Gaming subscriptions: The future of the gaming industry

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  Quantumrun Foresight
• January 15, 2022

Insight summary

The gaming industry is experiencing a significant shift toward subscription models, transforming the way games are accessed and enjoyed. This change is expanding the gaming demographic, fostering a more engaged community and encouraging companies to develop a wider variety of games. However, it also presents challenges, such as potential increases in screen time and energy consumption, and the need for new regulations to protect consumers and support smaller gaming companies.

Gaming subscription context

During the last two decades, two major disruptions, try-before-you-buy and free-to-play, have been seen in the videogaming business model. And now, all the signs point to subscriptions becoming the industry’s dominant disruptive business model.

Subscriptions have brought an entirely new demographic into the gaming industry. Based on how the subscription business model has benefited other sectors, gaming companies are increasingly applying this model to their various gaming titles. In particular, the way subscription business models have better-aligned customers' interests with providers has made them a massive success compared to other business models. 

Furthermore, the convenience of subscriptions is being supported by the diversity of mediums consumers are able to access gaming experiences, with new platforms offering games on smartphones, computers, headsets, and televisions. For example, Amazon Luna is a cloud-based platform that streams newly released games to different devices. The Apple Arcade subscription service unlocks over 100 games that can be played on various Apple devices. Google's Stadia platform, as well as Netflix, have expressed their interest in developing subscription gaming offerings.

Disruptive impact

The subscription model provides an opportunity to explore various games at a fixed cost. This option could lead to a more diverse gaming experience as players are not limited by the high upfront costs of individual games. Furthermore, the model could foster a more engaged and active gaming community as the barrier to entry for new and different games is lowered.

From a corporate perspective, the subscription model offers a steady and predictable revenue stream, which can be crucial for the financial stability of gaming companies. This model could also influence the development strategies of these companies. With a broad library of games to offer, companies might be more inclined to take risks and develop unique, niche games that may not have been financially viable under the traditional pay-per-game model. 

For governments, the rise of gaming subscriptions could have implications for regulation and taxation. As the model becomes more prevalent, governments might need to consider how to regulate these services to protect consumers, particularly in fair pricing and access. Additionally, the steady revenue stream from subscriptions could provide a reliable source of tax income. However, governments would also need to consider how to support smaller gaming companies that may struggle to compete in the subscription market. 

Implications of gaming subscriptions

Wider implications of gaming subscriptions may include:  

• The development of larger, more expensive, and more ambitious gaming franchises due to the larger revenue predictability of subscriptions.
• Gaming companies further diversifying their digital and physical product lines to provide greater value for their subscriptions or create multiple subscription tiers. 
• Other media industries outside of gaming experimenting with subscriptions or looking to partner with the subscription platforms of gaming companies.
• New job opportunities in the gaming industry as companies require more staff to manage and maintain the larger libraries of games offered by subscriptions.
• Schools providing a wide range of educational games to students at a low cost.
• The potential for increased screen time as the abundance of games available through subscriptions, leading to more time spent gaming and less time spent on other activities.
• New technologies to support the subscription model, such as advanced game streaming services, leading to improved gaming experiences.
• Increased energy consumption as the rise in gaming due to subscriptions could lead to more devices being used and more energy being consumed.

Questions to consider

• How do you think the gaming subscription business model will continue to change the gaming industry?
• Over the next decade, do you think that all games will eventually contain a subscription element?