GaaS, or Game as a Service, is now arguably the game industry's premiere business model. According to a report shared by Digital River, GaaS tripled the value of the digital market.
Game makers of all sizes earn from a steady stream of in-game content that both serves player expectations and increases their revenue per user. And this does not just apply to free titles: in 2016, a quarter of all digital revenue from PC games with an upfront cost came from additional content.
Digital games are on track to earn $96.5 billion this year, a 10% growth over last year, according to the report. With this trajectory, the digital game industry market could reach $123.5 billion in 2020.
Here's another excerpt on the impact of GaaS.
With lower barriers to entry, competition has gotten fierce and players expect more from game makers. Consumers are less willing to pay $60 for a boxed game and instead choose titles with a steady stream of new content. Publishers seek to meet these expecta7ons 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.
Revenue per user is expected to grow 2x faster than the overall addressable market (10% versus 5%), as the market relies less on upfront purchases and more on continuous player spending.
The report also notes that PC gamers are more price savvy than their console friends. On average, in the U.S. PC players hold off on purchasing new games for about 21 days to take advantage of potential sales or bundle deals. This audience can also visit game key selling websites to get even better deals. As a result, the average price of a premium PC game last year was $22.27, less than half compared to console's $49.41.
Square Enix recently said that they'll invest more in the GaaS model going forward, following the example set by games like Ubisoft's Tom Clancy's Rainbow Six: Siege.