More gaming companies are offering their products using the subscription model. What companies are leading this trend? What benefits does the subscription model offer in the gaming world? How may investors gain access to companies that may benefit from offering a subscription model?

Big Companies Leading the Trend

Xbox Game Pass and PC Game Pass are video game subscription services from Microsoft.  Both services offer users a rotating catalog of games from a range of publishers for a single monthly subscription price.  Plans vary by offering, and the company is reportedly getting ready to introduce a family plan.[1]

Sony recently announced the release of its own version of Microsoft’s Xbox Game Pass, called the PlayStation Plus Collection. The service will come in three tiers called PlayStation Plus Essential, Extra, and Premium. Subscribers will have access to over 400 PlayStation 4 and PlayStation 5 games.[2]

Rockstar Games announced a new subscription-based service, GTA Plus, for Grand Theft Auto players.  Subscribers will get benefits like exclusive properties in the game, membership discounts, and more.[3]

Strong Results from Subscription-Based Gaming

Some gaming companies are reporting impressive results from their subscription-based platforms.  Xbox Game Pass has amassed over 25 million subscribers, according to online magazine TechRadar.[4]  The same article highlighted that Xbox subscribers spend 60% more on games, 45% more on add-ons, and tend to play 40% more games than non-subscribers.  Games that launch on day one on the subscription model see a 3.5X lift in players, while games from independent developers see an increase of 15X.

Potential Benefits of the Subscription Model

Some of the potential benefits of the subscription model in the gaming industry include:

• Subscribers may be more engaged and spend more time playing games. 
• With gaming add-ons, such as accessories, skins, etc., subscribers may generate more revenue for the gaming company relative to non-subscribers.[5]
• Predictable revenue – A subscription model may allow companies to build a predictable revenue stream.

Users also experience potential benefits, including:

• Latest and Greatest – Subscribers have access to the latest updates and versions of the games.
• Often games in the subscription model do not contain ads or sales pitches, allowing for premium gameplay.
• Flexibility – Subscription models may allow flexibility in the price and number of games available.
• Elevated Status – Subscribers are often granted elevated status, giving them perks, such as exclusive access to content, discounts, etc.

With potential benefits to both gaming companies and their users, it can be believed that the subscription model is likely to increase significantly from its 4% share of the North American and European game market.[6]

[1] Khalid, Amrita, Xbox Game Pass Will Reportedly Get a Family Plan, Yahoo Finance, 3/31/22

[2] Grubb, Jeff, Sony launched PlayStation Spartacus service for as much as $18 per month, GamesBeat, 3/29/22

[3] Mehrotra, Shikhar, GTA+ Subscription Service Launched for PS+ and Xbox Series S/X Players, Republic World, 3/28/22

[4] Vjestica, Adam, Xbox Game Pass Has Proved Its Doubters Wrong Once Again, TechRadar, 3/27/22

[5] Grguric, Mihovil, Subscription Monetization: A Big Mobile Gaming Trend, Udonis, 1/18/22

[6] Ivan, Tom, Subscription Services Reportedly Account for 4% of North American and European Game Markets, Video Game Chronicle, 3/30/22