Virtual goods like guns in Fortnite and subscription services like Xbox Game Pass are becoming as important a part of the console industry as high-priced purchasable games. A turning point is imminent in a market worth more than $60 billion, he writes Financial Times.
According to the results of the current year, the spending of console owners on subscription in-game goods and services will reach $ 21 billion, according to calculations by the research company Ampere Analysis – about as much as they will spend on buying games in digital Copies and on physical media. A new segment of the console market was opened with the debut of the free Fortnite Battle Royale in 2017. Back then, console owners spent three times more buying games than they did on in-game items and subscriptions.
In the current economic climate, gamers are no longer in a hurry to pay $70 for a game they might not like – these considerations are prompting them to look for free-to-download alternatives like Fortnite and Apex Legends. Here, players are gently encouraged to spend their money on in-game clothing and weapons. At the same time, a significant portion of free spins revenue comes from a minority of players. Total console gaming revenues will rise 1.3% to $42 billion this year, Ampere analysts have calculated, as the market recovers from last year’s slump. The overall market, including the consoles themselves, will grow 5% to $61.5 billion.
Gamer tastes are changing rapidly, making life difficult for console manufacturers, developers and publishers alike. Worst of all is Sony, which relies more heavily on PlayStation 5 exclusives than its rivals. Fortnite, which remains the most popular console game in the world with monthly active users, is a kind of antagonist to blockbusters like Hogwarts Legacy. The Harry Potter spin-off drew a lot of attention at launch, grossing $1 billion in its first three months, but interest began to wane after that.
With the popularity of Fortnite, Apex Legends, and Roblox, the console gaming market is beginning to resemble the mobile market, which has long been dominated by free apps that buy extra lives, character outfits, and other bonuses. It’s also forcing traditional console makers like Activision Blizzard, Take-Two Interactive, and EA to rebuild their franchises like Call of Duty and Grand Theft Auto into worlds where people are willing to keep playing and spending for years. GTA V is now ten years old, but thanks to Rockstar’s constant flow of new content and additions, players are still flocking here. And even Microsoft, which is gearing up to spend $68.7 billion to acquire Activision Blizzard, is largely motivated by expanding its Xbox Game Pass offering — the service offers unlimited access to a massive catalog through one subscription . Other gaming services work similarly: Ubisoft+ and EA Play.
Sony has its own PlayStation Plus subscription, but its model implies a significant presence of exclusive subscriptions. Some analysts are skeptical that if gamers continue to be drawn to free-to-play games like Fortnite that don’t have advanced hardware, the Japanese manufacturer will find it harder to sell its PS5, which is only sought after by most gamers require loyal fans. In addition, there is a risk that the company will not meet its goal of selling more PS5s than PS4s – in six years 100 million previous-generation consoles have been sold. To make matters worse, development costs for paid games have skyrocketed, with Final Fantasy XVI and the latest Legend of Zelda climbing to $70.
By the end of June, Sony had sold 40 million PS5 units, however the console’s popularity has waned in recent months due to the difficult economic environment. Hiroki Totoki, Sony’s chief operating officer, recently said that PS5 sales are making “slightly less than expected” progress toward its fiscal year target of 25 million units, despite posting 38% annualized growth in the first quarter. Sales of PS5 consoles will remain for the company “one of the priorities”Mr Totoki added. Promotions and discounts are helping to achieve this goal: in the first 31 weeks of 2023 the company grew sales in the UK by 73%, but the end of the year is traditionally a busy time ahead. And paid games have to be extremely attractive to distract players from Fortnite and Co. “There is a completely new dynamic in the market”say analysts.