Change is coming to the $160B/year gaming market. What started off as a trickle with subscriptions passes coming to Xbox, UbiSoft, EA and others, has turned into a stampede. Apple recently launched its Apple Arcade, validating the gaming subscription future with the most valuable technology company on the planet jumping in with both feet.
Subscription gaming’s future is here, and the market battles will be around who the winners will be, will the new consumption model increase sales, decrease margins, or re-allocate profits to a few of the players (drawing uncomfortable parallels to what happened in the smartphone market). While it’s too early to tell where it all ends up, there are a few forces at play that are driving this trend.
Generally markets like predictability, and subscription revenue is valued more highly in the market than transactional revenue, regardless of how the long-term unit economics work out. This move to subscriptions, regardless of financial validation, is a trend unlikely to slow.
What’s appealing to game makers of large, never-ending ‘live service’ games like Fortnite, is that without an end, a subscription has no reason to terminate as the terrain, the combatants, and story are evolving in perpetuity. Games without an end and a constant revenue stream, sound very appealing to both the manufacturers, and investors, which is why so many new subscription model gaming services are getting started. It reminds me of an old IBM quote from years ago about ‘security’ businesses. The hypothesis was that ‘security’ is an unsolvable problem, and unsolvable problems make for good long-term business models. This same analogy could be applied to subscription gaming.
This is one of the reasons why we are so excited to announce our investment in labworks.io, the leading voice games publisher, who has introduced hit after hit of voice-first games for Amazon Alexa and Google Assistant smart speakers. The thoughtful team at labworks is headed up by former Facebook’er Tom Hewitson, who accidentally stumbled upon voice games by creating one of the first Alexa games in his spare time.
What happened after he launched ‘Would You Rather’, was one of those classic stories around how Tom went to bed one night as an unknown voice publisher, and woke up the next day with one of the Top 3 most popular games on the Alexa platform. From there, Tom and the labworks.io team launched a series of successful voice games, creating a catalog of compelling titles that have been played by more than 8 million people at family game nights around the globe.
This sensitivity to consumer’s desire for quality voice experiences, led Tom to the next advance in labworks.io’s growth – creating the first subscription gaming pass solution for Alexa smart speakers – Voice Arcade. This compelling bundle of labworks.io’s most popular games has quickly gained traction in the market, leveraging their existing customer install base and creating opportunities to grow outside of it.
VoicePunch is excited to join labworks.io on their journey to making Voice Arcade and interactive voice gaming subscription services the next Big thing.
