Shift from subscriptions based gaming to microtransactions
Subscriber revenue in the combined markets for PC massively multiplayer online games (MMOGs) and non-massive multiplayer online games (MOGs) in North America and Europe generated $1.58bn in 2010, down 5% from $1.66bn in 2009, according to IHS.
The new IHS Screen Digest Games Intelligence Report said this decline marks a historic shift in industry emphasis away from subscriptions and toward microtransactions.
The decline marks the beginning of an expected long-term reduction in the subscription segment, with the market decreasing on an annual basis through the year 2015, when revenue will dwindle to $1.33bn, the report said.
IHS senior analyst and head of games Piers Harding-Rolls said the focus of many PC game operators has clearly shifted to microtransaction-based models – in part due to competition in the subscription market especially in the high-end MMOG segment, but also because of the flexibility microtransactions offer operators in monetising gamers.
Microtransaction revenue rose to $1.13bn in North America and Europe in 2010, a 24.2% increase from $909m in 2009.
This more than compensated for the decline in the subscription area and caused total Western MMOG/MOG market revenue – both subscriptions and microtransactions – to rise to $2.7bn in 2010, up 5.3% from $2.57bn in 2009.
Microtransaction revenue will continue to rise during the following years, expanding to $1.8bn in 2015. This will drive up combined MMOG/MOG revenue in North America and Europe to $3.13bn in 2015, the report said.
Within the MMOG/MOG market, MMOGs still represent the majority of combined subscription/microtransaction revenue at $2.2bn for North America and Europe, while the MMOG segment revenue will reach $2.2bn in 2015, due to stalled growth.
In 2010, MOGs generated $500m in revenue, and is expected to grow to $900m in 2015.
"MOGs continue to rise in popularity with operators because they can cover a wider range of game genres than MMOGs, are generally less expensive to produce than full-blown MMOGs, and are also being increasingly successfully monetised by the industry," Harding-Rolls said.
The combined MMOG/MOG segment accounted for a significant 9.6% share of North American and European spending on games content across the entire games sector – consisting of packaged, digital and mobile segments – and represented the biggest digital opportunity in games.
Spending on all games content in North America and Europe reached $31bn in 2010, with the combined MMOG/MOG segment accounting for a significant 9.6% share of the market.
IHS does not expect that other major digital games segments, like PC social network games, PC casual games, the online console and PC core download games will expand to the scale of the MMOG/MOG segment during the next five years.