‘Gaming Netflix’ not likely, analyst says

With Microsoft Accumulation Studios For the Game Pass realm and many of the big players in the industry chasing cloud streaming, will a “Gaming Netflix” eventually come along and crush the a la carte game purchase, tying us all to subscriptions forever? industry analyst Piers Harding-Rolls is skeptical.

In a keynote at GDC 2022 on Wednesday, Harding-Rolls advised game developers to keep the rise in subscription services in perspective, considering it’s currently a much bigger topic of conversation than the actual industry sector: according to with the data company Ampere Analysis, where Harding-Rolls conducts gaming research, 4% of total gaming market revenue comes from subscriptions. He predicts it will be 8.4% by 2027 – a significant amount of money, but still a small slice of gaming as a whole.

Harding-Rolls also points out that the total number of Game Pass games is quite small and hasn’t been growing much lately. After EA Play games were added in March of last year, the service was just under or over 500 games. The success of Game Pass is mainly attributed to the novelty of the games available on it. (Especially compared to PlayStation Now, which offers more but older games.)

Netflix also started small and now has more than 200 million subscribers, but Harding-Rolls points out that games and videos are different from each other in some important ways. The biggest is that, as a category, games today earn most of their money after people are already playing them. According to Ampere data, 79% of gaming spend in 2021 came from in-game transactions across both free and paid games. This kind of behavior doesn’t exist for Netflix or Spotify.

A graph showing that game subscriptions only represent 4% of the current game market. (Image credit: )

According to Harding-Rolls, people who use subscription services spend more, on average, on full games, expansions, in-game purchases, and season passes — they just buy more overall, on top of the subscription fee. Asked whether this was because subscription services appeal to people who already play a lot of games or because the services somehow influence subscribers to spend more, he speculated that it was a mixture of both. A likely influence is that subscribers have a reason to try new games that non-subscribers don’t: they’re already paying for them.

Whatever the case, Harding-Rolls doesn’t buy into the idea that we’re on the cusp of a Netflix-like takeover, even as Netflix itself enters the games. “I don’t believe subscriptions will become the dominant monetization model in the gaming industry, as it has progressively done in the video and music industries,” he said.

Free games certainly aren’t going anywhere, although if we narrow the scope of our thinking to the kind of games that are most relevant to subscription services – games that aren’t free – I don’t feel confident that $60 purchases will be the typical way to acquire them in 10 years. But Harding-Rolls is keen to say that games aren’t movies, a fact I was guilty of neglecting when I felt threatening about Game Pass.

And while we are alleviating fears, I would add that people still rent and buy movies, digitally and physically. Subscription streaming accounts for more than half of home entertainment revenue, but according to the Digital Entertainment Group (via Variety), US consumers spent $5.9 billion on Blu-rays, DVDs and a la carte digital video purchases in 2019 and $3.4 billion on rentals. Those numbers are decreasing every year, but still: the things that video streaming subscriptions should have killed off a long time ago are still on the rise.

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