This document discusses the evolution of video game monetization models, including: 1) One-time purchases, the traditional model of selling a completed game, which remains popular through digital storefronts. Halo 2 demonstrated the model's strengths through pre-orders and special editions. 2) Flat-rate subscriptions, exemplified by MMORPGs like World Warcraft, provide steady revenue beyond launch. Final Fantasy XIV recovered from a weak start through subscriber-funded updates. 3) In-game purchases of microtransactions, loot boxes, and season passes allow free-to-play games to generate revenue later. Star Wars Battlefront 2 faced backlash for requiring many hours to unlock content. 4

1. G A M E S A S A
S E R V I C E :
T H E E V O L U T I O N
O F G A M E
M O N E T I Z A T I O N
M O D E L S
B E N J A M I N M A S C I O L I
M K T 4 9 0 – M A R K E T I N G
I N T H E M O V I E S

2. WHAT DOES “GAMES A SERVICE”
EVEN MEAN?
“Games as a Service” refers to
any strategies that leverage the
power of the internet to
monetize a video game beyond
the initial purchase.
The term is adopted from the
business software industry,
where “software as a service” is
a dominant pricing model.

3. I. ONE-TIME
PURCHASES
T H E O L D W AY O F D O I N G B U S I N E S S

4. THE ONE-TIME PURCHASE
MODEL
• The traditional sales model –
selling units of a game in a
store
• Each game only generates a
single transaction
• The game industry co-opted
this model from other
entertainment media
– Film: BluRay/DVD/VHS
sales
– Music: CDs/MP3s in a
digital store (iTunes)This Photo by Unknown Author is licensed under CC BY-NC

5. ONE-TIME PURCHASE
MODEL IN 2020
• Though other models have
proved to be more lucrative
over time, one-time purchase
is still the basis for most
game transactions
• Thrives today in the form of
digital storefronts, where
game downloads are sold at
a price comparable to their
physical counterparts
This Photo by Unknown Author is licensed under CC BY-SA

6. CASE STUDY: HALO 2
DEMONSTRATES STRENGTHS OF
ONE-TIME MODEL
– Pre-Orders – The ability to generate pre-release revenue and
buzz by allowing customers to pay to reserve a copy
• Halo 2 had over 1.5 million preorders before it was
released
– Launch events – The one-time model lends itself to
blockbuster opening weekends and explosive periods of
revenue growth
• Halo 2 Midnight Madness launch party
– Tiered Special Editions – Developers can market premium
priced versions of games that include additional content or
merchandise
• Halo 2 Limited Collectors’ Edition
– Retailer benefits – Third-party retailers can share in revenue
created
This Photo by Unknown Author is licensed under CC BY-SA

7. II. FLAT-RATE
SUBSCRIPTIONT H E B I R T H O F G A A S

8. THE FLAT-RATE SUBSCRIPTION
MODEL
• Model in which users pay a periodic
(usually monthly) fee to log into a
game
• Popularization of this model rose as
more American households gained
access to broadband connections
• MMORPGs, like World of Warcraft, are
the most common examples of this
price strategy
This Photo by Unknown Author is
licensed under CC BY-SA

9. FLAT-RATE MODEL (CONTINUED)
Benefits:
• Steady revenue that extends well
beyond the initial launch window
• Ability to recover from weak
launches through content updates
Drawbacks
• Studios have to maintain a steady
stream of new content to ensure
subscribers have a reason to renew
• It can take a long time for games of
this type to become popular

10. CASE STUDY: FINAL FANTASY XIV
• Final Fantasy XIV (2010)
– Released to universally poor reviews
– Users canceled subscriptions
– Game was expensive to develop and considered a huge financial failure
• Final Fantasy XIV: A Realm Reborn (2014)
– Re-made version of the game positioned as a content update
– Corrected user pain points from first version
– Has maintained steady growth of subscriber base to this day
This Photo by Unknown Author is licensed under CC BY-SA-NC

11. III. IN-GAME
PURCHASESM I C R O T R A N S A C T I O N S , L O O T B O X E S , A N D S E A S O N P A S S E S

12. IN-GAME
PURCHASE
MODEL
• Some games are free-to-play and are monetized entirely through in-
game item storefronts
Places a storefront within the game itself
• App developers struggled to sell apps, so they released free apps with
in-app purchases to monetize later
Grew out of mobile games
• Microtransactions – Low-priced purchases of in-game content
(powerups, character customization options, in-game currency)
• Loot boxes – Gambling-style in-game items, blind boxes containing
mystery content that the user cannot see or choose before purchase
• Season passes – Hybrid of subscription and in-game purchases.
Optional monthly fee granting access to content within subscription
period.
Three main categories

13. CASE STUDY:
STAR WARS
BATTLEFRONT 2
• Game promised Star Wars fans
the ability to play through classic
battles from across the Star Wars
franchise
• Unlocking content took hours of
tedious, repetitive gameplay but
could be done quicker through
in-game item purchases
• Fans and media felt that the
game was exploitatively priced at
$60 plus in-game items
• Publisher eventually eliminated
microtransactions altogether, but
game sales never recovered
This Photo by Unknown Author is licensed under CC BY-NC

14. “THE NETFLIX OF
VIDEO GAMES”I S S T R E A M I N G T H E F U T U R E ?

15. WHO WILL BECOME THE
NETFLIX OF VIDEO GAMES?
• Though none of these services have
formally launched yet, all are slated
to launch in 2021
• Will Google become a major player
in the game industry?
This Photo by Unknown Author is licensed under CC BY