A new study shows in-game content sales have tripled the video game industry’s value.
The study, conducted by business consultants Digital River and SuperData Research, shows the games-as-service model has benefited developers of all sizes through the "steady stream of in-game content that both serves player expectations and increases their revenue per user".
In the past, in-game content revenue had come primarily from free-to-play games. However, the report showed that last year, a quarter of the revenue from PC games that were not free-to-play came from additional content. In other words, games with an up-front cost are now making a substantial amount of their revenue from selling content in-game.
The price of video games has remained largely the same over the past decade, despite the increasing cost of development. The report found digitalisation has changed consumers' thinking around the cost of games, and that we now expect more content for less money.
The report said games-as-service is a reaction to this, allowing developers to try and meet the increasing cost of development by charging for additional content beyond the initial purchase of a game.
"Consumers are less willing to pay US$60 for a boxed game and instead choose titles with a steady stream of new content," the report said.
"Publishers seek to meet these expectations and have adopted a 'games as a service' model, releasing fewer titles over time while keeping players engaged longer with regular updates and add-ons."
As a result of this shift towards this model, the revenue per user of games-as-service titles is expected to grow twice as fast as the rest of the industry.
The study found this is because gamers are “gaming the market” when it comes to buying games upfront, with US consumers waiting an average of 21 days after the release of a game to purchase it in the hopes of finding a discounted copy.
This desire has seen a boom industry emerge around digital key resellers – a business the report found is harmful to the gaming industry due to practises such as third-party sellers using stolen credit cards to buy keys from publishers and then selling on the games at discounted prices on the grey-market.
"When the fraud is detected, publishers who sold the keys are hit with chargeback fees," the report said.
"Game makers can deactivate illegitimate keys, but the players who bought them do not usually know they are part of a scam. Gamers may believe their keys have been deactivated for no reason, and this can cause a negative backlash."