Future of gaming is in subscription services, says Simon-Kucher

18 December 2020 Consulting.us 4 min. read
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Gaming subscription services are expected to continue gaining in popularity, according to a report from Simon-Kucher & Partners. The marketing and strategy consultancy polled 13,000 people in 17 countries for its Global Gaming Study.

Video games have gained in popularity as the global Covid-19 pandemic has kept many people at home. Gamers have been spending more time and money on video games, and that trend is expected to last after the pandemic ends.

As with music, TV, and movies, subscription services in gaming are projected to become a predominant way that consumers access the media. Just as how consumers used to rent or buy movies on VHS and DVD but now subscribe to over-the-top streaming services like Netflix and Disney+, gamers will increasingly turn to subscriptions that offer a library of games instead of purchasing individual games in physical or digital format.

The Simon-Kucher survey found that one in three gamers globally have at least one gaming subscription – which includes subscriptions to one game (e.g. World of Warcraft), a game console’s online services (Xbox Live and PS Plus), and platforms that offer games from multiple publishers (Microsoft Game Pass, PS Now).

Gaming subscriptions not a winner-takes-all marketCurrent subscribers said that quality, number, and diversity of games were the most critical aspects driving their choice of subscription. As such, publishers should highlight these aspects in their communications, according to Simon-Kucher.

The report notes that casual gamers (five or fewer hours of gaming per week) are a substantial untapped market. Subscription platforms should therefore expand their selection of games to encompass titles that cater to the tastes and abilities of both casual and serious gamers – creating a “Netflix of Games.”

Consumers have been shifting to renting instead of owning across many categories, including cars and bikes, movies, and music – and that tendency is expected to carry over to video games – even if it’s being driven by publishers and gaming platforms seeking to generate recurring revenues from a subscription model.

Time spent gaming when on a subscriptionSimon-Kucher doesn’t expect the gaming subscription market to be a “winner-takes-all” one, where one company dominates the market. The survey found that nine percent of gamers already buy multiple gaming subscriptions, and 71% are open to trying multiple subscriptions. However, most gamers will be wary of every publisher trying to make their own service (Ubisoft and Rockstar have made feints in that direction), so market fragmentation shouldn’t go too overboard. The increasing fragmentation in the video streaming market – wherein consumers are facing new, separate streaming options from multiple traditional networks in contrast to the early days where Netflix had a wide and diverse roster of content – risks being replicated in video games, to the detriment of gamers. 

As of yet, the report found an untapped willingness-to-pay for gaming subscriptions. Serious gamers (20+ hours per week) are willing to spend 19 to 40 dollars per month for their ideal subscription. However, few providers target the high end of the price range – which could be tapped by providing limited or early access features, such as AAA titles available in the premium tier for a limited-time, such as Disney+’s premier access.

Though Microsoft Xbox has gone all-in on its Game Pass – offering recent triple-AAA content from its first-party publishers as well as wide selection of offerings from third-party publishers – Sony has been much more reticent to include their premium titles in PS Now, making it a much less attractive proposition than Game Pass. Sony is clearly worried about cannibalizing sales of $60 standalone titles, and feels that PS Now is not a sustainable monetization strategy for games in that price range.

However, it’s likely that Sony will eventually shift to the Microsoft stance of offering its new games immediately on its subscription platform – though how long that will take, and how much it will cost for consumers, is anyone’s guess. For Nintendo, the most conservative of the three console makers, such a setup will likely not arrive for a long time, however.