Can Mobile Gaming Subscription Services Break the Freemium Stranglehold?

Last month, both Apple and Google rolled out different versions of the same sort of service.

By Brian Crecente, The Washington Post | Updated: 24 October 2019 16:26 IST

Can Mobile Gaming Subscription Services Break the Freemium Stranglehold?

Subscription services - once the purview of the written word and cable television - have been slowly expanding to everything from music and movies to the clothes people wear and the food they eat.

Now the multibillion-dollar mobile game industry is embracing that model and analysts, developers and service providers all believe it's bound to fundamentally change what and how people play on their phones.

Last month, both Apple and Google rolled out different versions of the same sort of service: a monthly subscription that provides customers access to a selected group of games and apps - both completely absent of in-app purchases and advertising.

Where Apple Arcade's service includes only games - so far, all of them new to the App Store - Google's Play Pass is a curated collection of existing games and apps.

"I'm extremely excited about Apple Arcade because I think it's really going to cause a paradigm shift in the entire games industry, especially on mobile," said Ryan Cash, founder and creative director of publisher Snowman - which released Where Cards Fall and Skate City on the Apple Arcade. "I think we have the opportunity to show people that just because a game is a 'mobile game' does not mean it's any less special than a traditional console or PC game, and in fact, in many cases, these games can be more intimate, and reach wider audiences."

To understand why these $4.99-a-month (roughly Rs. 350) services are creating a stir in the mobile game development scene, it's important to understand the history and reach of mobile games on Android and iOS.

Gaming on both platforms worldwide made an estimated $75 billion last year, according to App Annie director of market insights Amir Ghodrati. "That's 20 percent higher than combined game spend on PCs, Macs, and handheld," he noted.

And the vast majority of that revenue is currently coming from in-app purchases and advertising.

Randy Nelson, Sensor Tower's head of mobile insight, noted that about 95 percent of the games hitting mobile in August were those sorts of "freemium" games. That leaves just 5 percent of the games going to mobile as "premium" titles, the word used to describe often big-budget games that sell for a single set price upfront. That's down from 25 percent just five years ago, Nelson added.

That fundamental shift from releasing mostly single-price games back at the inception of the App store to today's model of releasing mostly games that make money off purchases in a free game or through advertising, was driven by pure economics, both Nelson and Ghodrati said.

"Publishers have found that free-to-play has ended up providing the largest return on their investment," Nelson said. "That shift away from premium has been a boon to publishers, enabling a majority of them to grow their profit from their mobile division tremendously."

But, the result hasn't always been received well by those playing those games. While clearly, a vast majority of mobile players are willing to spend the money, it still can be seen as something bad for fans of deeper, more involved games.

"It's been a struggle for those sorts of games to monetise effectively in stores," Ghodrati said. "But with this new type of gaming ecosystem, there's a chance to expand that pie and drawn in more people willing to develop those sorts of games."

That's because under the services, Apple and Google are divvying up some of the money they bring in through the subscription to the game developers. By bundling games together, it's possible to entice players in a way that hasn't really been tried before on mobile.

Apple Arcade's current offering is about 85 games - with the promise of more than 100 within the month - for that one monthly fee. Anyone in the family has access to those games, which can also be downloaded and played offline. Google has more than 350 apps, about two-thirds of which are games. All of those apps can be downloaded and are available to the entire family, as well.

Austin Shoemaker, group product manager for Google Play Pass, said that the company believes the pass will empower developers to create great experiences.

"Our biggest focus is making sure the developer is successful," he added.

Heikki Repo, creative director on the Zelda-like Oceanhorn 2 - which hit the Apple Arcade at launch, sees the Apple Arcade as a chance to stop what he describes as an eight-year erosion of premium games on mobile.

"We think that Apple Arcade is a great way to reach out to developers who are willing to create meaningful, classic video games and support them," he said. "I believe many Apple Arcade titles are games you would see on consoles."

While it's still too early to tell how both mobile gaming subscription services will do, analysts believe that the subscription model is likely here to stay and perhaps to grow on mobile.

Dan Sherman, co-founder and CEO of GameClub, is betting on that too. GameClub, which is set to launch on Apple's App Store on October 24 for $4.99 a month and later this fall on Google Play, is a third subscription service coming to phones.

Where Google and Apple's subscriptions focus on current or new games, GameClub is a service set to deliver "classic" mobile games, updated to run on current phones for its monthly fee.

"What we are offering is a greatest hits catalogue of mobile games from over the past decade," Sherman said. "GameClub is bringing those games back to life."

As with Apple Arcade and Google Play Pass, GameClub will strip out all ads and in-app purchases, instead making all of its money off that monthly charge.

"I think it's great what Apple and Google are doing," he said. "I think we all acknowledge that this is the future of premium games. That upfront cost before you download the game has become an impenetrable block to buying a game. Those single-cost games have gone the way of the .99-cent song.

"Subscription is a better fit for premium game content. All three of us acknowledge that the world of games needs an alternative to freemium and its manipulative purchases and aggressive ads."

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