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Its fair to say that 2020 changed how we behave both inside and outside of our homes. Every industry, from travel to retail, has been affected by COVID-19 and the gaming industry is no exception. Our time in front of screens has increased significantly and as a result, a number of people are utilizing this additional screen time to learn a language, try a new hobby, or play video games. 

According to Deloittes 2020 digital media trends report¹, a third of mobile phone list consumers subscribed to a video gaming service for the first time during the pandemic. While these numbers might vary based on age groups, one thing is clear: this unexpected demand and interest for gaming will continue to increase in 2021 and beyond, particularly in a monetary sense. In a January 2021 study², cloud gaming growth is expected to reach more than $7B by 2027. 

Well look at how Games as a Service (GaaS) has contributed to this growth, how marketers can benefit from this popular trend, and what the future might look like for GaaS. You can jump to our infographic featuring all the insight and information you need to win at GaaS. 

What Is Games as a Service (GaaS)? 

Similar to Software as a Service (SaaS), Games as a Service (GaaS) helps developers monetize video games, even after the initial release. It incorporates an ongoing revenue model where players can purchase: 

Microtransactions (low-cost purchases that unlock additional content within a game)

Downloadable content (DLC) through a range of subscription-based options. 

Due to the number of games that are updated via remote servers, youll likely hear developers and gamers refer to these games as live-service games. Through exciting and engaging content and updates that are streamed directly to a device, live-service games are built to stand the test of time, particularly as the game, and its community of players, evolve way beyond the initial release. 

History of GaaS

World of Warcraft. Fortnite. Candy Crush. What do all these games have in common? 

They are successful examples of when developers cashed in on the GaaS strategy and model. 

Well explore these examples a little later but simply put, whether games offer a monthly subscription or opportunities to purchase microtransactions, the mission is the same: monetize a captive player audience with in-game experiences, purchases, and content. 

Gone are the days when youd go down to Blockbuster and rent a game for the weekend. Traditional video games are sold once and exist on a single purchase and experience level. As multiplayer games grew in popularity, so did the Games as a Service model. 

How Does the GaaS Model Work?

Simply put, Games as a Service is a business model that allows companies to monetize a game after the initial release or as an ongoing revenue stream for free-to-play games. 

Thanks to microtransactions, developers make money from players who are willing to spend on must-haves, like accessories and special features. Fortnite, a game that uses the GaaS model, generates revenue exclusively from microtransactions and, as a result, the game remains free and more enticing for players. 

As a business model, Games as a Service serves two audiences: 

The player who is happy to pay to play through microtransactions  

The player who is happy to pay to play through a monthly subscription 

An example of the microtransaction model: according to EA²,  Apex Legends had 50 million players in its first month in 2019. Note: this is the last time EA released player numbers so well use it as an example. If each of those players spent $3 while in the game, EA would earn $150 million on microtransactions alone. 

An example of the monthly subscription model: Final Fantasy XIV offers players a monthly subscription of $12.99, but there is a rule attached: players must be active in the game once a week to keep their spot and property. 

Game publishers and developers need to keep both audiences happy. Heres why: monthly subscribers help pay for the cost of remote servers and the ongoing overhead costs associated with production. People who are more comfortable paying via microtransactions are providing publishers and developers with extra reasons and revenue for adding those must-haves into the game to entice further loyalty. 

How Can Marketers Benefit from GaaS?

As a marketer, think strategically about your objectives and start with the ultimate goal: identify your audience and convert them into repeat customers. Its about creating the right message for the right audience and delivering it at the right time. 

In addition to outlining your objectives, its important that you identify which billing/subscription model makes the most sense for your audience; also think about how your CRM strategy will complement your overall marketing strategy. Lets look at billing and CRM more closely.