Jun 18, 08:52 PM

Video Games as a Service

GameDaily BIZ has an interesting article on how digital distribution might be the “next billion dollar game opportunity.”

While it may seem new to us, software as a service has been kicking ass over in the enterprise software industry. For businesses, software as a subscription makes sense: why keep buying expensive versions of new software and having to maintain it when you can just get a subscription? Subscription also has revolutionized video rental – ever heard of Netflix?

This relates to video games as well – if you want to stay current on the latest games, you have to keep buying titles constantly. At $50 a pop, it starts to get really expensive. And do you really get $50 worth of use out of all of those games? Most of the time, it just isn’t worth it. So why not pay a set fee per month for access to a library of games, and play whatever you want? For the average gamer, it makes a lot of sense.

We’ve actually seen this before: remember the sega channel ? As more and more expensive games come out, and as game systems begin to have those broadband connections coming out the back, video games as a service begins to look promising.

Subscription is the future. How soon this future will come is uncertain. There’s Xbox Live and WiiConnect24, but from the looks of it digital distribution is only for small arcade-type games. You might even consider pay MMORPGs the first major step towards video games as a service (VGaaS). It will take a big step for companies to let go of the current model of charging for their major titles. It changes the revenue model dramatically.

This model also cuts retailers out of the loop – a relationship few developers would be willing to jeopardize. VGaaS means a lower initial revenue, but a more sustained revenue over time. It means putting quality games out there that people want to play, so you can’t rely on initial hype to sell games. It also means a closer relationship with the gamer, as they are directly connected to you for their gaming experience.

But whatever company is willing to make this jump and make their meaningful games available on a VGaaS model could really make waves. Established companies, while in a good position to implement it, may be too set in their old ways and too resistant to change to do it. Smaller, independent companies are in a much better position for it (in the PC market).

In any case, I hope VGaaS comes sooner rather than later, because my bank account can’t take what we have now!

-Jon
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