscriptions at the same time, it became quite clear that we could offer ordinary purchases and subscriptions side-by-side without huge risks or upsetting the audience, since they still have the option to choose a traditional purchase if they wish.”

“We have obviously looked at the alternative of launching our own Paradox-wide subscription model, though every time we consider it, it's been clear that it's a tremendous risk for the company and also uncertain if it would give more value to our players. Besides that, we've also made sure that some of our games have been available through current subscription models.”

Nordstrom agrees that Xbox and PlayStation’s subscription services are introducing Paradox’s games to new audiences, since subscribers are more likely to try something different that’s available to them without having to pay full price. On the publisher’s ‘per game’ subscriptions, he says only a “very small portion” of its players subscribe but adds that it’s “very early days” and the reception has been encouraging.


“The community has, in broad strokes, been very positive about this, and especially new players – or churned players – express their gratitude as they can now come back for a few euros and enjoy the full back catalog of content for these games without spending hundreds of euros up front,” he says. 

“This is good news for us and our players, and allows us to continue to experiment more with this model and continue to push for more value to our players. Very early indications also show that subscribed players have even higher engagement, and from a company revenue perspective this stabilizes cash flow for the products instead of just relying on the spikes that come with content releases.”

So what role will subscriptions play in the future? Midia Research’s Karol Severin warns that developers “will need to adapt to the dynamics of subscriptions” as the model could prove to be transformative for the games industry, just like it has for others. 

“The closer to the mainstream subscriptions – i.e. access to many titles at one price – get, the harder it will be to justify high spend on individual games, except for a small handful of top titles,” he says.

“We expect games subscriptions to grow over the next five years, driven by new market entrants such as Amazon’s Luna, as well as the heightened conversion efforts of Xbox and PlayStation. The Covid-boosted engagement will face pressures as lockdowns are lifted, and the oncoming recession will have consumers generally more careful around spending.”

Codemasters’ Jonathan Bunney also believes subscription services will continue to grow, adding: “Consumer habits will dictate how quickly, but you only have to look at other entertainment forms to see how people consume content. Whether that’s Spotify, Netflix, Disney+ or DAZN, habits are changing, and discoverability through subscription recommendations is becoming the norm. They are a great way for players to try something new or something they’d forgotten without owning it outright to see if it’s for them.”

Nordstrom says the growth of subscriptions across the industry is driving Paradox to invest more in the model, although adds that it remains “quite risky” to shift entirely from the traditional premium model at this time.

“We're currently very happy with the current approach we've taken as it generates a tremendous amount of learning for us as a company, for the studios, for marketing, and as well getting the valuable feedback from our loyal audience,” he says. “This is highly important as we believe the future will be much more about subscription models. This is very clear if you look into the music or movies industries, and with Microsoft and Sony ramping up their initiatives around subscriptions.”

Byron concludes: “Streaming will be the next battleground. The key to success will be services which allow players to access their library anywhere – that’s the real Holy Grail.”


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