Assemble a group of game developers and ask them about the future of gaming and it’s a solid bet that one of them will mention the impending arrival of the Netflix or Spotify of mobile games.
For several years now gaming pundits have predicted that a subscription-based service, where for a monthly fee gamers can gorge on whatever mobile games are on the platform, is just months away. Yet still we wait.
Subscription based services are not new to gaming. Sony and Microsoft have offered a subscription service, where users have access to a wide spectrum of console games for a monthly fee, for several years. More recently, September 2019 saw the launch of Apple Arcade. Users currently pay $4.99 per month to access a growing number of games (around 100 at the time of writing) which can be played on Apple PC’s and TVs as well as iPhones and iPads.
Is the missing jigsaw piece in the gaming world an OS-agonistic, multi platform (mobile/PC/TV) service that allows its user to enjoy a broad range of ad-free mobile game titles wherever they are for a small monthly fee?
The rise of subscription services
Subscription services have become a key way that consumers pay for their content. Netflix is the obvious example, yet Spotify started disrupting the music industry back in 2008 and now boasts the back catalogue of almost all the world’s biggest artists. In Scroll there is even a paid for service for websites, which charges a monthly fee to deliver up to 300 titles to devices and computers with the advertising stripped out. Add Hulu, BritBox, Disney and Amazon Prime to that list too and it is clear that subscriptions are king.
There are several reasons why a Netflix style service for gaming would be beneficial for both gamers and developers.
A subscription based service would enable developers to create games that worked seamlessly on a number of platforms. This could potentially mean that developers are able to reach a wider audience with their games.
There could be other benefits for games publishers. Game discovery wouldn’t have to rely as much on the app stores meaning a broader range of titles will get played. This would mean that some excellent games which maybe would have remained below the radar on the app store might acquire significant audiences.
In theory a subscription service would allow more developers to make more money from more of their games, which in turn would mean less risk in developing games. With an increased likelihood of games making revenue, this reduces the hit or miss risk of getting a game published. Reduced risk for game developers might mean they are able to be more innovative and experimental with the games they produce, improving the diversity and creativity of game types and game play. Another positive of the reduced risk could be that investors are more willing to back games as they see a clear path to returns.
The way that the platform cross-promoted games might also prove beneficial to developers. Both Netflix and Spotify are built around very smart machine learning algorithms which constantly suggest content that it thinks users will like, this could help more games from indie developers to be discovered.
So for the gamer a platform like this would present a fantastic choice, and for the games developer it has some serious upsides too.
So why has this not happened yet?
The need for deep pockets
The most obvious reason is that building out this type of platform would be hugely expensive and beyond the reach of independent gaming studios and even the larger hits-focused mobile game publishers . Creating the platform would require a company with very deep pockets, but the hardest and most expensive part might be acquiring and keeping users. The platform would have to offer both the latest, most high profile games as well as a long tail of smaller, older games. Enticing all those developers onto the platform would be a very tricky job. It could take years. The Beatles held out until 2015 before licensing their music to Spotify, if several of the big games studios adopted a similar stance it could seriously impact on the popularity of the nascent platform.
Also one of the ways that Netflix has kept ahead of its rivals is by constantly adding new and popular content that’s not available elsewhere. The deals it hatches with content studios are often hugely expensive, and this could be replicated in a subscription-based gaming platform.
When you look at the large players that could pull something like this off, there doesn’t seem to be any one player who is best suited to launch a platform-agnostic mobile games subscription service.It could be an interesting brand extension for Netflix, but the company is clearly generating fantastic revenues in its own TV/ film core competency which it relies heavily on debt instruments to produce so getting distracted from it’s core competency to produce a gaming platform would be way too risky.
Facebook could in theory unite the industry behind such a platform. Yet the company is facing impending antitrust examinations which some pundits have predicted will lead to its breakup as governments seek to dilute its power and ubiquity. These days, Facebook is also light on innovation, and the trust of the public required to launch and test innovative things. Their last big attempt at something new, libra, seems doomed to never get off the ground, mainly because nobody trusts Facebook to control a global currency.
Everyone will ask but what about Google and Apple? For the time being both seem perfectly content with the games ecosystems they have generated. Apple Arcade in particular has strengthened the company’s position in gaming as it demands that its games are unique to its platform. Google is fumbling along with Stadia which nobody is quite
Blockbuster was huge once
It’s sometimes hard to remember that Netflix was once a scrappy startup and that people went to stores to pick up these disc things to watch movies on. Blockbuster was huge and unrivalled at the time and had the deep pockets we mentioned above, yet they failed to respond to the Netflix threat, a strategy turned a giant brand into a timeless warning about innovation and embedded culture. In the most pivotal moment in Blockbuster’s demise, the CEO’s plans to launch a Netflix-rivalling digital service were halted in favour of sticking to what they knew best and continuing to monetise off of penalising users rather than delighting them. This was their corporate culture, they didn’t have the willingness, knowledge, talent and culture to face this new threat.
There are many incumbents in the mobile game industry who technically could launch a subscription service but their embedded monetization model, much like Blockbuster, comes at the expense of the user experience and lack the willingness, culture and relevant talent to pull it off properly. Perhaps the industry is waiting for it’s Netflix and the disruption will come from left field as it did with Steam for PC games and Fortnite for multi-platform games.
We also need to talk about developer revenue
Some game developers are fearful of a platform they believe will undermine their revenues. In the short term a platform could be good news for the big games studios, as it seeks to tie up lucrative, unique deals. Yet if the Netflix and Spotify business models are any example, as time goes by the fees paid to developers starts to drop as the platform establishes itself.
A subscription service could mean the end of paid and IAP revenue for individual games. Developers can cite many musicians who were making a decent living through selling physical products like CDs and even downloads, but have since been poorly served by Spotify’s revenue distribution.
They would lose advertising revenue too, and it is questionable whether the royalties they receive from the platform would ever be as much as they currently get from in-game ads.
“For some small studios or some individuals, there are likely to be benefits from a ‘Netflix for games’ type platform emerging,” argues Andrew French, COO of Coda Platform. “Yet disrupting the existing business models would be very complex, and probably not good financially for developers in the long run.”
“The distribution issue is already solved in games through Apple and Google Play. And ultimately, while there’s an awareness issue that can be solved through user acquisition, the best games and the best content will always do well,” he adds.
With game studios and smaller developers not entirely on board, creating a subscription based gaming platform might prove to be an uphill struggle for whoever was adventurous enough to attempt to pull it off. Still it would be foolish to rule out it ever happening, but for the foreseeable future the odds are stacked against it.
