In the video game industry, games as a service (GaaS) represents providing video games or game content on a continuing revenue model, similar to software as a service. Games as a service are ways to monetize video games either after their initial sale, or to support a free-to-play model. Games released under the GaaS model typically receive a long or indefinite stream of monetized new content over time to encourage players to continue paying to support the game. This often leads to games that work under a GaaS model to be called "living games", "live games", or "live service games" since they continually change with these updates.
The idea of games as a service began with the introduction of massively multiplayer online games (MMOs) like World of Warcraft, where the game's subscription model approach assured continued revenues to the developer and publisher to create new content. Over time, new forms of offering continued GaaS revenues have come about. A significant impact on the use of GaaS was the expansion of mobile gaming which often include a social element, such as playing or competing with friends, and with players wanting to buy into GaaS to continue to play with friends. Chinese publisher Tencent was one of the first companies to jump onto this around 2007 and 2008, establishing several different ways to monetize their products as a service to Chinese players which typically play on phone or at PC cafes rather than on consoles or computers, and since has become the world's largest video game publisher in terms of revenue. Another influential game establishing games as a service was Team Fortress 2. To fight against a shrinking player-base, Valve released the first of several free updates in 2008, the "Gold Rush Update" which featured new weapons and cosmetic skins that could be unlocked through in-game achievements. Further updates added similar weapons which starting include monetization options, such as buying virtual keys to open in-game loot boxes. Valve began earning enough from these revenues to transition Team Fortress 2 to a free-to-play title. Valve carried this principle over to Counter-Strike: Global Offensive and to Dota 2, the latter which was in competition with League of Legends by Riot Games. League of Legends, which had already had a microtransaction model in place, established a constant push of new content on a more frequent basis (in this case, the release of a new hero each week for several years straight) to compete, creating the concept of lifestyle games such as Destiny and Tom Clancy's The Division.
Some examples include:
Games may combine one or more of these forms. A common example are lifestyle games, which provide rotating daily content, which frequently reward the player with in-game currency to buy new equipment (otherwise purchasable with real-world funds), and extended by updates to the overall game. Examples of such lifestyle games include Destiny, Destiny 2, and many MMORPGs like World of Warcraft.
The principal reason that many developers and publishers have adopted GaaS is financial, giving them the ability to capture more revenue from the market than with a single release title (otherwise known as "games as a product"). While not all players will be willing to spend additional money to gain new content, there can be enough demand from a smaller population of players to support the service model. For example, for World of Warcraft, it was estimated on the basis of average revenue per user (ARPU), that only 5% of the game's population paid 20 times more than the baseline ARPU, sufficient to continue ongoing development of the game. GaaS further represents a means by which games can improve their reputation to critics and players by continued improvements over time, using revenues earned from GaaS monetization to support the continued development and to draw in new sales for the product. Titles like Diablo III and Tom Clancy's Rainbow Six Siege are examples of games offering GaaS which initially launched with lukewarm reception but have been improved with continued service improvements.
Games as a service also impacts the development process for games. When developing a game as a product, there is generally a linear flow of tasks to assure that the product shipped is free of software bugs and other problems that may exist, which can be both time consuming and costly to test for. If there are critical bugs found post-release, this can also be costly to develop, test, and distribute software updates to rectify. In developing games as a service, where consumer expectation is already set to expect continual updates to the game, the rigor on software testing in the early stages of release may be forgone as to get the title out to players faster, accepting that software bugs may be present but will be fixed when the next update is released. Further, games developed as a service are more commonly driven by player feedback, so initial iterations of a game's release may be lightweight to be used as a foundation to build upon based on the game's community. This can further shorten the initial development cycle of a game. However, games as a service also increased overall development effort as there are usually two or more concurrent tracks to support a game; one working to support the current available release, and others that are working on the future content that will be added to the game.
While the games as a service model is aimed to extend revenues, the model also aimed to eliminate legal issues related to software licenses, specifically the concept of software ownership versus license. Case law for video games remains unclear whether retail and physical game products qualify as goods or services. If treated as goods, the purchaser gains several rights, in particular those related to the first-sale doctrine which allows them to resell or trade these games, which can subsequently affect sales revenue to publishers. The industry has generally considered that physical games are a service, enforced through End-user license agreements (EULA)s to try to limit post-sale activities, but these have generally not been enforceable since they affect consumers' rights, leading to confusion in the area. Instead, by transitioning to games as a service, where there is a clear service being offered, publishers and developers can clearly establish their works as services rather than goods. This further gives publishers more control over the use of the software and what actions users can do through an enforceable EULA, such as preventing class action lawsuits.
GaaS can reduce unauthorized copying. Also, certain games can be hosted in a cloud server, eliminating the need for installation in players' computers and consoles.
Industry analysis firm Digital River estimated that by 2016, 25% of the revenue of games on personal computers results from one form or another of GaaS. The firm argued that this reflects on consumers that want more out of games that are otherwise offered at full price (US$60 at the time of the report) or will look for discounts, thus making the market ripe for post-release monetization. Several major publishers, including Square Enix, Ubisoft, and Electronic Arts have identified GaaS as a significant focus of their product lines in 2017, while others like Activision Blizzard and Take-Two Interactive recognize the importance of post-release support of a game to their financial bottom lines. GaaS is also seen as a developing avenue for indie video games, which frequently have a wider potential install base (across computer, consoles, and mobile devices) that they can draw service revenues from.
A study by DFC Intelligence in 2018 found Electronic Arts' value rose from US$4 billion to $33 billion since 2012, while Activision Blizzard saw its value rise from $20 billion to $60 billion in the same period, with both increases attributed in part to the use of the GaaS model in their games catalog. Electronic Arts had earned $2 billion from GaaS transactions in 2018.