Has the Live-Service Bubble Burst? | Opinion

The games industry has been driven by a straightforward principle for most of the past decade: to generate substantial revenue, a game must succeed in the live-service model. This doesn't mean single-player games are obsolete, but rather that their financial prospects are no longer deemed significant. The notion of selling a product once and considering the transaction complete is outdated; the focus has been on recurring revenue. However, it was inevitable that this trend would eventually reverse. As a matter of economics, live-service games could never be the dominant paradigm in the industry. Successful live-service games maintain consumers' attention for extended periods, effectively blocking other games from thriving. In contrast, regular games coexist without stifling each other's growth. The industry's focus on live service has been driven by the rewards reaped by a select few winners, such as Fortnite and Genshin Impact. However, the risk profile for new entrants has become prohibitively high, with many high-profile failures serving as cautionary tales. The recent shift away from live-service aspects in game development, as seen in projects being canceled or repurposed, marks a significant change in the industry's approach. Publishers like Microsoft, EA, and Capcom have reassessed their strategies, pivoting away from live-service models in response to changing market conditions and consumer preferences. The live-service dream is still alluring, but its limitations and risks have become too great to ignore. As the industry continues to evolve, it will be fascinating to see how publishers adapt and where they turn next to make their business models viable in an era of rising costs and consumer resistance to price increases.