Subscriptions' slow march into gaming is gaining traction
The trend's contribution to total revenues generated by gaming in Australia almost doubled in two years.
First it was music, then TV shows and movies. Now, the subscription trend is well on its way to becoming a force in gaming.
It reached a new milestone in Australia this year, accounting for 12 per cent of all gaming-related spend (excluding mobile gaming) in 2023, nearly doubling from 7 per cent in 2021.
Total revenue generated by the gaming industry (excluding mobile games) in Australia also grew over this period from $2.4 billion in 2021 to $2.68 billion in 2023.
According to the Interactive Games and Entertainment Association's (IGEA) Australian Consumer Video Game Sales report, subscription is the fastest-growing category in gaming expenditure. Revenue from subscriptions increased by 33% from the previous year.
However, subscriptions still have a way to go before becoming the dominant revenue stream for the sector. By comparison, downloadable content accounted for the largest portion (33 per cent) of revenue generated by the gaming industry in Australia in 2023.
The publicly available data doesn't differentiate between subscriptions to individual games (such as Final Fantasy XIV or World of Warcraft) and services run by gaming companies (like Xbox Live or PlayStation Plus). It only shows the total revenue generated via subscription. While more detailed data exists, global gaming industry analysis firms like Newzoo and local analyst firm Telsyte confirmed they do not publicly release this information.
A key difference between video streaming services like Netflix and gaming subscriptions is that Nintendo, Microsoft, and Sony have bundled online gameplay functionality into their offerings, alongside offering games via subscription. Playing Nintendo, Xbox, or PlayStation games online with others requires a subscription.
This model was pioneered by Microsoft with the introduction of Xbox Live in 2002 and has gradually spread across the gaming industry over the past two decades. Accessing games via subscription is a more recent development, again pioneered by Microsoft and gradually followed by Sony and Nintendo.
"Anecdotally, subscriptions seem to be a purchasing model Australian consumers are comfortable with,” Ron Curry, CEO of IGEA said.
”Our partners tell us that players are seeing value in subscription offers, likely given the cost of living pressures generally and how people are choosing to spend their entertainment budgets.”
Contrary to Curry's comments, Telsyte analyst Alvin Lee contends that further growth of subscriptions may actually be challenged by Australia's current cost of living crisis. "The average consumer budget for video games decreased by 11% in 2023," he says. "We believe subscribers are more likely to consider turning subscriptions on and off to save money due to tighter budgets."
Lee suggests that the next major driver of subscriptions will come from the rollout of cloud-based gaming, which doesn't require a dedicated device, and further access to more AAA titles via these services.
The debate on the effect game subscriptions are having on the gaming industry is occurring in a vacuum of information. There's little detail on what cut publishers receive from having their titles released via a subscription platform and how that allows them to plan for future releases.
Additionally, some major publishers — such as Baldur's Gate 3 developer Larian Studios — are resisting the pull of the subscription model, saying they currently prefer to sell their games as standalone products.
What I’m playing: Rayman Legends: Definitive Edition
Truth be told, I’m still playing Final Fantasy XIV Dawntrail right now — it’s long. But writing about it two weeks in a row seems a bit much. So here’s a game that I finished a month ago that I had in the bank for a rainy day.
Rayman Legends: Definitive Edition is a 2D platformer from 2013, that (surprise, surprise) is currently available on most game subscription services. Over ten years on, it’s an incredibly impressive game with tight platforming mechanics and a diverse range of levels — easily the inspiration for some of the design seen in other later 2D platformers such as Super Mario Bros. Wonder.
Rayman Legends starts off somewhat easy, but by the final boss, you’ll be thankful your character does not have a life-count. Even the savviest platformer player will be dying a lot.
Perhaps the most unique component in this game is that it contains a number of levels that use context-sensitive mechanics with Murphy (a green fly). At a button press, Murphy interacts with the environment often changing it in a way that allows you to proceed. Platform out of reach? Murphy can drag it towards you.
This idea is teased out across the game. In the fiesta food themed area for instance, Murphy chews through cake for you to create a passage that you run along. (Writing this out makes me feel like I’ve been playing a fever dream.)
My only complaint about the game is that it’s full of popups and bloat, which is kinda part and parcel with the time it was made.
It feels like after every level there’s a notification saying that you’ve unlocked something irrelevant. You can tell they were going for the dopamine hit typically seen in mobile games — where constant unlocks encourage you to keep playing. But it just feels a dated and exhaustive here. I don’t care that I’ve unlocked new art, or a new character skin. I just want to move onto the next level.
But this is a minor quibble in what is otherwise an excellent game that has aged well. Short a game for the winter and have a subscription? Give it a go.
Worth trying if you like: Donkey Kong Country, Super Mario Bros. Wonder, Ori and the Will of the Wisps.
Available on: Nintendo Switch, Playstation 5, PlayStation 4, Xbox 360, PlayStation Vita, Wii U, Xbox One, Microsoft Windows, GeForce Now.
Thanks for reading this edition of Infinite Lives.
If you are enjoying this newsletter, help me grow its reach by sharing Infinite Lives with your friends or networks. Seeing one new subscriber a week not only keeps me motivated to keep going but to produce better stories too!
Great article. It's inevitable that streaming games will be a main part of gaming, and I only see this happening when internet is faster and made more available to all.
Nice article, thanks! I use sub services, but I don't like what they represent. Interesting that publisher/developer cuts are still opaque (and I'm guessing that's because the platforms force them to not disclose that information).