GaaS: How Do Games Make Money With This?

AlBQuirky

Games as a service: GaaS.

I'm not up on the latest and don't care to be, but I keep wondering how games make money here. You pay a set fee each month to play whatever games are offered. What percentage of that monthly fee goes to the game makers? Any? Are they paid a set sum to be included in the service by that service?

I'm having trouble seeing how game makers find this distribution profitable

Scot

As far as I understand GaaS it is all about monetarisation, not a subscription. That's why I see it as a development of the cash shop, of course a subscription could be part of a GaaS just like a "Gold Membership" can be part of a F2P MMO with a cash shop. Today's cash shops have changed MMOs into MALLs, they will sell you everything and anything, it is a shopping experience not a gaming experience.

FlyByKnight

I'd suspect that for games that are included as part of a service, licensing deals are done for a negotiated cost over a certain number of years. The reason it's potentially profitable is because it's not a primary revenue stream. Developers can distribute their content in multiple ways simultaneously.

In the instances of exclusivity, it's a whole different ballpark of value + other monetary caveats (production, marketing, etc).

Not in the gaming space but as an example; The Friends TV show was licensed by Netflix originally at 30mil. To continue that license for another year it set Netflix back 100mil. If Netflix tried to do an exclusivity deal for friends, that number would probably shoot up to triple that (or more).

alkarionlog

AlBQuirky said:

Games as a service: GaaS.

I'm not up on the latest and don't care to be, but I keep wondering how games make money here. You pay a set fee each month to play whatever games are offered. What percentage of that monthly fee goes to the game makers? Any? Are they paid a set sum to be included in the service by that service?

I'm having trouble seeing how game makers find this distribution profitable

with lots and lots of idiots who have more money then sense

AlBQuirky

Lots of interesting answers. Thanks

If I could narrow it down and look at a GaaS like Stadia... As far as I know (which is not much), they are not "selling" games like some of the other services are. So what is the incentive for game makers to "allow" their games on that service? Is this where the possible "licensing fees" may be used?

Maybe I'm just totally misunderstanding the concept, but it seems to be a way for companies to take the games out of the player's hands and have more control over how they're used. I can see EA and other publisher specific GaaS forms not having this trouble as the money still gets to the overall company, to be divided as they see fit, if at all.

XBox Live (on my 360) back in the day is when I started wondering about this concept. I know the game makers are making money, otherwise they'd not be jumping on board

Thanks for the insights

Iselin

As @Torval explained it can mean different things in different situations. However the term itself is a relatively recent addition to the video gaming lexicon and so is its usage when applied to games that used to be almost always sold as just pay once and play forever.

MMORPGs have always been GaaS whether they used monthly subs or were F2P or any combinations of the two, and they are the revenue model prototype that is being used in other game genres today.

They want you online where even the most benign and truly optional cash shops will still make additional income by virtue of just being there open for business, and they also want at least some places in the game where you can see and play with each other to use the universal "keeping up with the Jones" incentive for cosmetic item sales.

When EA uses the term as a top-down directive to all their game studios what they mean is that any and all game projects and franchises that were once single player only must in the future be developed as online GaaS. They want to do this not to make the games better, although their marketing departments will go into overdrive to say that this is the reason, but simply because multiplayer with cash shop is where the big bucks are. So you end-up with games like Anthem and FO76 and the Anthem-like plans for future Dragon's Age games.

It's this usage of GaaS to make everything under the sun an online multiplayer game that most gamers are referring to these days when you see the term used in a post.

vegetableoil

on top of that surprise mechanic 

Vrika

For GaaS like Stadia, I'd guess the deal depends on the GaaS provider and developer: The company could be paying a flat license fee, or a fee that depends on how many people are actually playing that game.

Many GaaS games also work like F2P games: The game isn't meant to generate profit, it's just there so that people would buy microtransactions and DLC.

Derros

For stadia, its important to know that profit may not be the be all end all. Google is an advertising and data company and stadia would have the oportunity to collect a whole heck of alot more data to the company that they could sell to others, things about play/spending habbits in certain demographics which could drive profits in other areas of the company. Heck last I heard Youtube still operates at a loss.

For GaaS, its all about keeping the player engaged with updates over time that the oportunity is always there for them to spend money buying microtransactions with no cap on the $ the player could be spending at any given time.

Kyleran

Stadia is a Game Service, more akin to cable TV service, not to be confused with Gaming as a Service which is applicable to a single title like GTA5 or any MMORPG.

How do game studios make money in this model? Same way music artists are paid in some manner when their songs appear on Pandora, are played in a restaurant, or used in a TV commercial.

There's an entire industry out there to make sure royalties are collected and paid to content creators.  TV shows and movies are marketed and sold to various networks, streaming and cable services etc on an annual basis. 

I assume similar will occur in Game Services,  devs will be paid fees for letting their games be listed for sure. The real question is will they be permitted to sell services directly to the consumer, or will all sales go through the game service who will then take their cut, much like Epic or Steam.

My guess is it will be the latter model, else why create Stadia in the first place?

AlBQuirky

Vrika said:

For GaaS like Stadia, I'd guess the deal depends on the GaaS provider and developer: The company could be paying a flat license fee, or a fee that depends on how many people are actually playing that game.

Many GaaS games also work like F2P games: The game isn't meant to generate profit, it's just there so that people would buy microtransactions and DLC.

I hadn't even thought about cash shop money. Good point

AlBQuirky

Kyleran said:

Stadia is a Game Service, more akin to cable TV service, not to be confused with Gaming as a Service which is applicable to a single title like GTA5 or any MMORPG.

How do game studios make money in this model? Same way music artists are paid in some manner when their songs appear on Pandora, are played in a restaurant, or used in a TV commercial.

There's an entire industry out there to make sure royalties are collected and paid to content creators.  TV shows and movies are marketed and sold to various networks, streaming and cable services etc on an annual basis. 

I assume similar will occur in Game Services,  devs will be paid fees for letting their games be listed for sure. The real question is will they be permitted to sell services directly to the consumer, or will all sales go through the game service who will then take their cut, much like Epic or Steam.

My guess is it will be the latter model, else why create Stadia in the first place?

Thanks for that clarification, That's a good distinction

MarkWentworth

It's understandable to feel a bit lost when it comes to the details of this new model of game distribution! I had the same questions myself when I first heard about it. The short answer to your question is that there is no set percentage for game developers, but it does depend on the game service. Generally, the game developers will receive a portion of the revenue generated from the service. Some services will offer a flat fee to the developer, while others may provide a larger share of the revenue depending on the game’s performance. Also, you may want to check out a website like joywallet.com, which allows users to make money in various ways. It's a great platform that provides different options for earning money, the best financial strategies and tools to help you achieve prosperity and increase passive income. I hope this helps.

Keithcutlip

Every time a player watches an ad, you get paid. The biggest hurdle with this model is that you need a lot of users to make any significant money from ads. But that shouldn't stop you from trying, because it's one of the most flexible revenue models and it has a long tail. Generally, the game developers will receive a portion of the revenue generated from the service. Some services will offer a flat fee to the developer, while others may provide a larger share of the revenue depending on the game’s performance.  Alpine Skyward

AlBQuirky

Keithcutlip said:

Every time a player watches an ad, you get paid. The biggest hurdle with this model is that you need a lot of users to make any significant money from ads. But that shouldn't stop you from trying, because it's one of the most flexible revenue models and it has a long tail. Generally, the game developers will receive a portion of the revenue generated from the service. Some services will offer a flat fee to the developer, while others may provide a larger share of the revenue depending on the game’s performance. 

Ads are "in game?"

Slapshot1188

Interesting necro


On topic.. Gamepass reported 120,000,000 users last I saw. That is an awful lot of money to divy up with the game makers.  I'm sure Microsoft keeps the majority but even at $10/mo we are talking about over a billion a month to play with.

AlBQuirky

Slapshot1188 said:

Interesting necro


On topic.. Gamepass reported 120,000,000 users last I saw. That is an awful lot of money to divy up with the game makers.  I'm sure Microsoft keeps the majority but even at $10/mo we are talking about over a billion a month to play with.

That does make sense.

GaaS usually have limited access to limited game libraries. I think I've heard (don't know) that Microsoft's set up will change out games from time to time. So dividing that monthly income among the offered games for that month would make the "contract" more palatable

I guess I wonder how that income compares to selling the game on it's own. I don't think we will ever know

Scot

AlBQuirky said:

Slapshot1188 said:

Interesting necro


On topic.. Gamepass reported 120,000,000 users last I saw. That is an awful lot of money to divy up with the game makers.  I'm sure Microsoft keeps the majority but even at $10/mo we are talking about over a billion a month to play with.

That does make sense.

GaaS usually have limited access to limited game libraries. I think I've heard (don't know) that Microsoft's set up will change out games from time to time. So dividing that monthly income among the offered games for that month would make the "contract" more palatable

I guess I wonder how that income compares to selling the game on it's own. I don't think we will ever know

Who needs a subscription only MMO when it can be part of Gamepass? Sidestep the cash shop (cosmetics only if you must), go for the pass and we have the revenue system that made old school MMORPG's great.

Slapshot1188

Scot said:

AlBQuirky said:

Slapshot1188 said:

Interesting necro


On topic.. Gamepass reported 120,000,000 users last I saw. That is an awful lot of money to divy up with the game makers.  I'm sure Microsoft keeps the majority but even at $10/mo we are talking about over a billion a month to play with.

That does make sense.

GaaS usually have limited access to limited game libraries. I think I've heard (don't know) that Microsoft's set up will change out games from time to time. So dividing that monthly income among the offered games for that month would make the "contract" more palatable

I guess I wonder how that income compares to selling the game on it's own. I don't think we will ever know

Who needs a subscription only MMO when it can be part of Gamepass? Sidestep the cash shop (cosmetics only if you must), go for the pass and we have the revenue system that made old school MMORPG's great.

IMHO GamePass is the most player friendly monetization possible.  I get a slew of games I can play for a monthly fee (ridiculously low if you know how to manipulate Microsoft's Gold into GamePass).   True I do not own any of the games and they can and will rotate in and out but 99% of the time I am not going to go back to a game after I finish it anyhow.

Angrakhan

Kyleran said:

Stadia is a Game Service, more akin to cable TV service, not to be confused with Gaming as a Service which is applicable to a single title like GTA5 or any MMORPG.

How do game studios make money in this model? Same way music artists are paid in some manner when their songs appear on Pandora, are played in a restaurant, or used in a TV commercial.

There's an entire industry out there to make sure royalties are collected and paid to content creators.  TV shows and movies are marketed and sold to various networks, streaming and cable services etc on an annual basis. 

I assume similar will occur in Game Services,  devs will be paid fees for letting their games be listed for sure. The real question is will they be permitted to sell services directly to the consumer, or will all sales go through the game service who will then take their cut, much like Epic or Steam.

My guess is it will be the latter model, else why create Stadia in the first place?

Musicians get paid fractions of pennies per stream. Even a million streams pays out only a couple thousand dollars. You can go Google this. No one is getting rich off streaming. Musicians stream their music so that you'll go to their show when they come to town. That's where they make money. 

Video game companies aren't holding concerts so I'm with the OP on how money is getting made.

kitarad

I like to hoard games and play them when I like. A game pass will never work for me because I can buy a game and play it over 3 years so this game pass thing just makes it that I have to play just one game and finish it. I'm a dilettante.

Iselin

kitarad said:

I like to hoard games and play them when I like. A game pass will never work for me because I can buy a game and play it over 3 years so this game pass thing just makes it that I have to play just one game and finish it. I'm a dilettante.

Most of the best Game Pass games stay there for years, not weeks or months, and even if you want to buy a game and play it after it leaves, you can get a lengthy preview of it and then 20% off if you decide to buy it.

Slapshot1188

Angrakhan said:

Kyleran said:

Stadia is a Game Service, more akin to cable TV service, not to be confused with Gaming as a Service which is applicable to a single title like GTA5 or any MMORPG.

How do game studios make money in this model? Same way music artists are paid in some manner when their songs appear on Pandora, are played in a restaurant, or used in a TV commercial.

There's an entire industry out there to make sure royalties are collected and paid to content creators.  TV shows and movies are marketed and sold to various networks, streaming and cable services etc on an annual basis. 

I assume similar will occur in Game Services,  devs will be paid fees for letting their games be listed for sure. The real question is will they be permitted to sell services directly to the consumer, or will all sales go through the game service who will then take their cut, much like Epic or Steam.

My guess is it will be the latter model, else why create Stadia in the first place?

Musicians get paid fractions of pennies per stream. Even a million streams pays out only a couple thousand dollars. You can go Google this. No one is getting rich off streaming. Musicians stream their music so that you'll go to their show when they come to town. That's where they make money. 

Video game companies aren't holding concerts so I'm with the OP on how money is getting made.

Dunno... tens of millions of dollars for an artist from streaming music is what I would call getting rich, but maybe you have a higher threshold?

https://www.foxbusiness.com/lifestyle/how-much-money-do-artists-make-streaming-music-on-spotify

AlBQuirky

Iselin said:

kitarad said:

I like to hoard games and play them when I like. A game pass will never work for me because I can buy a game and play it over 3 years so this game pass thing just makes it that I have to play just one game and finish it. I'm a dilettante.

Most of the best Game Pass games stay there for years, not weeks or months, and even if you want to buy a game and play it after it leaves, you can get a lengthy preview of it and then 20% off if you decide to buy it.

Interesting. I look at it as a GREAT service for players who play LOTS of games. I always think of Kyleran when I see game passes. He is usually a "one and done" kind of player which seems to be exactly what these services are seeking.

I don't know about how often games are "rotated", if at all. I just recall a few games with "limited time in the library." I think (NOT sure) these may have been almost like "early release" titles. I seem to recall this most often with Epic.

I'm more in kitarad's boat. I like the feel of physical copies. But I think if players find what they want, it's all good

Angrakhan

Slapshot1188 said:

Angrakhan said:

Kyleran said:

Stadia is a Game Service, more akin to cable TV service, not to be confused with Gaming as a Service which is applicable to a single title like GTA5 or any MMORPG.

How do game studios make money in this model? Same way music artists are paid in some manner when their songs appear on Pandora, are played in a restaurant, or used in a TV commercial.

There's an entire industry out there to make sure royalties are collected and paid to content creators.  TV shows and movies are marketed and sold to various networks, streaming and cable services etc on an annual basis. 

I assume similar will occur in Game Services,  devs will be paid fees for letting their games be listed for sure. The real question is will they be permitted to sell services directly to the consumer, or will all sales go through the game service who will then take their cut, much like Epic or Steam.

My guess is it will be the latter model, else why create Stadia in the first place?

Musicians get paid fractions of pennies per stream. Even a million streams pays out only a couple thousand dollars. You can go Google this. No one is getting rich off streaming. Musicians stream their music so that you'll go to their show when they come to town. That's where they make money. 

Video game companies aren't holding concerts so I'm with the OP on how money is getting made.

Dunno... tens of millions of dollars for an artist from streaming music is what I would call getting rich, but maybe you have a higher threshold?

https://www.foxbusiness.com/lifestyle/how-much-money-do-artists-make-streaming-music-on-spotify

Yeah yeah, you get the handful that catch lightning in a bottle, but remember first of all that for each of the handful of artist listed in that article there are tens if not hundreds of thousands of musicians that don't make anything close to that. Also, recognize all the artists listed work for a label that likely collected a majority share of that money.  

The same is going to be true of game development. Out of all the smash hits there a mountain of games that don't even blip the radar. Also, the publisher is going to collect most of that revenue.

And maybe that's the play. It's about Activision or Sony or Microsoft getting paid at the expense of the individual development shop that did the work but loses box sales when someone plays it on a subscription service like Xbox game pass. I can see that.

Slapshot1188

Angrakhan said:

Slapshot1188 said:

Angrakhan said:

Kyleran said:

Stadia is a Game Service, more akin to cable TV service, not to be confused with Gaming as a Service which is applicable to a single title like GTA5 or any MMORPG.

How do game studios make money in this model? Same way music artists are paid in some manner when their songs appear on Pandora, are played in a restaurant, or used in a TV commercial.

There's an entire industry out there to make sure royalties are collected and paid to content creators.  TV shows and movies are marketed and sold to various networks, streaming and cable services etc on an annual basis. 

I assume similar will occur in Game Services,  devs will be paid fees for letting their games be listed for sure. The real question is will they be permitted to sell services directly to the consumer, or will all sales go through the game service who will then take their cut, much like Epic or Steam.

My guess is it will be the latter model, else why create Stadia in the first place?

Musicians get paid fractions of pennies per stream. Even a million streams pays out only a couple thousand dollars. You can go Google this. No one is getting rich off streaming. Musicians stream their music so that you'll go to their show when they come to town. That's where they make money. 

Video game companies aren't holding concerts so I'm with the OP on how money is getting made.

Dunno... tens of millions of dollars for an artist from streaming music is what I would call getting rich, but maybe you have a higher threshold?

https://www.foxbusiness.com/lifestyle/how-much-money-do-artists-make-streaming-music-on-spotify

Yeah yeah, you get the handful that catch lightning in a bottle, but remember first of all that for each of the handful of artist listed in that article there are tens if not hundreds of thousands of musicians that don't make anything close to that. Also, recognize all the artists listed work for a label that likely collected a majority share of that money.  

The same is going to be true of game development. Out of all the smash hits there a mountain of games that don't even blip the radar. Also, the publisher is going to collect most of that revenue.

And maybe that's the play. It's about Activision or Sony or Microsoft getting paid at the expense of the individual development shop that did the work but loses box sales when someone plays it on a subscription service like Xbox game pass. I can see that.

Your statement was literally "No one is getting rich off streaming. You can go Google this."  So I did... and apparently people ARE getting rich.  And Spotify was just one Steaming service... there are quite a few out there.  

If a no name artist gets their one-hit wonder to go viral and get a ton of DLs they too can get rich.  Regardless of their name or connections.  It's based by percent of DLs or Steams each month.  So any artist that gets popular can make bank.

And it's not like someone is arm twisting these companies to join Gamepass.  Take Valheim for instance.  They launched on their own, made a shit ton of money, and now are choosing to go on Gamepass.  I assume it's because they believe they will make even MORE money on Gamepass as opposed to making Microsoft rich.