According to a recent report by international research firm Parks Associates, subscription models for online games are going the way of the dodo. The gaming business is experiencing a huge shift as virtual items and micro-transactions become a large part of the pie, with an expected revenue of $6 billion worldwide by 2015. The report is entitled “Online Gaming: Global Outlook.”
"Gamers are investing real money in virtual items in Farmville, World of Warcraft, and other online games, to the point they are filing lawsuits to establish 'ownership' of these virtual goods," said Pietro Macchiarella, research analyst, Parks Associates. "The enormous player base, availability on multiple devices, and the introduction of instruments such as Facebook Credits contribute to growing revenues."
The report states that 19% of active gamers in the United States spend money on in-game virtual items. At the same time, subscriptions to online game services have decreased from 35 percent in 2008 to 28 percent in 2010. Social game publishers like Zynga, have ridden this wave to high revenue, relying almost solely on the micro-transaction business model. The trend is also beginning to take in MMOs, with companies like Nexon America and Turbine finding success with the model.
"It is becoming increasingly difficult to justify subscription fees," Macchiarella said. "Thanks to social games and free-to-play MMOs, both casual and hardcore players have the option of playing quality games online for free. The virtual-items model that has proven so successful in Asia is finally generating significant revenues in North America."
Macchiarella believes that the growing business model will achieve higher average revenue per use as payment methods and models are improved. The report itself focuses on a wide swath of the online gaming market, including MMOs, console games, casual social titles, and cloud-based gaming offerings.
