Futuresource: Video Games Entering ‘Netflix’ Moment

With the pending arrival of new-generation video game consoles from Sony PlayStation and Microsoft Xbox, the transition toward online gaming, including subscription-based platforms, is heating up.

New data from Futuresource Consulting said worldwide consumer spending on game software, hardware and accessories reached $194 billion in 2019 — excluding another $17 billion spent on in-game ads, video streaming sites and e-sports.

Specifically, London-based Futuresource contends gamers will increasingly switch to subscription-based platforms such as Fortnite, PlayStation Plus, Google Stadia, GeForce Now and Xbox Live Gold and Game Pass.

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“Gaming may be on the verge of having its Netflix moment,” analyst Morris Garrard said in a statement. “We’re seeing it transition from one-shot content sales into all-you-can-eat subscription-based content access.”

Garrard said widespread adoption and consumer spend on subscription-based games will drive platform adoption.

“As these platforms gain more extensive content catalogs, consumer traction will increase, accelerating the transition towards all-you-can-eat gaming subscription services,” he said.

Software, which includes packaged media and digital game titles, remains the “golden child” of gaming, generating $143 billion in revenue in 2019, or 74% of total gaming spend across software, hardware and accessories, according to Futuresource.

As increases in connectivity and on-device storage have facilitated a move to digital content, software monetization strategies have evolved accordingly.

“Games publishers have adopted innovative ways to profit from content, from the sale of downloadable content, to in-game sponsored advertising [i.e. Wordscapes] and wider entertainment opportunities such as in-game concerts and e-sports,” Garrard said. “All of these additional revenue streams are helping extend the lifecycle and increase the profitability of a title beyond the initial purchase.”

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