Subscription Models in Gaming - A Paradigm Shift of Possibility

With media ownership dwindling in traditional entertainment domains, subscriptions emerge as the next frontier – and gaming certainly seems to be going down this path, as well.

In 2023, Netflix made a bold move into the gaming sector, conducting public tests of its cloud-streamed games. This year, the streaming giant is intensifying its foray into the global gaming market, presenting a revolutionary business model set to mirror its impact on the film and television industries. The shift from physical to digital formats in the gaming world, underway for nearly two decades, sets the stage for a subscription-based future.

Advertisers have a unique opportunity to consistently engage consumers as the game development industry increasingly embraces subscription services - although consumer trust may wane a bit initially as many are against such a future. While the gaming landscape transforms, advertisers must position themselves to capitalize on this evolving entertainment format, understanding that a subscription-based model – with deterministic data, may well define the future of entertainment.

Despite the vast potential within gaming, a significant barrier identified by agencies is the lack of education and understanding surrounding the reach and impact. Brands are yet to fully embrace the opportunities gaming advertising presents. Closing knowledge gaps is crucial to tapping into the impactful realm of gaming advertising and leveraging it as a strategic and lucrative channel – if not risky considering that gaming is live entertainment.

According to a September 2023 study by Integral Ad Science and YouGov, ads delivered alongside risky content are at odds with the quest for maximizing ad yields. And, the stakes become higher when you consider AI-generated content and limited oversight and control over automated ad placements.

The challenges associated with consumer data and cookie deprecation further compound the issue. In the dynamic world of programmatic advertising, projected to be a $157.35 billion market in the US this year, issues around targeting and control remain persistent concerns.