Mobile game publishers have been considering content subscriptions for years. Could a new Apple gaming service finally compete with advertising revenue?

To many industry leaders, content subscriptions seem like an ideal way to monetize mobile games. After all, streaming services like Netflix have proven fans are willing to pay monthly fees for entire film libraries — why couldn’t the same thing happen in other entertainment categories? Apple’s recent auto-renewable subscription features have already seen some adoption from game developers, but Apple is rumored to be readying a dedicated games subscription service that offers a limited selection of premium games. If true, that could herald a bold new era for mobile game monetization.

There’s just one problem: game publishers have been predicting that mobile game subscriptions will take off for years. Here’s one 2017 interview with a mobile developer promoting paid subscriptions within their apps. Here’s another from 2016 implying that mobile gaming could adopt content subscription models common in other apps. The subscription debate was even raging in 2014 as advertising revenue continued to rise.

Today, the overwhelming majority of mobile games are monetized using ads or in-app purchases. While Apple’s rumored game subscription service might finally kickstart a subscription trend, what would that look like? Are mobile game content subscriptions just around the corner, or are industry thought leaders overestimating their viability of yet again?

The benefits and drawbacks of subscriptions

To understand why industry leaders keep hyping mobile subscriptions, it helps to remember why they’re so appealing in the first place: outside of gaming categories, subscription-based apps are immensely profitable. In fact, in 2016 they represented up to 85% of total non-gaming revenue in the United States App Store alone.

Subscriptions also offer a steady and predictable revenue stream for publishers, providing resources for future titles and updates during a game’s lifecycle. These models can benefit players as well: users who purchase subscriptions are usually well retained customers willing to engage with apps over a prolonged period. Finally, subscriptions allow users to experience premium gameplay without necessitating ads or IAPs.

But there are also drawbacks worth considering. Just over a decade ago, the PC and console video game industries relied heavily on subscription fee monetization to support major online releases like World of Warcraft or EverQuest. Developers quickly learned that players might pay for access to a few select games, but they couldn’t maintain subscriptions to every game in the long term. Fans flocked to the more accessible free-to-play model, and the games industry followed their lead. Today, more mobile games are released per day than PC and console, making individual subscriptions even less tenable.

Publishers also need to address considerations of the mobile ecosystem. In 2014, an FTC ruling on in-app purchases limited the ability of publishers to implement auto-renewing subscriptions, making some mobile developers wary of the practice. Fair and reasonable pricing can also be an issue, since Apple takes 30% from each App Store transaction.

The current state of subscriptions in mobile gaming

Despite the drawbacks mentioned above, mobile games do make limited use of subscription models. In fact, this Unicorn puzzle game offers several membership tiers that extend into the $30 price range. Mobile Legends also includes a “Starlight Membership” alongside standard IAPs that unlocks monthly benefits for players.

Yet the simple fact is that, for the time being, paid subscriptions are a low priority for users and publishers alike. According to eMarketer, only 14% of mobile publishers consider subscriptions to be an effective monetization format. Rewarded video takes the lead at 75%, closely followed by IAPs and almost every other free-to-play monetization method. Paid subscriptions arrive in third-last place, surpassing only in-feed video ads and affiliate programs.

When subscription models do find success, they’re often deployed as optional supplements to advertising and IAP monetization. Remarkably few mobile games offer it as the primary monetization method.

Are subscription models on the rise?

If history is anything to go on, content subscriptions are unlikely to become a mobile trend in the immediate future. That being said, the concept does have some merit. While Apple’s gaming subscription rumor could just be hot air, it highlights one unexplored mobile subscription avenue: bundling an entire game library into a single, low-cost fee.

Non-mobile gaming platforms have experimented with this concept and found modest success, most notably Sony’s PlayStation Now and PlayStation Plus monthly free games line-ups. Apple is well-positioned to offer similar Netflix-styled services that unlocks premium apps while a subscription is active. Earning multiple games for a single fee holds inherent value, and helps customers avoid the hassle of managing multiple subscriptions.

Whether this will transform annual subscription predictions into a full-blown trend is anyone’s guess. But it’s certainly be worth paying attention to Apple if and when such a platform is revealed.

Looking to better understand the fast-paced mobile games industry? Download and read Tenjin’s 2018 Ad Spending Report today!