Deep Dive: Online Gaming Struggles With Subscription Competition

The video game market was one of the first to move into the subscription economy, even before gaming went online. Companies like GameFly cropped up back in 2002, sending physical discs and cartridges to customers. Gaming subscriptions shifted direction as the world moved online, making things a little more complex. Providers needed to offer subscribers more to keep them satisfied in the emerging online gaming market, especially as customers no longer valued services that offered access to just one game at a time.

There are more than 2.5 billion gamers worldwide, and consumers are demanding more content, options and perks in their online subscriptions. This group is set to spend $152.1 billion on games by the end of 2019, putting pressure on gaming subscription services to offer competitive pricing, features and, above all, content. Subscribers want access to new technologies or support for mobile games, but gaming subscription services also need to cater to historic preferences that have been slow to change, even in today’s digital world.

Mobile gaming is one of the fastest-growing industry segments, but many gamers still utilize consoles. Digital gaming is popular with players worldwide; most feel a sense of ownership regarding the online games they stream, making it difficult for providers to be fast or flexible enough to remain competitive.

Gaming companies will need to approach subscription services in a way that engages customers who want the same personalized experiences they receive when picking out games in a store, particularly as online gaming continues to expand.

Competing in a Global Subscription Market

Most gaming companies are competing on a global scale, meaning subscriptions need to appeal to gamers everywhere, from Asia to Europe to the U.S. Some companies decided to emulate media subscription service Netflix to craft a universally appealing experience.

Technology company Microsoft moved into the space with the launch of its Netflix-style GamePass subscription service for first-party games in 2017. The offering allowed gamers to play new games without purchasing them outright, which can cost consumers upwards of $60 per title. The service has steadily added subscribers since its release, with one title, “Sea of Thieves,” amassing five million participants.

Microsoft was quick to have competition in this area, with gaming firm Electronic Arts, more commonly known as EA, releasing a premium subscription solution of its own: Origin Access Premier. The offering was an extension of a service that granted gamers a few hours of pre-release play on the Xbox One console, as well as discounts on EA games. Subscribers could also play games as soon as they were available for purchase. EA’s service eventually changed how gamers approached online gaming, with many playing for longer, spending more money on games and interacting with a larger range of content. Other companies, including Sony, took note of the boon that could be reaped from such offerings and released similar services.

These subscription services remain popular, but companies are now faced with users who want personalized content across various channels.

Mobile Gaming and the Future of Subscriptions

This shift is clearest when it comes to mobile gaming, a space that is becoming popular as smartphone usage grows around the world. Mobile game “Fortnite Battle Royale” currently has 250 million players around the globe, and thanks to Chinese telecommunications company Tencent’s stake in the game, the country remains a leader in the market. The U.S. is slated to overtake China as time goes on, particularly as 5G networks rise across the country.

The mobile gaming market has grown more than 10 percent year-over-year (YoY) since 2018, reaching $68.5 billion and comprising 45 percent of the global gaming market. A full $54.9 billion of that figure was generated by smartphone games alone, indicating that mobile gaming is an important area that subscription services should consider for future success.

Subscription services will likely need to pivot their approaches once again to entice mobile users on a global scale. They will also need to make sure their offerings are as personalized as possible to connect with users as the global online gaming market grows and expands.