‘Games As A Service’ Proves Super Profitable

Games As A Service Proves Super Profitable

Why do so many kitchen competition shows promote essentially serving raw meat of every kind even if it is unsafe? Less cooking time means faster turnover in kitchens means more revenue for less or equal cost and therefore more profits. Why do exhibitors love easily packaged shorter films with four-quadrant appeal? More sessions times, wider appeal, more bums in seats and therefore more profits.

The same is true of the gaming industry as we’ve seen the move away from single player campaigns towards more ‘games as a service’ titles. Game companies push hard on titles filled with microtransactions, loot boxes, in-game app purchases, launch date DLC and season passes or even monthly subscription charges.

These aren’t about rewarding or engaging the player, they’re about generating more revenue for the business to cover rising marketing budgets, exorbitant executive salaries and paying out dividends to shareholders. Sadly that model continues to be embraced rapidly because, no matter how much some players cry foul or how often these companies are voted amongst the worst in America, it appears to be working.

DFC Intelligence (via GameDaily.biz) has published a report on how the games-as-a-service monetary model has changed the industry with a focus on the two major companies responsible for it – Activision Blizzard and Electronic Arts. In 2012 Activision was making $10 billion and EA $4 billion in market intake. This year? Activision will score $60 billion and EA up to $33 billion.

The revenue is shooting up even as the companies are producing less and less actual product, narrowing their line-up to only a handful of franchises. Digital microtransactions within those annual release titles, along with their increasing ‘live service’ games (eg. Sims 4, Origin Access, FIFA Online, Star Wars: The Old Republic), are what’s adding so much to the company bottom line be it sports titles, military shooters or space combat games.

In fact, EA has only seven actual game titles set for release in the fiscal 2019 year – its four annual sports titles (FIFA, Madden, NHL, NBA), its annual “Battlefield” release, and two new titles – “Anthem” and “Sea of Solitude”. All this is happening as physical release sales are down by 17% from last year, meaning the money from their digital storefronts is just too rich for AAA publishers to pass on.

How this will impact sales of the next generation of console hardware in a few years isn’t clear as yet, but the great AAA single player campaign titles which come with everything included in a one-off purchase is a model that really is going extinct despite the odd title (eg. “God of War,” “Marvel’s Spider-Man”) soaring up the charts.