Some recent signs in the gaming and technology industries are pointing toward cloud and subscription services as being the future. Drops in hardware sales are being offset by a pretty sizable increase in subscriptions to several different services.
With the current generation of gaming hardware nearing its end, a drop in sales is to be expected. Indeed, a drop in the sales of Xbox hardware was recently posted in Microsoft’s financial report. A huge increase was seen in the number of people subscribing the both Xbox Live and Xbox Game Pass. Although Microsoft did not provide exact figures on the increase in subscriptions, they did make it clear that the relatively stable revenue for Xbox Content and Services was due to the increased subscriber count offsetting a loss in third-party sales from the same time last year.
This massive increase in subscriptions even managed to offset the loss in revenue from IAP (in-app purchase) games. These signs seem to indicate that the longevity of current models of monetization, such as IAP and loot boxes, may not be the stable money-maker they’re often thought to be.
Services such as Microsoft’s Xbox Game Pass have contributed to keeping revenue stable. | Source: Microsoft
A Bad Day for IAP and Loot Boxes
Despite their popularity within the industry, IAP and loot boxes are often less popular with gamers. Loot boxes, in particular, have seen a heavy amount of regulation over the past few years due to their perceived negative effects on children and other players.
On the other hand, cloud and subscription services are increasingly popular across the board. PS Now saw an increase to 700,000 users earlier this year, while Microsoft’s own ‘Netflix for video games‘ X-Cloud has been released to preview;