The video gaming sector is ready for its “Netflix moment,” according to an industry analyst.
“Gaming may be on the verge of having its Netflix moment,” Morris Garrard, research analyst at Futuresource Consulting, wrote in a report published on Monday. “We’re seeing it transition from one-shot content sales into all-you-can-eat subscription-based content access.”
He explained: “The likes of Fortnite have reinvented gaming, with free-to-play titles monetized by downloadable content sales becoming the predominant business model for new titles. The widespread adoption and significant consumer spend on these games really underlines the opportunity for games as a service. Throw Xbox Game Pass, PlayStation Now, Uplay+ and EA Play into the equation, and we can see the momentum is beginning to build. As these platforms gain more extensive content catalogues, consumer traction will increase, accelerating the transition towards all-you-can-eat gaming subscription services.”
Futuresource’s report noted that including software, hardware and accessories, worldwide consumer spend on gaming reached $194 billion last year. “In addition, in-game ads, video streaming sites and e-sports created another $17 billion in revenue,” it added.
“In 2019, the gaming sector accounted for around one in every three dollars of consumer entertainment spend,” highlighted Garrard. “With gaming in rapid ascendance, the wider entertainment industry is eyeing it as an opportunity, while also paying close attention to its potential threat.”
Generating $143 billion in 2019, gaming software spending accounted for 74 percent of total gaming spend, Futuresource pointed out. “Games publishers have adopted innovative ways to profit from content, from the sale of downloadable content (DLC), to in-game sponsored advertising and wider entertainment opportunities such as in-game concerts and esports,” said Garrard. “All of these additional revenue streams are helping extend the lifecycle and increase the profitability of a title beyond the initial purchase.”