Why are gaming companies beginning to adopt subscription models?

When it comes to the world of business and entertainment, huge global brands rule the roost. Even a brief look at the latest news confirms this – the recent launch of IBM’s new IBM Z and Cloud modernization Center is a case in point. Of course, the biggest global brands currently come from the tech sector, and companies involved in gaming are flourishing. This is mainly due to how vibrant the gaming industry is now and how it has expanded rapidly in recent years.

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With the market size of video gaming in 2020 being almost $160bn, it is easy to see why top game companies like Sony or Microsoft do so well. In terms of companies like this, much of their recent success is due to adopting innovations like subscription-based models (such as the Xbox Game Pass). But why have they done this?

Why have gaming companies adopted subscription-based models?

The big hitters in gaming, such as Microsoft, have really started to push their subscription models for gamers in recent years. This has players paying a monthly fee to access games online. But why do the games companies love this way of operating?

Perhaps the biggest reason is that it gives them a stable, reliable income stream. Knowing that they will get so much income per month due to subscriptions is much less stressful than having revenues which bounce around. This, in turn, enables them to make better financial forecasts and invest money without as much risk, due to knowing exactly how much will come in regularly.

Subscription-based models also gel perfectly with the trend for online gaming and online game delivery. It allows companies to deliver titles to players in the way they like and faster. Offering online titles via subscription services also cuts the cost of producing physical games to ship out to stores. Subscription style gaming also helps to build a better connection with players and increase brand loyalty for tech firms.

Subscription-based gaming set to thrive

As more and more people move towards online play, then it is likely subscription-based models will continue to thrive. This makes sense for players because they get access to a wide range of games for less money than buying them all. It also means they can download games instantly and start playing right away. Subscription services are also prized by games companies for the reduced costs they bring, the greater level of player connection they breed and the stable income they offer.