Any hardcore gamer can guess what this is about. Subscription-based gaming is the norm for most social games that aren't free to play and companies like Zynga have not only enjoyed a more stable and predictable cash flow but they've been chipping away at the console gaming market at a steady pace. For the past few years console game developers have been trying to avoid getting pwned by bad economic conditions and the threat of shrinking market share, so naturally they have been gravitating toward the same subscription-based model in an effort to have more security for their revenue streams than Sony had for the PSN back in October. According to THQ's CEO Brian Farrell,
The big win there is you have a consumer base that pays you the subscription fee each month ongoing. That's a very different revenue model for a video game company, when you have this monthly subscription revenue rather than a one-time purchase.
Read on to find out why subscription-based gaming is gaining more momentum after the recent Reuters Global Media Summit.
Gamers instinctively knew that this would be creeping its way into the mainstream gaming world and with Call of Duty: Modern Warfare 3's Elite service, we were given proof. The Elite service is available by subscription and has gained over 1 million subscribers since it launched in early November despite some security problems of it's own. Long before that, players were shelling out a monthly subscription for World of Warcraft and don't forget about EA's $25 per year annual service, Season Ticket which launched August of this year.
What makes all this worth bringing up again is what came out of the recent Reuters Global Media Summit which was attended by some of the big names in console videogame development. Most notably Activision Blizzard CEO Bobby Kotick, who has been the most proactive with exploring the subscription-based model using their mega franchise Call of Duty which has done over $7 billion in revenue so far. Take Two Interactive's CEO Strauss Zelnick has also taken notice and is watching the success of the Elite service with baited breath.
They are experimenting with 'Call of Duty,' and we watch with interest to see how that will play out. I've said for years the holy grail of our business is to take a packaged goods release and turn it into a subscription model.
This is just more proof that, for better or for worse, hardcore gamers should start to increase the line item set aside for videogames in their annual budgets. For now, casual gamers seem to be in the safe zone but who knows what the future will bring.