How In-game Purchases and Subscriptions are Shaping the $60B Gaming Industry: Report

The video game industry, valued at around $60 billion, is amid an evident shift in revenue generation channels. There has been a surge in the popularity and financial contribution of virtual in-game goods, like those in Fortnite, and subscription services like Microsoft Corp's MSFT Game Pass. 

These alternatives to conventional standalone game purchases mark a pivotal moment in the evolution of gaming.

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This shift is so pronounced that according to Ampere Analysis, gamers will likely spend nearly $21 billion on in-game items and subscription services in the current year, comparable to what they would shell out for game downloads and physical discs. 

As the Financial Times reports, the allure of these in-game purchases has significantly amplified since the advent of Fortnite in 2017.

Change in Spending Behavior

The rise in living expenses is prompting players to reconsider splurging to $70 on games with uncertain enjoyment value. Instead, many prefer free-to-download games like Fortnite and Apex Legends. 

Once in the game, players often spend real or virtual currency on accessories like outfits, weaponry or gaining access to fresh content.

Interestingly, a minority of these players are responsible for most of the revenue from such free-to-play games.

Market Dynamics and Challenges

The global earnings from console games will likely ascend by 1.3% this year, approximating $42 billion, following a slump in 2022. 

Furthermore, the broader market, including hardware, is anticipated to grow by nearly 5% to reach $61.5 billion. 

However, this change in preference among players is making it intricate for console creators, developers, and publishers. 

Sony Group Corp SONY faces challenges due to its heavy reliance on exclusive premium titles for its PlayStation 5 console.

Trending "Live Service Games"

Games like Fortnite, Roblox Corp RBLX, and Apex Legends, known as "live service games," align the console market more with mobile gaming. 

Major console publishers, including Activision Blizzard Inc ATVI, Take-Two Interactive Software, Inc TTWO, and Electronic Arts Inc EA, are recalibrating their strategies to adapt to this trend, converting popular franchises into continuous live games.

The Road Ahead for Sony

Despite its current challenges, the console market's revival seems to be on the horizon. Bolstered by better availability of PS5 and robust sales of Nintendo Co, Ltd NTDOF NTDOY Nintendo's Switch, U.S. gaming hardware revenues surged by 23% to reach $2.6 billion in the first half. 

While Sony reported 40 million PS5 unit sales till late July, the company has recently been observing a slowdown. However, the holiday season, backed by a strong content pipeline, will likely be crucial for the industry.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.