Whilst bricks and mortar videogame stores used to be the big earners, now online subscription models are where major retailers have focused their attention.
Although retail in the gaming industry used to be based around nothing more than casino gift shops and videogame purchases, the state of the market today is radically different. Online gaming retail accounts for a huge, and fairly young, section of the market. Whilst money to be made from consoles was once an enormous money-spinner for gaming companies, now tiny add-on costs are stacking up to create huge profits. The gaming industry is a rapidly changing one. Here are some of the trends that are on the rise right now.
Peer to Peer Retail
There is more of an appetite than ever for video gaming content, with users paying subscriptions to watch their favorite gamers at work.
The peer to peer retail market is likely to continue to grow over the next year, with streaming services such as Twitch gaining popularity. Currently, many users sign up to watch their favorite players demonstrate exactly how to win a game of online poker, or how to defeat a boss on a tricky level. To someone who isn't familiar with the service though, it could be confusing understanding how it generates income.
The opportunities for money-making here are simple; advertising and subscriptions. In the subscription model, users can pay an $8.99 premium to remove all advertisements from their account. Some popular content creators also charge a small fee for extra content, usually $4.99 each month. Advertising is a little less straightforward. Twitch charges companies to place adverts on its homepage and between videos. As an incentive for these adverts to appear in a user's content, Twitch gives each user who reaches $100 worth of 'advert viewing time' per month, a portion of the proceeds. This sharing the wealth model provides Twitch with a stable income, advertisers with access to a unique demographic and content creators a small cut as well.
Much as Twitch operates a largely subscription-based service, so too do many of the game company giants. The reasons for this are twofold. Firstly, the technology for games that worked perfectly as simple CDs in the early 2000s has become far more complex. Now in 2020 games are absolutely huge, require enormous amounts of storage space, and are far too complex to fit onto half a dozen CDs, let alone one. The larger games that were released in the late 2010s as hard copies proved this point, as many bugs were flagged up after just a few weeks of general release. To combat this issue, the ability to download a game and receive regular patches and bug fixes has become the norm.
The second reason that gaming as a service has become popular, is that it is a lot simpler to encourage customers to spend more money. In order for consumers to 'upgrade' their gaming experience beforehand, they would have to go to a game store and purchase a 'stuff pack'. This was often around the $20-$30 price bracket, which was a considerable expense. Now consumers have the option of buying just one item from that stuff pack, for closer to $2, an amount that many people will part with without a second thought. These micro-transactions are quickly becoming an enormous money-spinner for gaming companies.
Cross screen gaming is perhaps less an emerging trend and more a lesson learned. Over the last five years, companies chose to invest a lot of time and money into making their games playable across multiple platforms, perhaps Xbox, Computer, and Mobile phone. Unfortunately, the vast majority of these efforts have not landed well with consumers. It turns out that most frequent gamers use one or two platforms alone to play, generally a console or PC. Although they may well own other devices that are capable of gaming, these are more often used for watching content; for example phone and tablet.
There are a couple of exceptions to the rule of course. Some consoles have incorporated mobile phones as handsets for their games, to allow more players to join in if a household doesn't have multiple controllers. These 'party' games are certainly niche, but a nice that might be worth exploring further. The most useful thing to be taken from this cross-screen experiment though is the voracious appetite for gaming videos. Twitch is further ahead than perhaps anyone with that, but that's not to say there isn't room for competition.