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Competing in the live service games sector is about to get really difficult

Cover image for Competing in the live service games sector is about to get really difficult

Photo: Drew Beamer

Photo of Karol Severin
by Karol Severin

With the advent of in-game purchases, live service games have gradually become an important fuel of the games industry’s growth. Their sheer success and the appeal of the business model have understandably swayed a large part of the games industry to either adopt it or consider doing so. Some took leaps-of-faith and succeeded. Others took the challenge and fell short. The remaining handfull decided not to pursue the space at all.

Now, the live services games landscape is arguably approaching its saturation tipping point.

This will affect all games companies, albeit differently – depending on how far into their live services opportunity pursuit they are.

Time spent matters and an increasing number of games are competing for it

Live-service games’ commercial longevity is associated with in-game purchases. In-game purchases heavily depend on time-spent as a key metric. This is because the longer consumers spend in a social and interactive environment, the more likely they will want to define and express their image. Therefore often, the more time spent in a game, the more likely consumers are to want to purchase in it.

This worked like magic in the early-stage growth days of live services and in-game spending. But now, arguably, too many companies have ‘caught on’.

The short-to-mid-term problem with this is that an increasing number of companies are becoming dependent on and competing for time spent – while the available 24 hours in the day is not growing alongside.

Competition increases, user acquisition costs go up, and margins get squeezed – ultimately leading to consolidation in the space through increased failure frequency and M&A.

Simply, competing in the live services sector is about to get a much more difficult. Live service games will experience higher risk and lower potential reward than they have been used to thus far.

MIDiA’s new report titled “Tipping point: The coming consolidation of live service games” dives into these dynamics, plays out the future vision scenario for live services, advises on how to spot the danger signs early, and looks at the implications for different types of games companies – depending on where on they are on their journey with live services.

This is a must-read for any games company in or around the live service sector.

Alternatively, contact us if you would like to discuss the impacts of this on your own game or organisation.

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