Tipping point The coming consolidation of live service games
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20,000 foot view: The games industry has become addicted to the promise of lower risk and better ROI from live service games. As a result, there has been a flurry of live service titles released over the last years. This is the key reason why the games industry’s core business model has shifted from unit-sales based to engagement based. Given the saturated attention economy and increasing number of live service games competing for the same consumer time, the initial advantages that the early movers had is evaporating. This will lead to a consolidation of the live service games market, likely pushing up IP valuations of a small handful of market leaders. We are now at the tipping point. Games companies should examine their positioning in live services and carefully balance their games strategy to hedge against oncoming risk.
Key insights
- Games companies’ of the live service promise lower risk and higher returns resulted in more than two of games revenue now coming in-game spending
- Live service depend on time spent, but time spent is finite, the of competing live services is
- This means on average, consumers will either to distribute their limited time more games or not adopt games in an over-saturating live sector
- Diluting time will eventually lead to decreasing to the point where the commercial appeal of the live business model evaporates
- In-game buyers hours per month more than average gamer playing games, but also play more titles in given month vs
- Up until in-game buyers’ higher time spent games was enough to offset fact that they distribute that among a number of games, we are now at the point
- Companies run risk of not seeing this enough, as low value users first will initially result in and average time spent increasing
- The oversaturation result in consolidation, building the of a handful of established and affecting each company differently, on size and stage of progress
- For games to be successful in live games, four core needs must met: audience size, share of degree of monetisation and cultural
- Established IP service games will have inherent over newcomers
Companies and brands mentioned in this report: Apex Legends , Ariana Grande, Call of Duty, Call of Duty: Warzone, Defiance, EA, Fall Guys, FIFA, Fortnite, SKATE, TikTok,Travis Scott, Overwatch, World of Tanks, and Minecraft