While the gaming industry isn’t new, it is constantly evolving, and not just in the number of offerings or the increasing number of players.
Driving this evolution and completely changing the landscape of the industry itself is the business model known as GaaS, or Games as a Service.
Simply put, GaaS is the new way to monetize the gaming industry.
And it’s working. Just look at the likes of Candy Crush, Fortnite, and World of Warcraft.
It’s obvious by now that this model also includes a winning strategy when it comes to engaging and retaining customers.
Marketers are beginning to recognize this and looking for ways of how to implement successful components of GaaS into their own marketing strategies.
What they are finding is that brands need to start by rethinking their content marketing strategies and giving customers more choices.
Keep reading this blog post to learn more.
What is the Games as a Service (GaaS) Model?
Games as a Service (GaaS) relates to those games lacking initial acquisition costs but instead rely on in-game purchases or subscriptions to create profit.
Essentially, GaaS is a recurring revenue model.
Monetizing video games is a strategy to engage players and keep them coming back for more. The key to all of this is providing great content — consistently and often.
Updates can arrive daily, weekly, or monthly, depending on the game.
GaaS games are accessible from the cloud, making them available to anyone anywhere at any time, which is another way to keep players interested and engaged.
In-game purchases and varied billing options attract gamers of all types as there is something that will fit everyone.
For instance, once in a game, a player can make an in-game purchase such as a shield for their character.
Winning with subscription services
Another monetization strategy is to require payment or subscription to ascend to a higher level in the game.
Updated payment and subscription options can show up at different points during the game now that the player has gained experience and wants to continue playing.
For example, games will present volume-based billing while others require a flat monthly rate.
With this business model, online games can be released, and with the help of GaaS, keep consumers engaged longer, retaining them far beyond what was possible in the past.
It can also keep the consumer from growing bored with a game by upgrading and adding new content constantly.
GaaS also allows brands to spend more of their marketing dollars where potential customers are already hanging out and, in turn, better their experience and retain them over the long term.
The gaming industry (bigger than the movie and music industries combined) continues to grow and shows no signs of slowing down any time soon. Thanks to GaaS, it won’t have to.
How the GaaS Model is Changing the Gaming Industry
The Games as a Service model is profoundly changing the gaming industry, affecting both consumer sales methods and game developer goals and strategies.
No longer is the focus on selling copies of a game on a grand scale.
The focus has shifted to determining ways to maximize that recurring revenue once players are already in the game.
Benefits for consumers
Consumers are receiving a higher ROI and gaining confidence in sticking with a game, knowing it continues to offer new content and options and won’t be defunct in a year.
With the free-to-play model, consumers can determine if they like what they experience, then choose to buy additional items or features or choose a billing or subscription option.
With new content added on a continual basis, what’s not to love?
Benefits for developers
For developers, the benefits include the ability to stay on one project longer, which can lower development costs of having to create sequels or move on to other new projects.
Once a game is released, they continue to provide updates or downloads (DLCs) instead.
With revenue streaming in from in-game purchases, developers find the incentive to improve and update the game as they go along.
Benefits for gaming companies
The advantage for gaming companies is they no longer need to invest heavily in the creation of a game at the beginning.
Once launched, they can utilize CRM systems to gather and analyze data, so the game can be adjusted to the benefit of the players.
In other words, the game can evolve along with the knowledge they gain about the players themselves.
The gaming industry is competitive, and you can expect this competition to go even higher in the years ahead.
Change and innovation are making the gaming industry better for everyone involved, and that can only increase with such competition.
4 GaaS Lessons Marketers Can Learn From
With new ways to monetize the gaming industry, GaaS is a winning strategy for engaging and retaining customers.
But building and retaining an audience over the long term is the goal of marketers everywhere, not just those in the gaming industry.
So, what can marketers learn from the GaaS model?
The ultimate goal of marketers hasn’t changed, that being to identify your target audience and find ways to convert them into returning customers.
Essentially it boils down to creating the right content for the right audience at the right time.
Staying up-to-date on the latest trends in the marketplace is also a focus, and Games as a Service is one to not only watch but to learn from.
Here are four GaaS lessons marketers can learn from to increase consumer engagement and retention.
A microtransaction is just as it sounds — a customer pays a low fee in a quick transaction, usually for unlocking a new feature, ascending to the next level, or purchasing virtual items.
While the low fee may not seem profitable, think of how many microtransactions can occur by looking at the number of players and the time they spend on the gaming platform.
For example, the game Fortnite generates much of its revenue from microtransactions, allowing them to keep the game free to entice more entry by new players.
By offering something free, consumers gain experience with a game or brand, and in turn, are willing to continue the relationship by making small purchases over and over again.
With microtransactions, gamers buy exactly the content they prefer, which keeps them engaged and loyal to the game.
Microtransactions are a way to monetize a game long after the launch and a way to market the game far beyond its initial strategy. With them, customers stay engaged, which means they stay longer.
For marketers, finding such ways to keep customers engaged by providing what they want will be a winning strategy.
2. In-Game Advertising
In-game advertising is proving to be highly successful for various brands.
Game developers too are benefiting, with the ads creating another revenue stream beyond the in-game purchases and subscriptions.
This form of advertising, however, requires a new way of thinking and a new way of presenting information.
Ad placement, timing, and ad format are all strategic pieces of the same puzzle.
For instance, ad format and placement can be a video appearing at the loading screen or tucked within the game at some strategic point.
Another popular choice is rewarded videos. Players receive in-game rewards just for watching the video.
By now, most gamers see advertising as part of the overall experience and not an annoyance. The key, however, is to make the ads engaging, informative, visually appealing, and non-disruptive to the gaming experience.
Gamers are also prone to remember these ads or at least part of them.
Marketers should take note of this and continue devising strategies to concentrate on the best ad placements, whether it be within the gaming industry or another.
As a result of all this, GaaS platforms are opening up new possibilities for advertising.
Marketers need to expand possibilities, seeking out new markets and new ways to reach a targeted audience.
And if you’re not already considering in-game ad placement, take a second look.
3. Personalizing Subscription and Payment Options
The GaaS model offers gamers a variety of ways to access additional content, from subscription services to various payment options.
A recurring subscription fee, starting with a free-to-play (F2P) model, offers access to premium content for players.
A game subscription service makes games exclusive on a particular platform (e.g., Microsoft and Xbox game pass).
Still another option is the seasonal digital pass, best for those thoroughly committed to a game. The fee for the pass becomes like a bank account, which players can “dip into” during the year.
The pass can increase customer loyalty by offering exclusive features and content only to those holding one of these seasonal digital passes.
A variety of billing options are also available in the Games as a Service model. These include volume-based billing, tiered billing, and flat billing.
By understanding their target audience and micro-targeting their buyer personas, GaaS models can offer personalized payment strategies that appeal to various consumers.
4. Flexibility in Content Creation (It’s all about Content!)
Content needs are continual in the GaaS business model, and the right content can make all the difference when engaging and retaining customers.
In the past, marketers were tasked with creating content around the launching of a product (game), and this is where the majority of revenues were generated, usually within the first few weeks after release.
With the GaaS model, marketing efforts extend further, requiring a constant supply of new content.
Game revenue in the first few weeks following the launch now accounts for a small percentage of the overall total, and in-game content is the true revenue generator.
Marketers in the gaming industry stay updated on the newest in product development as it’s happening, sitting alongside developers to gain knowledge ahead of big changes.
Armed with this knowledge, they can build a roadmap or plan for content development and find ways to share the news.
By doing so, players feel valued and excited about what is to come.
For those players who have left the game, these marketers also have a plan to lure them back. By keeping them updated on any changes and additions to the product, they stay curious and aware so that they may return one day.
While creating content to retain your customers and to lure those back who have left, you also need to expand your marketing strategy to attract new players. GaaS marketers are excelling at this as well.
Another strategy for increasing revenue is to continually add new content and require payment for players to access. In other words, they are monetizing new content instead of focusing on the old content.
For example, Fortnite releases seasonal content that players can purchase, keeping players active and in anticipation of what that new content will be each season.
D2C Marketing Wins in the Gaming Industry
Various brands are already finding ways to win over gamers and turn them into loyal customers for their own products.
Just look at Mountain Dew and how they are connecting with the gaming industry.
Gamers purchase their products, then go to their designated storefront (eCommerce site) and enter codes in return for exclusive game add-ons or virtual currency.
The brand even goes one step further, introducing a drink geared towards gamers specifically with a customer loyalty program attached.
Another Direct-to-Consumer example is a strategy taken by the Butterfinger brand, creating a mini-game and offering it on Twitch for a limited time.
For them, this is an interactive gaming promotion that works.
Wrap Up: The GaaS Model Can Provide New Ideas for Marketers
Marketers can benefit from learning about the business model that is taking the gaming industry by storm, with that being the Games as a Service (GaaS) model.
By personalizing subscription and billing options, facilitating in-game microtransactions, bettering in-game advertising, and consistently providing good content, the gaming industry has found a way to effectively retain customers while still gaining new ones.
The key, essentially, is engagement and at the center of that engagement strategy is content experiences.
To find out more about how to rock content experiences, check out our blog post!