Games as a service

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In the video game industry, games as a service (GaaS) represents providing video games or game content on a continuing revenue model, similar to software as a service. Games as a service are ways to monetize video games either after their initial sale, or to support a free-to-play model. Games released under the GaaS model typically receive a long or indefinite stream of monetized new content over time to encourage players to continue paying to support the game. This often leads to games that work under a GaaS model to be called "living games" or "live games", since they continually change with these updates.

Contents

History and forms

The idea of games as a service began with the introduction of massively multiplayer online games (MMOs) like World of Warcraft , where the game's subscription model approach assured continued revenues to the developer and publisher to create new content. [1] Over time, new forms of offering continued GaaS revenues have come about. A significant impact on the use of GaaS was the expansion of mobile gaming which often include a social element, such as playing or competing with friends, and with players wanting to buy into GaaS to continue to play with friends. Chinese publisher Tencent was one of the first companies to jump onto this around 2007 and 2008, establishing several different ways to monetize their products as a service to Chinese players, and since has become the world's largest video game publisher in terms of revenue. [2] Another influential game establishing games as a service was Team Fortress 2 . To fight against a shrinking player-base, Valve released the first of several free updates in 2008, the "Gold Rush Update" which featured new weapons and cosmetic skins that could be unlocked through in-game achievements. Further updates added similar weapons which starting include monetization options, such as buying virtual keys to open in-game loot boxes. Valve began earning enough from these revenues to transition Team Fortress 2 to a free-to-play title. [3] Valve carried this principle over to Counter-Strike: Global Offensive and to Dota 2 , the latter which was in competition with League of Legends by Riot Games. League of Legends which had already had a microtransaction model in place, established a constant push of new content on a more frequent basis (in this case, the release of a new hero each week for several years straight) to compete, creating the concept of lifestyle games such as Destiny and Tom Clancy's The Division . [4]

Some examples include:

Game subscriptions
Many massively multiplayer online games (MMOs) use monthly subscription models. Revenue from these subscriptions pay for the computer servers used to run the game, the people that manage and oversee the game on a daily basis, and the introduction of new content into the game. Several MMOs offer an initial trial period that allow players to try the game for a limited amount of time, or until their character reaches an experience level cap, after which they are required to pay to continue to play.
Game subscription services
Subscription services like EA Play and Xbox Game Pass grant subscribers complete access to a large library of games offered digitally with no limitations. User need to download these games to their local computer or console to play. However, users must remain subscribed to play these games; the games are protected by digital rights management that requires an active account to play. New games are typically added to the service, and in some cases, games may leave the service, after which subscribers will be unable to play that title. Such services may offer the ability to purchase these titles to own and allow them to play outside of the subscription service.
Cloud gaming / gaming on demand
Services like PlayStation Now, Stadia or GameFly allow players to play games that are run on remote servers on local devices, eliminating the need for specialized console hardware or powerful personal computers, outside of the necessary bandwidth for Internet connectivity. These otherwise operate similar to game services, in that the library of available titles may be added to or removed from over time, depending on the service.
Microtransactions
Microtransactions represent low-cost purchases, compared to the cost of a full game or a large expansion pack, that provide some form of additional content to the purchaser. The type of content can vary from additional downloadable content; new maps and levels for multiplayer games; new items, weapons, vehicles, clothing, or other gear for the player's character; power-ups and temporary buffs; in-game currency, and elements like loot boxes that provide a random assortment of items and rewards. Players do not necessarily need to purchase these items with real-world funds to acquire them. However, a game's design and financial approach that aims to provide ongoing service is aimed to assure that a small fraction of players will purchase this content immediately rather than grinding through the game for a long time to obtain it. These select "whales" providing sufficient revenue to support further development of new content. This approach is generally how free-to-play games like Puzzle & Dragons , Candy Crush Saga , and League of Legends support their ongoing development, as well as used atop full-priced games like Grand Theft Auto Online .
Season passes
Games with season passes provide one or more large content updates over the course of about a year, or a "season" in these terms. Players must buy into a season pass to access this new content; the game remains playable if players do not purchase the season pass and do gain benefit of core improvements to the game, but they are unable to access new maps, weapons, quests, game modes, or other gameplay elements without this content. Games like Destiny and its sequel and Anno 1800 use this season pass approach. A related concept is the battle pass which provides new customization options that a player can earn by completing challenges in a game, but only if they have bought into the battle pass. Battle passes can be seen in games such as Dota 2 , Rocket League , Tom Clancy's Rainbow Six Siege and Fortnite Battle Royale .

Games may combine one or more of these forms. A common example are lifestyle games, which provide rotating daily content, which frequently reward the player with in-game currency to buy new equipment (otherwise purchasable with real-world funds), and extended by updates to the overall game. [5] Examples of such lifestyle games include Destiny , Destiny 2 , and many MMORPGs like World of Warcraft .

Rationale

The principal reason that many developers and publishers have adopted GaaS is financial, giving them the ability to capture more revenue from the market than with a single release title (otherwise known as "games as a product"). While not all players will be willing to spend additional money to gain new content, there can be enough demand from a smaller population of players to support the service model. [2] GaaS further represents a means by which games can improve their reputation to critics and players by continued improvements over time, using revenues earned from GaaS monetization to support the continued development and to draw in new sales for the product. Titles like Diablo III and Tom Clancy's Rainbow Six Siege are examples of games offering GaaS which initially launched with lukewarm reception but have been improved with continued service improvements. [6]

While the games as a service model is aimed to extend revenues, the model also aimed to eliminate legal issues related to software licenses, specifically the concept of software ownership versus license. Case law for video games remains unclear whether retail and physical game products qualify as goods or services. If treated as goods, the purchaser gains several rights, in particular those related to the first-sale doctrine which allows them to resell or trade these games, which can subsequently affect sales revenue to publishers. The industry has generally considered that physical games are a service, enforced through End-user license agreements (EULA)s to try to limit post-sale activities, but these have generally not been enforceable since they affect consumers' rights, leading to confusion in the area. [7] Instead, by transitioning to games as a service, where there is a clear service being offered, publishers and developers can clearly establish their works as services rather than goods. This further gives publishers more control over the use of the software and what actions users can do through an enforceable EULA, such as preventing class action lawsuits. [7]

GaaS can reduce unauthorized copying. Also, certain games can be hosted in a cloud server, eliminating the need for installation in players' computers and consoles. [8]

Impact

Industry analysis firm Digital River estimated that by 2016, 25% of the revenue of games on personal computers results from one form or another of GaaS. The firm argued that this reflects on consumers that want more out of games that are otherwise offered at full price (US$60 at the time of the report) or will look for discounts, thus making the market ripe for post-release monetization. [9] Several major publishers, including Square Enix, Ubisoft, and Electronic Arts have identified GaaS as a significant focus of their product lines in 2017, while others like Activision Blizzard and Take-Two Interactive recognize the importance of post-release support of a game to their financial bottom lines. [6] GaaS is also seen as a developing avenue for indie video games, which frequently have a wider potential install base (across computer, consoles, and mobile devices) that they can draw service revenues from. [10]

A study by DFC Intelligence in 2018 found Electronic Arts' value rose from US$4 billion to $33 billion since 2012, while Activision Blizzard saw its value rise from $20 billion to $60 billion in the same period, with both increases attributed in part to the use of the GaaS model in their games catalog. Electronic Arts had earned $2 billion from GaaS transactions in 2018. [11]

Related Research Articles

History of video games Aspect of history

The history of video games began in the 1950s and 1960s as computer scientists began designing simple games and simulations on mainframe computers, with MIT's Spacewar! in 1962 as one of the first such games to be played with a video display. The early 1970s brought the first consumer-ready video game hardware: the first home video game console, the Magnavox Odyssey, and the first arcade video games from Atari, Computer Space and Pong, the latter which was later made into a home console version. Numerous companies sprang up to capture Pong's success in both the arcade and the home by creating clones of the game, causing a market contraction in 1978 due to oversaturation and lack of innovation.

The video game industry is the industry involved development, marketing, and monetization of video games. It encompasses dozens of job disciplines and its component parts employ thousands of people worldwide.

A massively multiplayer online game is an online game with large numbers of players, often hundreds or thousands, on the same server. MMOs usually feature a huge, persistent open world, although there are games that differ. These games can be found for most network-capable platforms, including the personal computer, video game console, or smartphones and other mobile devices.

Free-to-play video games are games that give players access to a significant portion of their content without paying. Free-to-play is distinct from traditional commercial software, which requires a payment before using the game or service. It is also separate from free games, usually referred to as freeware, which are entirely costless. Free-to-play's model is sometimes derisively referred to as free-to-start due to not being entirely free.

Mobile game Video game played on a mobile device

A mobile game is a video game that is typically played on a mobile phone. Historically, the term refers to all games that are played on any portable device, including from mobile phone, tablet, PDA to handheld game console, portable media player or graphing calculator, with and without networkability. The earliest known game on a mobile phone was a Tetris variant on the Hagenuk MT-2000 device from 1994.

A season pass is a form of video game monetization in which consumers purchase a discounted package for current and future downloadable content (DLC) packs for a video game atop its base cost. A game may have a single season pass, or for some lifestyle games, may have new season passes over time. The name originates from the concept of a season ticket for sports. First introduced around 2011, the use of season passes became commonplace among triple-A publishers by the end of the 2010s. Season passes can be controversial because the contents of a season pass are not fully itemized beforehand or may not contain all planned DLC, with some instances of season passes being called scams by the gaming press.

A casual game is a video game targeted at a wide, mass market audience, as opposed to a hardcore game, which is a game targeted at a more niche audience of hobbyist gamers. Casual games may exhibit any type of gameplay and genre. They generally have simpler rules, shorter sessions, and less learned skill than hardcore games.

Microtransactions, often abbreviated as MTX, are a business model where users can purchase virtual goods with micropayments. Microtransactions are often used in free-to-play games to provide a revenue source for the developers. While microtransactions are a staple of the mobile app market, they are also seen on PC software such as Valve's Steam digital distribution platform, as well as console gaming.

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Buy-to-play (B2P) is a revenue model for video games that can only be played by purchasing the game, as opposed to there being a subsequent subscription fee for playing the game. Buy-to-play, while a form of premium games, generally apply to games where there is continued ongoing content or support from the developer or publisher well beyond the period of purchase, such as through maintenance of online servers or through the production of ongoing content and expansions, as often the case in massively multiplayer online games (MMO). This support is monetized through additional microtransactions or through an ongoing subscription fee. Microtransactions are becoming evermore entwined with the Buy-to-play revenue model as most recent games allow for some sort of additional purchase. For example, buy-to-play title Guild Wars 2 allows players to purchase additional in-game items with microtransactions, while Destiny 2 lets users purchase season passes for additional content.

Xbox Game Pass Video game subscription service by Microsoft

Xbox Game Pass is a video game subscription service from Microsoft for use with its Xbox Series X/S and Xbox One consoles and Windows 10, as well as Android devices via xCloud. Xbox Game Pass grants users access to a rotating catalog of games from a range of publishers and other premium services, including Xbox Live Gold and EA Play, for a single monthly subscription price. The service was launched on June 1, 2017 while Xbox Live Gold subscribers received priority access on May 24. Subscribers of Xbox Game Pass Ultimate have access to Xbox Cloud Gaming since September 15, 2020.

Loot box Redeemable virtual item as video game prizes

In video games, a loot box is a consumable virtual item which can be redeemed to receive a randomised selection of further virtual items, or loot, ranging from simple customization options for a player's avatar or character, to game-changing equipment such as weapons and armor. A loot box is typically a form of monetisation, with players either buying the boxes directly or receiving the boxes during play and later buying "keys" with which to redeem them. These systems may also be known as gacha and integrated into gacha games.

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Battle pass Type of video game monetization

In the video game industry, a battle pass is a type of monetization approach that provides additional content for a game usually through a tiered system, rewarding the player with in-game items for playing the game and completing specific challenges. Inspired by the season pass ticketing system and originating with Dota 2 in 2013, the battle pass model gained more use as an alternative to subscription fees and loot boxes beginning in the late 2010s. Battle passes tend to offer free passes, which are available to all users, and a premium pass that require annual or seasonal charges in exchange for enhanced items and cosmetics.

History of mobile games

The popularisation of mobile games began as early as 1997 with the introduction of Snake preloaded on Nokia feature phones, demonstrating the practicality of games on these devices. Several mobile device manufacturers included preloaded games in the wake of Snake's success. By the early 2000s, the technical specifications of handsets had matured to the point where downloadable applications could be supported, however mainstream adoption continued to be hampered by market fragmentation between different devices, operating environments, and distributors.

References

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  7. 1 2 Lane, Rick (March 2, 2012). "To Protect or Serve". IGN . Retrieved December 3, 2017.
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