Gaming Landscape Poised for Disruption in 2019 as Subscription Services Appear on Horizon

Games Market Analysis and Commentary

As the gaming landscape continues to evolve, 2019 will be a status quo challenging year for the industry, with companies taking cues from video and music industries in a bid to bring gaming to a wider audience. That’s according to the new ‘Subscription Streaming Opportunity in Gaming’ report from Futuresource Consulting.

“When it comes to video and music, consumers have a predilection for streamed content,” says Morris Garrard, Information Analyst at Futuresource Consulting. “Subscription services dominate, allowing consumers a degree of freedom that just cannot be matched by linear content. And now gaming is poised to join the party, with the announcement of a raft of subscription gaming and subscription streaming services coming to market in 2019.

“In a market that was worth US$144 billion across games hardware and software in 2018, there’s everything to play for. Using a subscription model, companies have the opportunity to change how existing gamers are able to access content, but they can also open the doors to new customer segments.”

The Road to Subscription

The subscription model will allow consumers to access content on a wider range of devices and will reduce the need to invest in powerful gaming hardware. A range of business models will be employed, but they will fall into one of three main categories. Companies will either provide content access or processing services, or a combination of the two. Content library access will allow people to play from a wide catalogue of titles, with unlimited usage. Cloud processing services will give consumers access to best-in-class hardware specifications in the cloud, taking the emphasis off the device and allowing for a richer, more powerful gaming experience without the elevated hardware costs.

False Starts and Challenges

“Despite some false starts from the likes of OnLive and Gaikai, the gaming industry is becoming more service-focused and stepping back from its hardware orientated roots,” says Garrard. “It’s been riding a roller coaster of boom-and-bust release cycles and holiday season sales spikes, but the new world of Gaming as a Service (GaaS) can offer a regular source of consumer monetisation. Indeed, massively multiplayer online games (MMOs) such as World of Warcraft, which boasts around two million active subscribers, have been successfully blazing a trail for years. However, it’s only now that services are beginning to offer up sizeable libraries and give access to a wide range of diverse gaming content.”

A question mark still hangs above gaming subscription services. What will happen to owned content if services are dissolved? Will a lack of highspeed broadband and 5G coverage limit global uptake? There are also strong emotional ties with owning gaming content, as gamers commit to making progress and personalising a game, so there could be concerns over potential for loss of progress should a venture fail.
Futuresource doesn’t expect the market for gaming hardware to experience a decline in demand over the forecast period, out to 2023, primarily due to the hobby aspect of owning and building PCs and the strong brand loyalty enjoyed by console manufacturers. However, over the mid-term, full game downloads will be impacted by subscription services. Once content library access services can offer exclusive day one access to AAA content, a key turning point will be reached.

The new Futuresource ‘Subscription Streaming Opportunity in Gaming’ report explores the industry roadmap to subscription services, the access provider and publisher opportunities, and the future outlook. For further information on this report, please contact Jack Tammaro.

About the author

Morris Garrard

Morris Garrard is a Lead Market Analyst at Futuresource Consulting, working within the Professional Displays team.