Subscriptions provide a wealth of opportunities in a brave new gaming world - Prismic
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Publication date:
Feb 2021
Authors:
Dom Tait, George Jijiashvili
Subscriptions provide
a wealth of
opportunities in
a brave new gaming
world
In partnership with:
Brought to you by Informa Tech
Subscriptions provide a wealth of opportunities in a 01
brave new gaming world
Contents
Two-minute primer 2
Introduction: What is subscription gaming? 3
Games subscriptions services—access to a library of games content 5
Cloud gaming services—subscriptions at their heart 6
Single-game subscriptions—a promising monetization model 7
Not just a game—Fortnite and its bold move to the subscription model 9
Wider games ecosystem—games streaming and esports 10
Subscription bundling—a mutually beneficial partnership 11
Challenges and opportunities—the critical factors for a successful subscription model 12
Conclusion 17
Appendix 18
© 2021 Omdia. All rights reserved. Unauthorized reproduction prohibited.
Subscriptions provide a wealth of opportunities in a 02
brave new gaming world
Two-minute primer
• The games industry moves to a different beat from video and music, where the subscription
model dominates, but games subscriptions are nevertheless in the ascendancy.
• Technological constraints and industry unwillingness have been overturned, and the last 12
months have seen a flurry of new services become available.
• Subscriptions are being used in multiple ways—from offering a library of games, to greater
engagement with a single game, and even to services beyond the notion of simply playing.
• The opportunities of subscriptions are manifold, from simplifying and improving the user
experience for the consumer, to greatly enhanced data and a strong, constant revenue stream
for the provider.
• Obstacles remain, including developer uncertainty and low consumer awareness, but these
attitudes are beginning to change.
• Adapting the subscription model to the unique demands of the games market requires agility
and expertise, but the rewards are worth the effort.
© 2021 Omdia. All rights reserved. Unauthorized reproduction prohibited.
Subscriptions provide a wealth of opportunities in a 03
brave new gaming world
Introduction: What is
subscription gaming?
More and more players in the games industry are adding subscription options to their payment mix,
but how well is that proposition being sold to consumers? Even for perhaps the most well-
understood definition of that term—the cloud gaming subscription services offered by the likes of
Google Stadia—confusion seems to reign. According to research conducted by Omdia in late 2020,
82% of consumers from a cross-section of demographics in the US, the UK, Germany, China, and
Japan aren’t aware of the exact proposition made by Stadia, Xbox Games Pass, Amazon Luna, and
others. Intriguingly, the research went on to find that once cloud gaming’s proposition is fully
explained, 20% of consumers become interested.
Zeroing in on just cloud gaming subscriptions demonstrates the potential of such services. The global
market for this generated an estimated $0.8 billion in 2020, or less than 1% of total consumer spend on
games across all formats. Over the next five years, however, it will expand at an impressive CAGR of
63%, with revenue reaching $9.5 billion in 2025, or about 6% of total consumer spend. The coming year
will be a landmark one for cloud gaming, boosted by the popular Xbox Game Pass Ultimate service
gaining a cloud gaming capability at the end of 2020, as well as the entry of new services such as
Amazon Luna. This impact is reflected by the predicted 260% year-on-year revenue growth for cloud
gaming subscriptions in 2021, before growth settles somewhat in the outer years of the forecast
period.
© 2021 Omdia. All rights reserved. Unauthorized reproduction prohibited.
Subscriptions provide a wealth of opportunities in a 04
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Figure 1: The global cloud gaming subscriptions market is expected to grow rapidly over the next
five years
Global cloud gaming revenue forecast ($bn), and content subscription YoY growth (%)
14 300%
260% 12
12
10 9.3
Revenue ($bn)
175% 200%
8 7.0
6 5.2
4.0 9.5 100%
4 54%
7.2
5.3
2 1.4 3.9
0.2 0.4 0.6 3.0
0.8 30%
0 0.1 0.2 0.3 0%
2017 2018 2019 2020 2021 2022 2023 2024 2025
Subscriptions Other revenue Subscriptions YoY growth
© 2021 Omdia
Source: Omdia
But in reality, and rather ironically, “subscription gaming” is a far more nebulous term than cloud
gaming alone, encompassing an ever-increasing range of offerings across the ever-broadening
gaming ecosystem. Here, then, is a rundown of the ways in which subscription gaming can be
interpreted:
• A range of games from multiple developers. These types of subscription services are offered by
both native (Sony, Microsoft) and non-native (Google, Amazon, Apple) companies.
• A range of games from a single developer, such as the services EA Play or Ubisoft+.
• A range of games provided by a service provider such as a telco, typically offered by a white-
label cloud gaming service such as Blacknut.
• A single, continuously updated game such as Roblox, World of Warcraft, or The Elder Scrolls
Online.
• Single-game subscriptions where the game is just one part of the offering, such as Fortnite,
which has a main game plus its social area and increasing forays into wider entertainment.
• Services beyond just playing games, from streaming (such as Prime Gaming) to esports (such as
Major League Gaming).
© 2021 Omdia. All rights reserved. Unauthorized reproduction prohibited.Subscriptions provide a wealth of opportunities in a 05
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Over the course of this report we will examine these categories of subscription gaming in more
detail to seek the common thread that links all such providers—no matter the service—and tackle
the key challenges and opportunities that determine their success.
Games subscriptions services—access to a library
of games content
The most recognized type of games subscriptions are services which give members access to a
library of games for a monthly fee, usually ranging from $4.99 to $14.99. Offerings such as EA Access
and Sony PlayStation Now services have existed since 2014, but consumer uptake was initially slow,
even as subscription services rapidly dominated the music and OTT video spaces. But consumer
behavior around consuming and paying for entertainment has changed fundamentally over the past
decade, so it’s unsurprising that the subscriptions business model is now finding its place within the
games industry.
The key factors previously inhibiting the uptake of games subscription services were low consumer
awareness, technical shortcomings of platforms, low global penetration of fast internet access, and
limited availability of triple-A (premium) game titles. These are now being addressed across all
fronts, helped along by the emergence of more subscription services offering an attractive selection
of games and other perks. Services from tech giants and major game companies such as Apple
Arcade, Xbox Game Pass, and Ubisoft+ have led the way, but smaller and more specialized
subscription services are also emerging, such as Antstream Arcade and Utomik.
Most subscriptions offer players access to a library of games, discounts on store purchases, and
multiplayer features. Some also offer additional benefits such as no ads, curation of content, and no
in-app purchases. With their immense network infrastructure, compelling consumer offerings, and
vast marketing budgets, the tech giants such as Amazon, Apple, Google, and Microsoft have
accelerated this shift to subscriptions. Major publishers including Activision Blizzard, EA, and Ubisoft
are also taking substantial steps and others are set to follow.
One certainty is that the number of subscribers is ramping up. In September 2020, Microsoft
revealed that Xbox Game Pass had passed 15 million members, up from 10 million five months prior.
EA reported 6.5 million subscribers at the end of 2020, up from 3.5 million at the start of 2019, while
PlayStation Now also saw a dramatic increase of subscribers—from 700,000 in April 2019 to 2.2
million by mid-2020. Games are inherently very different from music and video due to their
interactive and often complex nature—therefore the games market will develop uniquely at a
different pace. Subscriptions, microtransactions, one-off purchases, and in-game ads will continue to
coexist in the future. Each of these offer their own set of advantages, but subscriptions are best
placed for companies to implement crucial elements like rapid time to market, minimizing friction
for continuous payments, and scaling to reach a global audience.
© 2021 Omdia. All rights reserved. Unauthorized reproduction prohibited.Subscriptions provide a wealth of opportunities in a 06
brave new gaming world
Figure 2: Market map of subscriptions in the games ecosystem
Source: Omdia
Cloud gaming services—subscriptions at their
heart
Increasingly, game subscriptions and cloud gaming services are becoming one and the same.
Amazon Luna, PlayStation Now, and Xbox Game Pass Ultimate enable users to stream games from
the cloud. “PC in the cloud” subscription services such as Nvidia GeForce Now, Playkey, and Vortex
also exist, which allow members to play digital games they already own on platforms such as Steam
on a virtual gaming PC. Specialized cloud gaming companies such as Blacknut and Ubitus have also
emerged, offering white-label services to telcos around the world.
Subscription is the favored form of monetization by cloud gaming service operators such as
PlayStation Now and Xbox Game Pass Ultimate, as they follow in the footsteps of Netflix and
Spotify’s “all you can eat” approach, which consumers have become accustomed to and now
increasingly expect. Furthermore, given the inherently high continuous running costs associated with
cloud gaming, subscription is a much better-suited model.
© 2021 Omdia. All rights reserved. Unauthorized reproduction prohibited.Subscriptions provide a wealth of opportunities in a 07
brave new gaming world
Cloud gaming is therefore gaining real momentum, with most of the vital pieces finally coming
together to make it a viable option for both serious and casual gamers. Large investments from tech
giants and major game publishers have propelled this technology forward. The global cloud gaming
market is set to grow quickly over the next five years, reaching annual revenue of $12 billion in 2025.
What’s more, $9.5 billion (or 78% of the total) will be generated by subscriptions in 2025 (see figure
1).
The market-dominant media subscription services all have attractive content as their centerpiece,
but they all also feature carefully designed user journeys to minimize friction and maximize
acquisition and retention of subscribers. To ensure long-term success, game companies need to
consider how they can be more effective at converting trial customers into paying loyal members,
and growing revenue per subscriber through targeted and relevant offers.
Figure 3: Six key trends in the games industry driving the future adoption of cloud gaming
Source: Omdia
Single-game subscriptions—a promising
monetization model
Given the existence of game library subscription services and ample free game content, convincing
gamers to subscribe to individual games is a big, but not insurmountable, challenge. Several major
titles, and even popular free-to-play (F2P) games, have been able to successfully utilize this form of
monetization. Examples include World of Warcraft, offering one-, three-, and six-month
subscriptions giving access to new levels and features. Roblox offers a tiered subscription, providing
monthly in-game currency rewards and additional game features such as trading virtual items. The
Elder Scrolls Online “Plus” members, meanwhile, get access to additional digital content, and receive
monthly rewards and vanity items such as unique skins. Subscriptions are not limited to the biggest
© 2021 Omdia. All rights reserved. Unauthorized reproduction prohibited.Subscriptions provide a wealth of opportunities in a 08
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titles; as long as they have a loyal and engaged player base, developers of smaller game titles are
also able to reap the benefits of this model.
Over the past few years, the battle pass has emerged as a successful monetization strategy for top-
grossing F2P mobile games, including Clash of Clans, Fortnite, and PUBG Mobile. Battle passes are
time-limited one-off purchases which provide players with a host of bonus benefits that they must
earn by playing. Fortnite and PUBG Mobile have recently also rolled out subscription options, which
provide additional perks. These subscription services seek to further increase retention, drive
engagement, and generate recurring revenue.
Despite the leading F2P mobile games increasingly embracing subscriptions, this model is unlikely to
dominate the space. Subscription revenue will complement—not cannibalize—in-app purchases and
ad revenue. The market will therefore come to be a mix of these elements. The key goal for game
publishers should be to provide a wide choice of monetization options for gamers, which will in turn
give developers more flexibility in promoting their games.
As these kinds of hybrid business models emerge, games monetization is becoming an increasingly
complex endeavor. This is further exacerbated by the fact that game makers are targeting players all
around the world, who use different currencies, languages, and payment methods. The difficulties
involved in effectively handling subscription payments, say, to retain players while simultaneously
identifying and acquiring new ones, should not be underestimated. And subscriptions are likely only
one of multiple business models needing to be offered to cater for users who prefer a non-recurring
engagement.
Figure 4: Examples of benefits game subscriptions provide to subscribers, developers, and
platforms
Source: Omdia
© 2021 Omdia. All rights reserved. Unauthorized reproduction prohibited.Subscriptions provide a wealth of opportunities in a 09
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Not just a game—Fortnite and its bold move to
the subscription model
Fortnite is a fundamentally opportunistic enterprise. This is in no way a criticism. First released in
June 2017 as Fortnite: Save The World, it rapidly pivoted into a battle royale game on the back of this
genre’s success with other titles and hasn’t looked back since.
Figure 5: Lifetime downloads and revenue for Fortnite on the iOS and Google Play app stores
Fortnite, app version, downloads (millions) and revenue ($m)
600 $527
500
Downloads (millions)
400
$303
300
200
100 70
43
0
Downloads (millions) Revenue ($m)
US Rest of world
Note: Lifetime downloads and revenue since launch on Apple's
App Store and Google Play Store © 2021 Omdia
Source: Sensor Tower, Omdia
Fortnite has perfected the battle pass monetization mechanic forged by other games, and constantly
experimented with new ways with which it can engage its huge audience. Innovations for 2020
included Party Royale, a weaponless zone functioning as a social space for users. Meanwhile, 12.3
million concurrent users watched rapper Travis Scott perform an in-game music set in April 2020,
while Fortnite was also the location of the premiere for the trailer of Christopher Nolan film Tenet.
Indeed, lockdown or no lockdown, Fortnite lays claim to being the world’s largest events space.
That the game is moving into subscriptions, then, tells us everything we need to know about the
current allure of that model. December 2020 saw the debut of Fortnite Crew, an $11.99 monthly
subscription providing consumers with Battle Passes, in-game currency (V-Bucks) and other exclusive
in-game items. Maker Epic Games is evidently confident in providing value for those taking up the
subscription offer. We can speculate that future new game and non-game offerings might become
subscription-only, or subscription-first, to drive uptake.
A subscription strategy is, of course, highly ambitious for an F2P game. But as referenced above,
Fortnite’s core game is increasingly only part of its appeal, and the multiple attractions to its wider
© 2021 Omdia. All rights reserved. Unauthorized reproduction prohibited.Subscriptions provide a wealth of opportunities in a 10
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virtual world could help to sell the proposition. Meanwhile, with 250 million registered accounts,
there are a huge number of possible players for Epic to target. How well the company executes on
that proposition will significantly impact what proportion of those 250 million players become more
firmly entwined within Fortnite’s ecosystem. What’s more, many other players will be watching with
interest—as and when the benefits of Fortnite adding a recurring payment to its revenue mix
become clear, adding a subscriptions layer will become top of mind for even more providers of
popular titles.
Wider games ecosystem—games streaming and
esports
In December 2020, the most-watched title on games streaming platform Twitch had more than
double the viewing time of second-placed World of Warcraft. But this number one title wasn’t a
game—instead it was the self-explanatory Just Chatting channel, logging 229 million hours in a
month.
Figure 6: Most popular Twitch channels, December 2020
Twitch viewership hours, December 2020, (millions)
Call of Duty: Warzone 49
Among Us 56
Cyberpunk 2077 56
GTA V 58
CS:GO 65
Minecraft 71
League of Legends 91
Fortnite 94
World of Warcraft 95
Just Chatting 229
0 50 100 150 200 250
Hours watched, millions © 2021 Omdia
Source: Twitch Metrics, Omdia
This social aspect to gaming—as well as the increasingly sophisticated ecosystem set up around
esports—encapsulates the wider trend for younger demographics to play, watch, and interact with
games content in very different ways, offering in turn an opportunity to massively extend the reach
and longevity of gaming properties.
Subscriptions are one way in which these wider gaming offerings are appealing to consumers.
Indeed, Twitch has offered perks for subscribers to parent Amazon’s Prime service since 2016.
© 2021 Omdia. All rights reserved. Unauthorized reproduction prohibited.Subscriptions provide a wealth of opportunities in a 11
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Renamed Prime Gaming in August 2020 to cohere with other Amazon properties, the offering
includes free games and bonus in-game items to subscribers. YouTube competes by allowing its
most popular content creators to charge a $4.99 monthly fee in exchange for exclusive access and
badges.
Subscriptions in esports are a more nascent development, but certainly gathering pace. Activision
Blizzard-owned Major League Gaming was an early adopter, and provides a range of subscription
(and one-off payment options) for consumers depending on their levels of engagement. Meanwhile,
November 2020 also saw esports infrastructure company Nerd Street Gaming take the plunge,
launching NerdStreet+. A mixture of online and offline benefits, the subscription offers entry to both
live and digital tournaments, plus access to equipment at various venues in the US. A cheaper,
digital-only option is also available. These new and innovative offerings demonstrate the breadth of
the games ecosystem and how subscriptions continue to be selected as both the model most likely
to offer a recurring revenue base and a platform for growth.
Subscription bundling—a mutually beneficial
partnership
Game subscription services are well-suited for bundling with telco and media services, where pre-
existing billing relationships are already in place. The aggregation approach also has the benefit of
simplifying consumers’ admin and allowing new subscription options to be promoted. Casual and
family-oriented services subscriptions from the likes of Blacknut and Gameloft provide a curated
selection of games aimed at a broad audience. Usually the games on these types of services
intentionally omit microtransactions, ads, and loot boxes, in order to provide additional peace of
mind for parents.
Cloud gaming subscription services can also be effectively used for attracting the dedicated gamer
demographic, who tend to be early adopters of technology and are high-spending consumers. The
re-emergence of cloud gaming services is well-timed with the gradual rollout of 5G networks around
the world. Several network operators have already bundled cloud gaming services as part of their 5G
offering—since this technology is best suited to the games’ high demands—including China Telecom,
Deutsche Telekom, SK Telecom, Sprint, and Vodafone. Several network operators such as BT,
Telecom Italia, and Verizon have also used cloud gaming subscription bundles for upselling faster
fiber home broadband packages. Omdia has tracked nearly 40 cloud gaming partnerships with
network operators in 2019 and 2020; more are expected to emerge globally in 2021 and beyond.
© 2021 Omdia. All rights reserved. Unauthorized reproduction prohibited.Subscriptions provide a wealth of opportunities in a 12
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Figure 7: Overview of types of companies which are currently partnered with cloud gaming
subscription service providers
Types of companies partnered with cloud gaming service providers
Network operator 42
Games publisher or developer 44
Game engine or middleware 19
Device manufacturer 20
Technology company 18
Cloud technology provider 6
Semiconductor manufacturer 4
Media company 2
0 5 10 15 20 25 30 35 40 45 50
Number of partnerships
Note: Live partnerships, 1Q17—4Q20 © 2021 Omdia
Source: Omdia's Cloud Gaming Partnerships and Bundles Tracker: 4Q20
Challenges and opportunities—the critical factors
for a successful subscription model
Some developers remain apprehensive about subscription services
It’s undeniable that gamers are warming to the idea of game subscription services. However, small-
and medium-sized game developers remain apprehensive—according to GDC’s 2020 State of the
Industry Survey, 55% of developers believe that subscription services will, or might, devalue
individual games. However, there is growing evidence that subscriptions in fact have many positive
attributes.
In 2019, Microsoft revealed that, on average, Xbox Game Pass subscribers play 40% more games and
30% more genres than they did before becoming members, including games outside the
subscription. Also in 2019, it was revealed that Google Play Store was seeing a global growth in game
subscriptions of 70% year-on-year. Leading developers of popular game titles including N3TWORK
(Legendary: Game of Heroes), Scopely (Scrabble Go), and XFLAG (Monster Strike) have confirmed
that these paying subscribers were significantly more engaged compared with before they
subscribed, and that they saw increased revenue due to the higher retention.
The long-term success of these services is heavily reliant on wide developer support, so platform
holders must better communicate how subscriptions can complement their existing monetization
methods in order to bring those developers round to this new model. Once success stories like Game
© 2021 Omdia. All rights reserved. Unauthorized reproduction prohibited.Subscriptions provide a wealth of opportunities in a 13
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Pass are better broadcast—and the benefits of subscriptions better articulated—this should go some
way to resolving any lasting concerns that developers may have about the model.
Figure 8: Small- and medium-sized game developers are apprehensive about implementing
subscriptions, but there is growing evidence in favor of this model
Are developers concerned that subscription services will devalue individual games?
18% Yes
27%
Maybe
No
26% Not sure
28%
n=2,943
Are you concerned that subscription services will devalue individual games? © 2021 Omdia
Source: Omdia
Awareness is low for cloud gaming services, but there is clear interest once people understand its
benefits
At the end of 2020, Omdia polled over 5,000 consumers across five key markets to gain insight into
consumers’ awareness and uptake of cloud gaming subscription services. Only 18% of all
respondents knew about cloud gaming services—5% were existing subscribers and 4% were
planning to subscribe. This highlighted the current nascent state of the cloud gaming market.
Intriguingly, 20% of all respondents became interested in cloud gaming once they understood its
proposition—highlighting a major opportunity to reach millions of potential subscribers.
© 2021 Omdia. All rights reserved. Unauthorized reproduction prohibited.Subscriptions provide a wealth of opportunities in a 14
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Figure 9: Consumer research confirms low awareness for cloud gaming subscription services, but
also highlights opportunity to target a sizable segment who might be interested
Four in five consumers don't know what cloud gaming can offer
Quarter of those who didn't know about cloud gaming became interested once they understood its
100%
Aware - But is not interested
80% 19%
24% 20%
20% Aware - Has a cloud gaming service
15%
60% Aware - Planning to subscribe
24%
40% Unaware - But is interested
Unaware - Happy with current
20% gaming setup
Unaware - Not interested in games
0%
US UK Germany Japan China Total
"Cloud gaming services now let you play recent PC/console games on your smartphone or any other device
for a monthly fee of about $10-$15. You don't need to buy a new console or PC in order to use the service.
Were you aware of this?" © 2021 Omdia
Source: Omdia
More innovative monetization models and a wider choice are needed for the long-term success of
F2P games
While mobile games have been popular ever since the widespread emergence of smartphones over
a decade ago, it is only more recently that publishers have found truly effective monetization
strategies. The early model of charging $0.99 upfront for mobile games met with only partial
success, with even that extremely low price point proving a significant psychological barrier for
consumers unsure of the value of the product, while providing only tiny margins for each sale.
The most popular mobile games now rely on a combination of advertising and free-to-play (F2P),
microtransaction-based business models. The effect of this is that only a low single-digit percentage
of players actually spend money, thus the model heavily relies on a minority of big spenders (so-
called “whales”). A predominant feature in many F2P games are “loot boxes”—in-game purchases
consisting of a virtual container that awards players with items and modifications based on chance.
In 2017, a surge of triple-A game publishers made controversial moves to integrate this practice into
their full-priced console and PC games, as loot boxes proved to be very effective at keeping players
engaged and spending more money. However, heavy-handed implementations of loot box systems
caused a severe fan backlash. Even more seriously, several jurisdictions, including Australia, Belgium,
the Netherlands, and a number of US states, determined that certain kinds of loot boxes are
gambling and should be regulated as such.
It’s increasingly clear that the F2P whale economy and use of loot boxes are not a sustainable long-
term strategy. A one-size-fits-all solution simply doesn’t exist; there are many monetization
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approaches available, each with their own set of advantages and challenges. Mobile games are now
in competition with other forms of entertainment media, which are vying for consumers’ money and
time. More than ever, it’s now vital for game developers to diversify their monetization options.
Successful developers are already utilizing an array of business, as seen in Figure 10, and this trend
will make more headway. Subscriptions in particular can provide a better value-for-money
proposition to players, while keeping them better engaged and even driving additional in-game
purchases. For platforms providing a library of games, subscriptions can greatly enhance
discoverability through targeted curation and recommendations—a model perfected in the music
segment by Spotify.
As the overall landscape becomes increasingly complex and competitive, it is more important than
ever for companies to leverage data and user insights to develop robust strategies. Every step of a
user’s journey needs to be planned carefully to ensure it is frictionless: from the discovery of the
game, to the sign-up process, to the activation of bundled products, to getting support and changing
their plan to ensure retention remains high. The bar for a great subscriptions experience has been
set very high by the likes of Amazon and Netflix. To meet those expectations, game companies must
offer flexible and generous terms, as well as providing a customizable service.
Figure 10: Game developers currently utilize a variety of business models, including subscriptions,
which are expected to grow in importance in the coming years
Which business model(s) are you using for the current game you're developing?
Other (please specify) 11%
Premium tier subscriptions (e.g., Fallout 76) 4%
Subscription for an individual game (e.g., World of Warcraft) 6%
Paid item crates 8%
Subscription as part of a monthly offering (e.g., Apple Arcade) 8%
Ad supported 14%
Free DLC/Updates 17%
Paid DLC/Updates 18%
Paid in-game currency 22%
Paid in-game items 22%
Free to download 43%
Pay to download 45%
0% 10% 20% 30% 40% 50%
n = 2,943 © 2021 Omdia
Source: GDC State of the Industry Report 2020, Omdia
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Most game companies were not built from the ground up as subscription businesses, but any
company can take advantage of the model
For any game developer, service, or platform, implementing subscriptions as an option can appear
daunting. Billing for multiple products must be handled and payment card security standards (PCI
DSS) must be complied with—all while working on a game or a service and trying to reach a global
audience. Repositioning as a subscription business is possible and, although this entails investment
of money and time, increasing numbers of companies are showing that the rewards are well worth
the effort.
The benefits of a subscription business model are clear—both in gaming and also in adjacent
entertainment media. Early movers Netflix and Spotify have come to dominate their respective
industries. Having access to deep insights into subscribers’ user habits helps companies deliver a
highly personalized service, forging long-lasting customer relationships. This in turn leads to greater
user retention and revenue growth.
Companies can look to transition into a subscription billing model, yet still handle one-time
payments for specific offerings. This would also enable them to increase their choice of payment
methods, regardless of the platform or currency. But navigating these uncharted waters will no
doubt prove a challenge for many when their energies are naturally focused on the most important
element—crafting a compelling gaming experience.
Figure 11: Example of the route that F2P game developers can take their players
Source: Omdia
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Conclusion
Games and subscriptions are entering into an ever-tighter embrace. The initial uptake of games
subscriptions was slow, but as consumer purchase behavior for entertainment media has changed
fundamentally, the subscriptions business model is now set for a period of fast growth. The leading
game publishers and tech giants have made bold moves in this space, in many ways validating
subscriptions as a viable business model—both for big and small companies in the games industry.
More companies are expected to enter this brave new world in the coming months and years.
There is growing evidence in favor of subscription services as a sustainable business model that
should win over its doubters. Game developers and publishers of all sizes should be confident in
exploring routes to offering subscriptions, as they can be used to provide a better value-for-money
proposition to players, keeping them better engaged and even driving additional in-game purchases.
This mutually beneficial model has been proven to drive loyalty and help companies build lasting
relationships with gamers.
The complexities and unique features of the gaming market mean that subscriptions will often act as
complementary to, rather than a replacement for, existing business models. Subscriptions, one-off
purchases, microtransactions, and advertising will continue to coexist in the future, each offering
their own set of advantages depending on the type of game experience that a company offers. Yet
the inherent advantages of a subscription relationship with a consumer mean this model is now in
the ascendancy. Adding a subscription element even opens up new avenues in terms of forging
partnerships with content aggregators, providing a meaningful boost to awareness and helping to
acquire new users around the world. Partnering with the right vendors can greatly improve a games
company’s short- and long-term prospects.
Despite their allure, subscriptions require time and expertise to perfect. There is no cut-and-paste
solution for a successful subscription model; capably implementing one is becoming an increasingly
complex task. First and foremost, game companies must be able to identify and attract players by
providing monetization options that truly enhance their gaming experience, as well as ensuring none
are deterred by narrow payment options or inflexible packages. They must be able to retain those
customers, while having the capacity to scale quickly to seize any opportunities that become
available. And although this is a complex mix, one final challenge is to ensure that for the consumer,
interacting with games content is totally simple—that tortuous systems never interrupt their
experience. Across the gaming spectrum, the way these imperatives are implemented will be the key
differentiator between successful and unsuccessful game offerings.
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Appendix
Methodology
The underlying methodology of Omdia’s gaming forecast data is based on a collaborative, integrated process involving both
quantitative and qualitative analysis. The forecasts are the result of a rigorous process of scoping, market mapping, data
collection, statistical modeling, and validation.
The forecast model is built around the historical and current data alongside informed assumptions from market experts about
the factors likely to have an impact on future trends. A number of factors have been considered, including economics,
demographics, behavior, technology, competition, government legislation, and a host of individual segment drivers that have
an impact on specific markets. As part of building our forecast models, all leading gaming and game subscription companies
were carefully analyzed, after which our future growth assumptions were applied, based on our market knowledge.
When Omdia was building the models, a number of approaches, such as a time series technique (i.e., logistic curves) and
causal technique (i.e., linear regression), were used to provide a more rigorous methodology.
Authors
Dom Tait George Jijiashvili
Research Director, Games Senior Analyst
Dom.Tait@omdia.com George.Jijiashvili@omdia.com
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brave new gaming world
Get in touch Omdia consulting
www.omdia.com Omdia is a market-leading data, research, and consulting business
askananalyst@omdia.com focused on helping digital service providers, technology companies, and
enterprise decision-makers thrive in the connected digital economy.
Through our global base of analysts, we offer expert analysis and strategic
insight across the IT, telecoms, and media industries.
We create business advantage for our customers by providing actionable
insight to support business planning, product development, and go-to-
market initiatives.
Our unique combination of authoritative data, market analysis, and
vertical industry expertise is designed to empower decision-making,
helping our clients profit from new technologies and capitalize on
evolving business models.
Omdia is part of Informa Tech, a B2B information services business
serving the technology, media, and telecoms sector. The Informa group is
listed on the London Stock Exchange.
We hope that this analysis will help you make informed and imaginative
business decisions. If you have further requirements, Omdia’s consulting
team may be able to help your company identify future trends
and opportunities.
About Vindicia
Simplifying subscriptions to create the ultimate gaming experience
Delivering an amazing subscription experience is more complex than just
offering great gaming content. Subscription providers must make it easy
for users to discover, sign-up, engage and stay.
Vindicia, an Amdocs company, helps subscription gaming businesses
acquire more customers, retain them longer, and accelerate business
growth. Vindicia gaming clients include Major League Gaming, Leap Frog,
Cryptic Studios and Cascade Game Foundry.
Vindicia’s comprehensive subscription management solutions provide
gaming services with more recurring revenue, more customer data,
better insights, and greater value across all customer touchpoints.
Providing much more than just a billing and payments system, Vindicia’s
SaaS-based approach combines big data analysis, strategic consulting and
proprietary retention technology.
Vindicia MarketONE is the industry-leading, all-in-one subscription
platform designed to support every stage of the growth journey that
enables next-generation models. Bringing together recurring transactions,
© 2021 Omdia. All rights reserved. Unauthorized reproduction prohibited.Subscriptions provide a wealth of opportunities in a 20
brave new gaming world
bundling, and user journey management, MarketONE enables
subscription gaming providers to innovate and evolve ahead of the
competition, helping them conquer new markets and extend customer
relationships.
The MarketONE platform features Subscribe, Bundle, and Connect.
Subscribe powers recurring transactions on a global scale. Bundle allows
subscription providers to find the right bundling options to grow the
business. Connect delivers the frictionless user journey that consumers
expect – without the technical complexity of other options. Bringing these
critical subscription must-haves together delivers faster time to market
and much lower total cost of ownership.
For customer retention, Vindicia Retain helps gaming services keep
customers who want to stay by reducing involuntary churn. Retain
resolves failed transactions without the service interruptions that can
result in cancellations. Average customer lifetime value and revenues
increase as the customer experience improves. Retain is easy to deploy
and works with existing billing platforms and payment processors.
Vindicia’s subscription intelligence capabilities combine real-time views of
subscription data with expert consultative guidance, turning granular data
into actionable insights. Trusted by over 100 leading direct-to-consumer
companies, Vindicia has processed billions in transactions for hundreds of
millions of subscribers.
To learn more, visit www.vindicia.com.
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brave new gaming world
Copyright notice and disclaimer
The Omdia research, data and information referenced herein (the “Omdia
Materials") are the copyrighted property of Informa Tech and its
subsidiaries or affiliates (together “Informa Tech”) and represent data,
research, opinions or viewpoints published by Informa Tech, and are not
representations of fact.
The Omdia Materials reflect information and opinions from the original
publication date and not from the date of this document. The information
and opinions expressed in the Omdia Materials are subject to change
without notice and Informa Tech does not have any duty or responsibility
to update the Omdia Materials or this publication as a result.
Omdia Materials are delivered on an “as-is” and “as-available” basis. No
representation or warranty, express or implied, is made as to the fairness,
accuracy, completeness or correctness of the information, opinions and
conclusions contained in Omdia Materials.
To the maximum extent permitted by law, Informa Tech and its affiliates,
officers, directors, employees and agents, disclaim any liability (including,
without limitation, any liability arising from fault or negligence) as to the
accuracy or completeness or use of the Omdia Materials. Informa Tech
will not, under any circumstance whatsoever, be liable for any trading,
investment, commercial or other decisions based on or made in reliance
of the Omdia Materials.
The information in the "About Vindicia" section has been provided by
Vindicia and does not constitute an endorsement by Informa Tech.
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