What is Games as a Service (GaaS) and what does it mean for marketers?

Games as a Service (GaaS) was introduced as a barrier between consumer cost concerns and user engagement. It offers a way to reduce customer acquisition costs and has been shown to keep users in a game much longer than the pay-to-play method. EA Games, for example, grew its market value from $ 4 billion to $ 33 billion in just six years of launching GaaS content.

Games as a Service acts as a continuous revenue service for developers, allowing them to no longer rely on the one-time purchase. As more games are developed every year, GaaS gives them a competitive edge in the battle for users' attention. Additionally, advertisers can be featured in some of the most popular games on the market today.

What is Games as a Service (GaaS)?

Games as a Service refers to games that operate at no initial cost and instead make their profits through subscriptions or in-game purchases.

Games as a Service allows video games to be monetized even after they are released and has been proven to keep gamers busy longer. Instead of climbing a level, losing interest and forgetting about the game in the back of their closet, players are constantly brought back with the promise of new and improved content.

GaaS games can often be streamed directly from the cloud to a user's device so that they can be accessed from anywhere, anytime. It also enables better cross-platform functionality, an essential part of being competitive in the gaming industry.

With this strategy, games can be updated weekly, monthly, or sometimes even daily to keep users busy. New content often appears in the form of "drops" or "releases" when new content is announced – a technique that mirrors Supreme's luxury marketing strategy.

Games as a Service has also been referred to as "cloud gaming", "gaming on demand", "live service games" or "game streaming". Some popular games as a service games are Candy Crush, Fortnite, Destiny, and Overwatch.

Features like unique billing and subscription services have fundamentally changed the business model for games. In a Games as a Service environment, payments are unique and personalized and offer broad access to incoming players.

Payment options for games as a service

  1. Flat-rate billing in which a user is charged the same amount weekly, monthly or yearly
  2. Volume-based billing that changes the fee based on usage
  3. Stage model in which a customer is charged based on a unit range

In addition to these updated payment options, Games as a Service players can pay using cryptocurrencies, smaller payments, and more frequently.

This new business model is sure to change the gaming landscape by offering accessibility, ease of use and high profits.

Play microtransactions as a service

A microtransaction is a business model in which customers pay a small fee for a quick transaction, usually to buy virtual items or to unlock new features.

An example of this would be a player who pays $ 2 to buy a new horse for their character or $ 1 for a new hat.

Microtransactions allow developers to monetize their games in a number of ways, well beyond the original purchase point. Some games require a small fee to unlock the next level or access new features. These transitions are often referred to as "in-game purchases".

These transactions can seem insignificant on their own. Can a developer really benefit from only spending a dollar each player?

So think about it.

The online game League of Legends (LoL) is played by 115 million people worldwide.

If each of these players spends even $ 5 in the game, they've made just over half a billion dollars.

Play as the League of Legends service screenshot on the game purchase screen

Virtual currency

Virtual currency is used in many games, either as trade-in value for real money or to purchase features while playing. These currencies can be in the form of jewels, gold coins, tokens, and more. They can also be collected by completing quests, killing monsters, and doing other in-game activities.

Popular cryptocurrencies like Bitcoin and Litecoin can also be used in certain games. In games like Lordmancer II from Active Games, players can even earn cryptocurrency by purchasing game assets and trading them in the in-game market.

Brands also step into action by offering players virtual currency or exclusive game add-ons by purchasing their products and entering codes in their virtual storefronts. Mountain Dew and Butterfinger are two examples of brands that successfully bridge the gap between physical brands and the virtual gaming environment.

Play as a service with Tau

Business models for games as a service

There are different business models of Games as a Service that offer creative, experimental and exciting new ways to monetize the game industry. It is important to note that this field is still evolving and new models, regulations and content strategies will continue to shape its growth.

Selling in-game content to players

One of the most effective ways to keep monetizing a game even after it's released is to keep selling products to players in the game.

In certain Games as a Service models, players can pay to buy new equipment for their characters, unlock new levels or features, and even improve their skills.

Loot boxes are one of the most popular in-game content transactions where players pay a small fee ($ 1 to $ 3) to pull special items out of a virtual box. This tactic has been accused of encouraging gambling with children and has been banned in some European countries. That being said, their profits are enormous. Loot boxes are projected to make $ 50 billion by 2022, and businesses can often sponsor items.

The income from in-game purchases provides game developers with an incentive to keep updating and improving their games. For the players, it brings new and exciting content more frequently and in higher quality.

Pay to play

Pay-to-play refers to games that customers have to pay for in order to access them. For many games, this means paying for a physical copy of a game and playing it as many times as you want.

In certain games, such as B. World of Warcraft (WoW), you only have to pay to play after reaching a certain level or after a set playing time. That way, players can explore the game, see if it piques their interest, and then invest once they know they want to sign up. WoW works with a subscription-based service that requires a monthly fee in exchange for the game time.

Some companies that follow this model also use other games as a service tactics, e.g. B. Selling in-game content or paying for new downloadable content (DLC). According to Newzoo, a game insights company, 2.7 billion people will spend roughly $ 159.3 billion on online games in 2020. So it's safe to say that this method works.

Ad placements

With the number of users now participating in Games as a Service increasing, it's no wonder advertisers have seen a huge market.

With in-game ad placements, developers can expand their revenue streams beyond pay-to-play models and even beyond the Games as a Service model.

Ads can be viewed as videos on loading screens or even customized to match the game, e.g. B. Gatorade's commercial in NBA 2K18 mode "The Neighborhood".

In fact, players don't mind seeing the ads on their games. A 2018 Ipsos study found that 47% of users can remember an ad they saw while playing a game. This means that this was part of the experience and not a hassle. In addition, 50% of users found the viewing of the ads "visually appealing".

Overall, games as a service platforms offer a new world of advertising opportunities.

Play as a service Hotwheel and Rocket League ad placement

Pay for new content

A popular way to increase in-game revenue is to keep adding new content to a game that players must pay to access.

Fortnite is one of the most popular examples of this method, which requires players to buy into each new "season" of content. The seasons appear four times a year, but developers also make income through microtransactions between seasons.

This is a great way to keep a player base active while also spending money well beyond a game's original release. It's also great value for existing users who regularly benefit from new and exciting content.

Even free-to-play platforms can benefit from this strategy as it monetizes new content instead of existing one.

Game packages

Game packs are a collection of multiple titles conveniently grouped into one package that users can usually purchase at a discount.

Bundles are often used by game developers to attract new users to their existing games by offering high quality and less popular titles. This is an easy way to generate new leads for an existing but not widely used product.

Game packages reduce the unit cost of games and increase the potential reach of developer products. This is an easy way to promote certain products or to increase sales of a normally unprofitable product. Brands have also worked with developers in the past to offer sponsored bundles with perks.

Games as a service bundle example

Cloud gaming services

Cloud gaming services offer unrestricted access to a wide variety of games. These platforms typically operate on a subscription basis, with users paying a monthly or annual fee to gain access to the library. A regular subscription costs between $ 4.99 and $ 19.99 per month.

Cloud gaming services focus on high quality, graphics intensive games that typically require more sophisticated hardware to run. All games are hosted in the cloud and can be streamed to user devices.

One of the great advantages of cloud gaming services is that users can save money by not paying for each game individually.

Some examples of cloud gaming services are Steam, Amazon Luna, Sony PlayStation Now, Google Stadia, and Microsoft Project xCloud.

Multigaming platform apps

Some platforms offer a large number of games that users can play by downloading an app.

Many of these platforms also allow users to make money playing games, making them an exciting new trend in the gaming community.

Some of the most popular multigaming platform apps are WinZO, MPL, Coco, Hago and BaaziNow.

Premium memberships

Some platforms like Roblox offer many games for free, but others can only be accessed by paying a premium membership. This is a powerful incentive for users to connect more closely to a particular platform. It also makes their premium games more lucrative.

Premium memberships can vary greatly in terms of price and services offered. Some also offer virtual currency through purchases or discounts on future purchases. Ultimately, it's about helping the buyer and increasing the return on investment.

Play as the service tiles of many of the online games shown on the Roblox platform

Conclusion

With the introduction of Games as a Service, the game industry's approach to consumer sales has changed significantly.

Now, developer goals have shifted from selling as many copies of a game as possible to maximizing recurring income.

The future of Games as a Service is still evolving, but we can expect more innovative and exciting ways to bring games and brand awareness to gamers in the years to come.

Do you have products that can be integrated into the Games as a Service model?

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