What Do the Recent Closures Mean for the Future of Live Service Games?

The past few weeks have seen numerous developers and publishers announce the shutdown of their live service titles, with some not even making it past the one-year mark. Within a short span, the plug was pulled on several games, including Apex Legends Mobile, Rumbleverse, Knockout City, CrossfireX, Crayta, and Dragon Quest: The Adventure of Dai - A Hero's Bonds. While this may seem alarming, Midia Research senior analyst Karol Severin believes it's a natural adjustment in the market, as companies seek a more sustainable balance between supply and demand. "The current wave of closures is an organic response to the changing macroeconomic trends, rather than a reflection on the live services sector as a whole," he notes. Severin draws parallels with the recent layoffs in the industry, stating that companies are now focusing on cutting expenditure and driving towards profitability in the face of adverse market conditions. This shift has resulted in a decreased appetite for riskier projects, including live service games. Oscar Clark, CEO of live ops publisher Fundamentally Games, echoes Severin's sentiments, describing the current wave of closures as "completely normal" given the broader market context. "Many games struggle to find and satisfy their audience or face internal issues, which can lead to their demise," he says. "It's unfortunate for the developers and players who are affected, but it's essential to recognize that no one benefits from a game that isn't sustainable." Dr. Serkan Toto, CEO of analyst firm Kantan Games, adds that the online and live service space is highly competitive, particularly on mobile and PC. "The competition for time and attention is intense, with games vying for the same 24 hours in a day as music services, video streaming, social media, and sports," Severin explains. "Live service games are heavily dependent on time spent in-game, which is correlated to in-game spend. To succeed, new games must dethrone users' engagement with other products or services, which is a challenging task." The recent closures have highlighted the difficulties faced by new IP in breaking through in the live service market. Severin notes that established premium game franchises have an advantage when transitioning to a live service model, as they can leverage their existing audience and unlock an initial boost during market entry. However, for entirely new IP, it's becoming increasingly difficult to break through. Clark stresses that smaller players can still succeed in the live service market by focusing on creating games with a regular cadence of engaging events, promotions that add value for players, and a solid structure of missions, challenges, and narratives. "It's about building a community that loves the game and feels valued," he says. Severin warns that smaller companies will need to find their "superfan niche" to break through, which requires a deeper understanding of their users and what drives their engagement. Toto is less optimistic about the chances of smaller studios, stating that they have "almost no chance" of success without a significant budget, top IP, or experience building live service games. Despite the recent wave of closures, the experts believe that this year's shutdowns will have little impact on the overall evolution of the live service model. Clark asserts that live ops is a positive force for creating lasting playing experiences and sustainable game studios, while Toto concludes that the industry is still in the early stages of a live service gaming revolution, with many lessons to be learned and business models to be refined.