From Netflix to Spotify, subscription streaming services have revolutionized media consumption. The belief was that after disrupting cinema, TV and music, subscription services would also dominate console and PC gaming. Initially, they surged in popularity, but it now seems gamers are turning away from the idea. This shift isn’t due to cost or subscription fatigue, as gaming remains the fastest-growing sector in entertainment. Instead, it’s about the metaverse.
A definition disconnect
The buzz around the metaverse has waned for two main reasons. First, generative AI has emerged, capturing headlines and becoming the new hot topic. Second, there’s a disconnect between the metaverse’s initial promise and current technology and consumer behavior. Meta positioned the metaverse as an immersive, 3D virtual world accessed via VR headsets, where users, as avatars, could do anything from buying a house to watching a concert. Many consumers, especially those over 40, dismissed it as sci-fi fantasy.
The metaverse is gaming
If we consider the core elements of the metaverse — online, engaging, creative, social experiences with virtual currency — we’re actually describing modern video gaming. Traditionally, video games progressed level by level to completion, but the best current games have no end, fostering long-term engagement. Many are free to play, generating revenue through virtual transactions, and rely heavily on user-generated content, making gamers co-creators.
This evolution in gaming behavior and expectations is stalling subscription growth.
A subscription-based business model works in theory
On paper, a gaming subscription service is powerful. A single AAA game costs over $60, which can be prohibitive, especially for younger consumers. A subscription lowers the entry barrier and provides smaller developers with a more stable revenue stream through regular royalties. But this subscription-based business model only works if players play linear games and treat gaming in the same way they treat other content such as a TV series.
Despite an estimated 180 million active subscriptions globally — impressive considering the time it took Netflix to convert traditional TV viewers — some predict this figure has peaked and will soon decline, even as gaming itself grows more popular.
Gaming is growing but subscriptions are stalled
The global gaming audience is approximately 3.3 billion, with just 25% being console gamers. Analysts expect minimal growth in console and PC gamers over the next two years. Despite a massive installed base of consoles, the subscription ratio remains stagnant, leading platforms to adjust pricing and game selections, with a likely shift from growth to retention strategies.
Customer insights should dictate actions
To retain customers, especially when there remains financial uncertainty and growing evidence of subscription fatigue, the platforms need to do more than manage upfront costs. They need to manage expectations and dig deep into their available customer data to create offerings and levels of service that will chime with the existing customer base, because there is no one-size-fits-all approach to reducing attrition, improving retention or even maintaining growth.
Ultimately, different demographics and different geographical regions will demand different actions.
Value for money isn’t measured purely in terms of price. The service needs to stand out among its direct competition in terms of ease of use, personal tastes and preferences, and depth and breadth of content. What’s more, it needs to stand out against the wider subscription-based elements of the media, entertainment and gaming landscape.
Tailoring an approach against these criteria is only possible with detailed customer data and insights that can uncover behavioral trends and preferences from country to country and demographic to demographic and, crucially, the underlying motivating factors that influence the decision-making process.
Moving to the metaverse
Considering that 40% of gamers primarily use smartphones, major players are pivoting to online and smartphone spaces to diversify revenue. However, without clear customer insights and a solid approach to customer experience, this shift could be risky.
The other option is to embrace and help co-create the metaverse, at least as it relates to video gaming. But again, any creativity would need to extend to the customer experience. How would an omnichannel approach to customer support work in a virtual world? How could issues be resolved without negatively impacting the in-game experience?
Likewise, a virtual world attracts a global audience, so as well as multilingual CX, organizations will need to provide multilingual trust and safety services. How do you protect against bad virtual behavior, attempts at fraud or social engineering and maintain a safe and inviting space that works for every major language and every major culture?
The gaming industry, despite leading in technological and digital creativity, faces a pivotal moment. The metaverse is redefining traditional gaming, making subscriptions less attractive. Success in this evolving landscape will hinge on the ability of companies to innovate, personalize experiences and understand diverse consumer demands. Those that listen to their audience, use customer data effectively, and adapt to the digital landscape will be best positioned to navigate the challenges and seize future opportunities.
To learn more about elevating your customer experience for the future, read our best practice guide “Media, entertainment, and gaming: Entertaining new CX ideas.”