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Study finds "Games as a Service" has tripled the industry's value

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Obliterator

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This is something we've been discussing for the last few years as we see companies like Ubisoft, Activision, EA and others drastically change the way they develop, release and monetize software. Digital River did a recent study on the industries shift towards fewer games, with a longer service model plan in place and found some very interesting results. A few quotes below.

A study from monetisation service company Digital River found that games as a service has tripled the industry's value.

The report continued: "This does not just apply to free-to-play titles: In 2016, a quarter of all digital revenue from PC games with an upfront cost came from additional content."
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"Consumers are less willing to pay $60 for a boxed game and instead choose titles with a steady stream of new content," the report said. "Publishers seek to meet these expectations and have adopted a 'games as a service' model, releasing fewer titles over time while keeping players engaged longer with regular updates and add-ons."
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According to Digital River, this change from up-front costs to protracted spending means that revenue per user is expected to grow twice as fast than the rest of the market. This is backed up by findings that, on average, PC players in the US wait 21 days after they decide they want content before buying in the hopes they can take advantage of a sale
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Digital games are on track to earn $96.5 billion this year, a 10 percent growth over last year, and are expected to reach $123.5 billion by 2020.
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http://www.gamesindustry.biz/articles/2017-10-10-games-as-a-service-has-tripled-the-industrys-value

Lots of interesting stuff at the article as well as the full report.
 
I don't want to play 10 games a year anymore. I want like 3 that get consistent updates and 1 or 2 linear story-based games to sprinkle in. GaaS are on to something.
 
Not too surprising for those paying attention, but the numbers are pretty insane.

The grey market is especially problematic for publishers, according to the report. Digital River said: "Previously, publishers simply lost revenue from a pirated boxed game. Now, many developers prefer piracy over credit card fraud so they don't end up with negative revenue."
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This is interesting.
 
This seems like the news that kicks off a "And then they were all consumed by greed" story that ends up killing off the industry.
 
Bad news for me given my tastes, but I've had fun with the model and I know plenty of people who are completely behind that kind of structure. But for every bad example, there's also stuff like The Witcher 3 where all the paid, post launch content was incredible.

Consumers are less willing to pay $60 for a boxed game and instead choose titles with a steady stream of new content
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Interestingly, indies are filling this gap by providing smaller, shorter, and more focused games that are less than 60. I wonder if this is a model AAA will adapt, but I doubt it mainly because they need all of their staff focused on content for their big games.
 
WestEgg said:
This seems like the news that kicks off a "And then they were all consumed by greed" story that ends up killing off the industry.
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If this is where it is going or is right now then I have no issue with that. I'll go collect stamps or something.
 
Not surprised. It makes sense. Personally, for fighting games and games like DMC I'll happily support them for years if there is a steady supply of new content.

To Capcom: Please (finally) add a boss rush mode, optional co-op and classic weapons for DMC. I will pay.
 
Yup, multiplayer games have to have free updates without the need to pay for new content or I'm not interested anymore. I have services like GWG and EA Access to give me games I won't buy for full price anymore.

Battlefield 1 held my interest but no way am I paying for Premium after I did for BF3.
 
For multiplayer games it's the way it should be. Buying year refreshes of what could be content updates seems silly now. I'd rather sequels be more spaced out and, as a result of content updates, be required to be larger steps up from their predecessors
 
I am perfectly fine with GaaS. Keeps Rainbow Six going and it worked well enough in Phantom Dust that hopefully we get a new version of that. It can be done very wrong though.
 
This is the worst timeline. Time to welcome our AAA $60 early access p2w loot box overlords.

Goodbye complete single player experiences.
 
Sounds good to me.

Keep adding fresh, quality content to a solid foundation and I'll keep supporting the product.

Loves me some evergreen titles like Paradox grand-strat franchises.
 
A few years ago I decided to pause my gaming hobby and then pick up as if I'm one year behind. This has allowed me to jump in on GOTY editions full of updates and for some games, huge mod communities. I still buy some games day 1 but it's extremely rare.
 
Ninja Scooter said:
If anything it's the $60 AAA game market that was more analogous to the housing bubble.
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My comparison to the housing bubble is high growth rates propped up by shaky fundamentals. If "games as a service" means providing worthwhile expansion content for your money, then sure. But "games as a service" is used more as code for season passes, loot boxes, unfinished released games with massive patches, and other such anti-consumer practices. That model will collapse over time as consumers find better value for their money elsewhere.
 
Exploratory said:
I don't want to play 10 games a year anymore. I want like 3 that get consistent updates and 1 or 2 linear story-based games to sprinkle in. GaaS are on to something.
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I, too, want fewer, better games. Unfortunately most GaaS games we’ve been sold have sucked ass and they use the “consistent updates” to make it suck ass a little less.
 
If they want games as a service then they need to be provided as a service. Make them free.

Industry trying to have its cake and eat it, wanted the free to play economies but wants to charge full price for games while it does.
 
I want to be a big fan of the GaaS-model and those kinds of games, but it's so rare that I find games that are that good that I want to really invest hundreds or thousands of hours playing them. I buy a game like Overwatch and I play it for 30-40 hours and I have a great time, and then I just...don't care. Then it doesn't matter if they keep providing updates or events because the core gameplay doesn't entice me to keep going beyond the hours where it's still novel.

Last game I really, really got into in that sort of way was probably Halo 3, which was almost exactly 10 years ago.
 
UnemployedVillain said:
For multiplayer games it's the way it should be. Buying year refreshes of what could be content updates seems silly now. I'd rather sequels be more spaced out and, as a result of content updates, be required to be larger steps up from their predecessors
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For sure, the yearly releases really ought to get this idea in their head. I think multiplayer games are the best way to do the "as a service" style since it blends easily with that kind of game. New weapons, new maps, balancing patches; this stuff is needed for a big multiplayer shooter and you can add any content that would be in the next years game relatively easily to the now year old game since it will be on the same platform and engine.

I just worry for the day when we start getting single player games needlessly adding this sort of stuff. FFXV still has me majorly shook with their ongoing plans.
 
Mass Effect said:
Unsurprising. I expect more companies to step on the gaas as time goes on.
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The most interesting company for me here is Nintendo. They're also using this model but in their own weird way. Arms and Splatoon 2 use some characteristics of GaaS games and yet don't use their biggest benefit, the continues revenue stream. Of course, with Nintendo selling tons of merchandise and amiibo they have other ways to get more money. But I do wonder if shareholders will revolt at some point or if Nintendo can fend them off with their mobile games.
 
JinjoUnchained said:
My comparison to the housing bubble is high growth rates propped up by shaky fundamentals. If "games as a service" means providing worthwhile expansion content for your money, then sure. But "games as a service" is used more as code for season passes, loot boxes, unfinished released games with massive patches, and other such anti-consumer practices. That model will collapse over time as consumers find better value for their money elsewhere.
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Still not really sold on this analogy. The "fundamentals" for GaaS are fantastic in terms of consumer demand, and while awful implementations like Forza and Shadow of War exist consumers have demonstrated they're willing to put up with lootboxes and season passes in exchange for increase long-running support.
 
I can see it now: Reviews are going to slam games like Super Mario Odyssey and Xenoblade Chronicles 2 because Nintendo doesn't want to "get with the times" and add loot boxes and microtransactions.
 
It's funny - I work for Ubisoft and my whole career is kinda based on this concept. We talk about it a lot.

As a gamer I like it. I don't really have the time or desire to get invested in a new game every month - I'd rather play a handful of games i really like and take part in live events and meaningful DLC to supplement that experience.

EDIT: Also, GaaS ideally isn't "loot boxes/microtransactions" - it's consistent post launch support in the form of in-game events (aka "live events"), DLC that adds a new experience (so a new mission/story, a new mode, etc), and more.

The goal is to provide value to keep players engaged with the product and not move on to other titles - microtransactions and loot boxes are short term rewards that don't further that goal.
 
Like some others, I have been saying that the AAA development cycle wasn't going to be sustainable during the 360/PS3 years and this is a direct result of that. Games are more expensive than ever to make and consumers are expecting more from their games.
 
It makes sense, especially for multiplayer games. Update games with new features instead of releasing a new game every year or two.
 
I indeed enjoy an incentive to stick around for awhile.
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Especially MP games because they dropped the pretense and just keep updating the base game with free content. Way less split player base issues this gen for me.
 
Yeah, not shocked. I feel this was reaction of the Gamestops and selling shit online but after the MMO boom, reactions to Season Passes and Overwatch, feels like this is the result of that.
 
NoKisum said:
I can see it now: Reviews are going to slam games like Super Mario Odyssey and Xenoblade Chronicles 2 because Nintendo doesn't want to "get with the times" and add loot boxes and microtransactions.
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I kind of doubt this, considering that loot boxes and microtransactions have zero customer benefit outside of temporary endorphin release.
 
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