Video games will never be like Netflix, says industry analyst

Analyst Piers Harding-Rolls believes subscription services will never take over the games market.
subscription services games online

Video game subscription services have soared in popularity over the last few years, with Xbox Game Pass being a very tantalising prospect for players who want to play the latest game releases at an accessible cost. PlayStation is also reportedly looking to get in on the action, with rumours claiming a new streaming service is being announced soon. But despite major companies like Microsoft, Sony, EA and Ubisoft all launching dedicated game streaming platforms, one industry analyst doubts these services will ever make a big impact on the market.

According to Piers Harding-Rolls, who works for data firm Ampere Analysis, game developers should keep the rise of game streaming subscription services ‘in perspective’, given they reportedly only account for around 5% of the current games market.

That said, they are on track for steady growth, with Harding-Rolls noting on Twitter that the US $3.7 billion (AU $4.9 billion) ‘games content cloud gaming PC subscription’ market’ had grown 57% year-on-year since 2020.

At a GDC 2022 talk (reported on by PC Gamer), Harding-Rolls further forecasted that game streaming services will still only represent 8.4% of the market by 2027, despite the increasing push behind current and rumoured services.

Harding-Rolls said that services like Xbox Game Pass have not grown significantly in the market since their launch. While Xbox Game Pass frequently changes out what games are available on the service to keep content fresh, Harding-Rolls believes this is not enough to compare game streaming to the major success of entertainment streaming.

Read: What we know about PlayStation’s Xbox Game Pass rival

In his GDC talk, Harding-Rolls explained that while Netflix and other entertainment services make money purely from offering streamed content, video games operate very differently, and therefore streaming is not as important to the overall growth of the market.

This is because many video games generate the most money after the game is initially ‘purchased’, with 79% of game spending coming from in-game transactions (cosmetics, season passes, DLC content), according to Ampere data.

Harding-Rolls believes people who use video game subscription services are more likely to spend more money on in-game purchase, contributing to the lopsided view of the market. While game streaming remains popular, it doesn’t contribute to any real growth in the industry when taken on its own.

‘I don’t believe that subscriptions will become the dominant monetisation model in the games sector as it has done progressively in the video and music sectors,’ Harding-Rolls said of the phenomenon.

With in-game transactions now such an essential part of playing video games, it appears they will continue to eat up a major portion of the games market. As a result, streaming subscription services will only experience a slow, measured growth in future – although this comes with the caveat that they are also indirectly supporting the in-game transaction market.

Video games will never be like Netflix, according to Harding-Rolls, but game streaming services will play a significant part in the growth of the games industry going forward – regardless of its overall contributions to the market.

Leah J. Williams is a gaming and entertainment journalist who's spent years writing about the games industry, her love for The Sims 2 on Nintendo DS and every piece of weird history she knows. You can find her tweeting @legenette most days.