Live service, subscriptions and F2P: A new reality for console gaming

This has dramatically altered the competitive landscape on consoles and impacted how game developers and publishers successfully launch new games, get their games noticed, pull in new players and drive engagement.

My talk at GDC this year laid out the challenges of today's market as the industry gets to grips with escalating costs and an era of lower growth, while competing against entrenched games-as-platforms and hundreds of new releases.

Subscription services are most important on consoles

The console gaming software and services market is arguably the most dynamic part of the games sector in terms of business models. No one business model dominates console gaming in 2024, and over the next few years Ampere's outlook for the monetisation dynamics across console remain largely similar, with in-game, subscription and premium monetisation all playing a significant role.

Spend on in-game and DLC content has grown to become a central part of the market opportunity. Yet, like the PC gaming space, premium games are still important to the scale of the market.

Where console gaming differs significantly from all other gaming device categories is in the importance of multi-game subscription services.

The recent news that Microsoft's Game Pass only reached 34 million paid subscribers even with the conversion of Live Gold subs to Game Pass Core, and the year-on-year fall in Sony's PS Plus subscribers, underlines our view that subscriptions are not going to dominate monetisation in games as they have done in other media sectors.

Even so, spending on console subscription services is expected to grow to a 27% share of the total console games and services market by 2026 (note: includes Game Pass Ultimate and PS Plus Premium). The expanded role of subscription services as distribution and discovery channels has added a layer of complexity to the console competitive landscape which didn't exist five years ago.

Live service games dominate activity on PlayStation and Xbox

The console market now displays many of the traits of the wider games market across PC and mobile. The most played games in any one month are largely live service titles, which are fully entrenched and have lifespans that last many years. The launch of AAA, single player-focused games only momentarily impact the usage of these games, with the average gamer returning quickly to their live service favourites once they have finished these new releases.

Single-player franchises have evolved to adopt more live service elements to retain engagement and relevance beyond the launch window. This includes the release of free or paid content updates, the introduction of online modes and even the support of in-game monetisation. Publishers also try and maximise lifetime revenue through advanced and responsive premium pricing strategies and by leveraging subscription services to develop a new revenue stream for catalogue titles. As a result, we expect there to be a continued harmonisation of games content, as publishers and developers lean on similar product strategies and engagement levers.

The structure of these games and the engagement strategies that publishers employ mean that players return to games often daily. The most engaging titles have player bases that on average return to the game for around a third of the days in any one month, although there are noteworthy differences across the biggest live service titles on console - FIFA / EA Sports FC is routinely the most engaging live service game, while Fall Guys operates at the lower end of the live service scale.

Game Pass and PS Plus are undoubtedly impacting how a segment of smaller publishers or self-publishing developers are bringing their games to market

Beyond that, such is the scale and reach of the biggest games - and Fortnite is easily the biggest game across PlayStation and Xbox - the introduction of new seasons or major new content releases can re-engage what we describe as semi-lapsed players. These are users that still retain accounts to live service games, but are less engaged on a day-to-day basis, but may be prompted to return to a title during these significant events.

There are no simple choices when it comes to what product strategy to pursue. Both live service and single-player titles have their distinct challenges and making an impact in either area of the market is not an easy task considering the incumbent live service games and the amount of content on offer.

F2P games are in the minority on console, but a handful take a big share of activity

The chart above also illustrates the importance of free-to-play (F2P) titles - or F2P modes in the case of Call of Duty's Warzone 2.0 - in today's console market. Five of the top ten games ranked by MAU in February were either F2P or had a significant F2P mode that helped scale and maintain audiences.

A few of the games shown here have transitioned from premium to F2P to help maintain or broaden their player bases. Of course, Rocket League, Fall Guys and Overwatch 2 monetise in-game as their main source of revenue. So, while F2P games are not dominating the games landscape on console in terms of volume of releases, as they do on mobile, they are an important dynamic to consider when assessing the competitive landscape.

These commercial dynamics mean that a handful of publishers consistently dominate the PlayStation and Xbox markets

The games portfolios of the group of seven publishers shown on the chart below represent 55% of MAUs across all games on these platforms. While the shares of each publisher can move a bit from one month to the next, they have remained largely consistent over the last couple of years.

This consistency comes from the successful live service games operated by these companies and, of course, leads to consistent revenue streams as well. EA often leads with the greatest share of MAUs due to the success of FIFA / EA Sports FC and Apex Legends and the extensive portfolio of titles it offers.

It's worth noting that adding Activision Blizzard's and Microsoft's MAUs together would make them the biggest publisher across PlayStation and Xbox in February ranked in this way.

Cross-genre competition for gamer attention means a more complex commercial landscape

Traditionally, publishers and self-publishing developers have looked closely at the competitive performance of directly comparable games to their own titles both to support planning forecasts and to see what they will be competing with more directly across the platform. Publishers will also look for other upcoming major releases and their expected launch windows, as there are many console enthusiasts that will buy and play the latest games from a cross-section of genres.

This narrower concept of competition should now be expanded significantly not only due to the impact of live service models on engagement and playtime as discussed above, but also due to the important role that multi-game subscription services have on user acquisition and game-type experimentation. Fans of specific types of game gravitate to new releases in their favourite genres, but there is a surprising amount of cross-genre engagement across large swathes of players.

The chart below shows active players of Helldivers 2 on PlayStation 5 and what other games they played during February this year. Alongside the live service games you'd expect to see, I've highlighted in yellow a few interested titles which illustrate the significant cross-over of gaming experiences that big groups of players engage with.

Final Fantasy 7 Rebirth had both a demo and its full launch during the month, while Silent Hill: The Short Message was a free game released right at the end of January. The Elden Ring DLC trailer also launched in February, resulting in more engagement for the full game, while there was still noteworthy overlap with Baldur's Gate 3 players.

Subscription services are influencing both industry and consumer behaviour

Game Pass and PlayStation Plus are undoubtedly impacting how a segment of smaller publishers or self-publishing developers are bringing their games to market. Our data shows that outside of the major listed publishers, a significant share of games released in 2023 with the highest peak MAUs were released into subscription services as a go-to-market strategy.

Out of the top 100 ranked by peak MAU (of games not by the major listed publishers), 46 were launched straight into subscription services or as free games to PS Plus subscribers. Subscription services offer a ready-made audience, so we would expect games launched into these services to rank highly in MAU terms. Even so, the volume of releases using this method is significant.

Not all games can launch in this way of course, as there are finite slots available and release schedules are fixed many months in advance, however, the influence is clear to see. With the promise of guaranteed license revenue available, competition for slots within subscription services is growing, meaning that there is a structural downward pressure on the value of licensing deals offered by the service operators.

Today's competitive landscape on console is more complex than ever

As we've seen, subscription services also impact consumer behaviour, and most publishers want to try and understand the premium sales cannibalisation potential of these offers. We look at this issue through the lens of the share of total platform MAUs that games offered within subscription services have and the share of total playtime.

The example below looks at the Game Pass for Console portfolio and share of total results across 18 months. Share of MAUs is remarkably consistent, sitting in the 20-25% range of all game MAUs across Xbox showing that there has been no shift towards market dominance from subscription services. This share may well shift with the introduction of more Activision Blizzard titles into Game Pass during the year.

Share of total Xbox playtime from Game Pass titles is lower at between 15-20%, as engagement from subscription titles tends to be below average as gamers experiment and try lots of games. This lesser engagement is important to note especially for companies planning to implement in-game monetisation across their titles.

Overall, today's competitive landscape on console is more complex than ever. The different factors that need to be considered when launching new games not only include examining existing directly comparable games and titles coming to market in the launch window. Planning analysis now extends to major content updates and new seasons in live service games, understanding the impact of F2P games and modes on player behaviour and taking into account subscription service catalogues.