Tech industry analysis group predicts an increased focus on streaming and subscription services by gaming platform holders in 2020.
In their “2020 Technology Predictions” report released earlier this month, tech investment analysis group G.P. Bulldog sees a tumultuous year on the horizon for the games industry. The main cause of the disruption will be a shift in the way games are bought, or licensed, more accurately. Based on a survey by Reuters and customer data released by Electronic Arts (EA), the Bulldog report identifies the adoption of games subscription services as a key trend. The Reuters survey found that Millenials are more likely to subscribe to a games service than to a cable TV service. According to the EA data players with subscriptions play a wider variety of games for a longer period of time and spend more money in-game.
Another trend identified by the report is the shift towards streaming games and away from buying downloads and physical copies of games. According to the report, streaming services like Google Stadia create an opportunity for games to broaden their audience and diversify their monetization models:
Over the next year, we will see gaming exposed to the masses through streaming, people will increasingly subscribe to libraries of games, and developers will look to newer more comprehensive development platforms and tools for efficiencies and monetization.
From the perspective of large publishers and platform holders, this report is good news. They no longer need to invest as much in long term console development because streaming services don’t require high-end machines in people’s homes. The trend towards subscriptions means an end to trading and reselling games, allowing publishers to recapture the profits they once lost to those practices. Subscription services also allow publishers to leverage their back catalogs and make money without investing as much in new games.
There are reasons for skepticism about some of the report’s findings from a consumer’s perspective. First, the report cites the increased adoption of subscription services without mentioning that many of these services are now bundled with the ability to play games online which was a free service in the past on some platforms. Second, the report ignores the hidden costs of streaming services. While the report mentions that only half of households in the US have access to internet fast enough to run a service like Stadia, it also claims that the expansion 5G wireless service will solve this problem. This ignores the fact that access to 5G will most likely be more expensive than low-speed wired internet access. So while, in theory, streaming could bring gaming to a wider audience for a lot of that audience there will be added expenses that make adoption impossible.
Finally, for developers, the outlook is more mixed. As streaming services build their game libraries there will be an intense need for new games but once the library reaches a large enough size problems with discoverability and curation tend to surface. Also as publishers start to leverage their back catalogs they lose the incentive to publish new games.
So yeah, 2020 should be great, if you own shares of stock in EA that is.
Source: G.P. Bulldog