Subscriptions
Increase your subscribers with new markets and pricing policies
September 5, 2022
Subscription services in gaming have exploded in popularity in recent years and show no sign of slowing down.
DFC Intelligence released a report predicting software sales on consoles and PC will hit $72 billion, up 5% from last year's mark, driven by growth in subscription services. Xbox Game Pass, the game subscription service from Microsoft, has paid independent developers more than $2.5 billion in royalties so far. Games offered on Game Pass see an 8.3x increase in players, with day one launches for indie games seeing 15x more players. According to Xbox’s statistics, 50% of subscribers spend more money in-game. Joining a subscription service (or developing one) can expand your reach to a more global audience and bring in more revenue.
Global markets are another way to reach more customers and subscribers. Expanding your marketing efforts to include more geographical locations can organically grow your audience and customer base. International markets are some of the fastest growing spaces in the industry, providing another avenue to reach more customers and subscribers.
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Games market value example from Newzoo, showing Europe + LATAM equalling the value of NA, with Asia-Pacific almost double NA.
With global markets demonstrating a growing customer base, it's also important to scale marketing subscription services to these new customers with a localized strategy based on regional needs. For example, the PayPal and credit card usage that 90% of North Americans use for their purchases might not be as popular in other countries around the world.
Different regions prefer different payment methods, meaning you will need different payment systems to provide the most accessibility for global customers to join your subscription services. Regional pricing over globally fixed pricing can also lead to more subscribers from various socioeconomic statuses. Here are some steps you can take to take your subscriber base to new markets.
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Looking at another example of regionally priced subscriptions, Spotify sets specific prices per region based on cost as a percentage of yearly salary. For example, Spotify Premium’s individual prices in Africa vary from $2.19 per month to $4.99 compared to the $9.99 price tag in America. Netflix also implements this strategy, charging $1.96 per month in Turkey, $6.23 in South Africa, and $12.86 in Switzerland.
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This extends to game developers as well. Developers can reach more customers and earn more revenue if they adjust for regional pricing. For example, Xbox slashed their Game Pass and Live Gold prices in Chile, Hong Kong, and Israel after they conducted evaluations of market conditions. Monthly pricing for Chilean gamers dropped from $12 to $8.50 and $15 to $10 in Hong Kong and Israel.
When adjusting for regional pricing, it’s important to take into account a few simple factors that can help you establish your pricing strategy. Factors like average income, GDP, the price of a cup of coffee, or even what other game subscriptions in your genre are priced at (and selling for successfully) in that region can give you enough information and context to adjust your own game’s price.
With nuances surrounding subscription models, and differences across regional payment systems, it can be hard to successfully expand into both spaces. Luckily, Xsolla Subscriptions can help.
Games market value example from Newzoo, showing Europe + LATAM equalling the value of NA, with Asia-Pacific almost double NA.
With global markets demonstrating a growing customer base, it's also important to scale marketing subscription services to these new customers with a localized strategy based on regional needs. For example, the PayPal and credit card usage that 90% of North Americans use for their purchases might not be as popular in other countries around the world.
Different regions prefer different payment methods, meaning you will need different payment systems to provide the most accessibility for global customers to join your subscription services. Regional pricing over globally fixed pricing can also lead to more subscribers from various socioeconomic statuses. Here are some steps you can take to take your subscriber base to new markets.
Introduce Local Payment methods
In order to reach as many users as possible, you need to provide them with a convenient way to pay for services. Some countries prefer cash-based payment methods, others prefer mobile, and some prefer a mix. It’s important to understand each method and accommodate your customer’s preferred method of spending. China currently holds the title for the biggest gaming market with close to $50 billion in revenue as of 2021 and over 685 million gamers. Almost 90% of people in China’s largest cities use Wechat Pay, Alipay, or other mobile services as their primary means of payment, which means traditional, card-based systems would immediately alienate a majority of Chinese gamers. China isn’t the only growing Asian market with its own regional payment methods. Ranked the 3rd largest Asian gaming market by revenue in 2021, the South Korean gaming market has over 30 million gamers and has brought in $5.4 billion in revenue. KakoPay, a mobile and digital wallet, is used by over 20% of South Korean consumers. TOSS eWallet, another mobile payment system used in South Korea, has an audience of 11 million users and 20 million downloads. In Indonesia, more than 80% of the country’s 273 million people consider themselves gamers. Almost half of the country’s population doesn’t have a bank account, making cash-based payment systems the most popular method. This is also linked to the increase in popularity of eWallets like Go-Pay in Thailand. Across the globe, Brazil’s gaming market, the largest in Latin America and ranked 13th in the world, generated an impressive revenue of $2.3 billion in 2021. It’s estimated that 70% of Brazilians play games, and more than half of those gamers say they game for over 20 hours a week. Almost half of the country’s population is unbanked, making cash voucher systems like Boleto Vouchers and money transfer services like Skrill and Amazon Pay popular among digital consumers. Since Skrill and Amazon Pay are also popular in countries like the USA, Germany, the UK, and Canada, accepting these systems as valid payments allows expansion into European and North American countries. The European games industry is projected to reach a revenue of $27.4 billion by the end of 2022, with the five largest markets being Germany, the UK, France, Italy, and Spain. Online banking and virtual cards are generally popular across the European market, and users commonly pay through SEPA, which has resulted in the growth of platforms like Paysafecard and Sofort. India’s gaming market has grown exponentially over the past several years, estimated to be worth $1.98 billion USD by the end of 2020 and boasting over 430 million players. With promotional help from the local governments, digital forms of payment like RuPay, Paytm, and UBI are used by around 40% of the population. From mobile payments and bank transfers to digital wallets and cash-based systems, these examples are just a few alternatives to credit cards and PayPal used by gamers worldwide.Adjust Regional Pricing
Since payment capacity differs from region to region, fixed product pricing can quickly become a barrier for gamers depending on where your products are being sold and marketed. In some regions, your default pricing could be considered too high, while others might think your pricing is suspiciously low. Conducting your own research about your players’ spending capacity with A/B testing in different regions can hone in on what pricing plans work best for the demographics you’re targeting. Steam has utilized a regional pricing model since 2014, automatically suggesting local prices to players based on currency and location. Valve also automatically offers prices for local currencies in other regions when listing games for sale. Since the “indie game explosion” from the early 2010s introduced more price points to the market than the typical $60 for a AAA game, the importance of regional pricing has become more apparent, with developers noticing increased sales by pricing lower or higher for different regions. With regional pricing models now an expectation for customers, developers are seeing increased complaints and backlash when implementing fixed pricing across multiple regions. Square Enix made the mistake of ignoring regional pricing when taking pre-orders for Forspoken at the end of 2021. They set pricing at $60 across the board, which led to criticism from countries like India who’s players would’ve been forced to pay about 3.5% of the country’s average yearly salary to afford the game – this would be like an average American spending almost $1,100 for the same game.
Looking at another example of regionally priced subscriptions, Spotify sets specific prices per region based on cost as a percentage of yearly salary. For example, Spotify Premium’s individual prices in Africa vary from $2.19 per month to $4.99 compared to the $9.99 price tag in America. Netflix also implements this strategy, charging $1.96 per month in Turkey, $6.23 in South Africa, and $12.86 in Switzerland.
This extends to game developers as well. Developers can reach more customers and earn more revenue if they adjust for regional pricing. For example, Xbox slashed their Game Pass and Live Gold prices in Chile, Hong Kong, and Israel after they conducted evaluations of market conditions. Monthly pricing for Chilean gamers dropped from $12 to $8.50 and $15 to $10 in Hong Kong and Israel.
When adjusting for regional pricing, it’s important to take into account a few simple factors that can help you establish your pricing strategy. Factors like average income, GDP, the price of a cup of coffee, or even what other game subscriptions in your genre are priced at (and selling for successfully) in that region can give you enough information and context to adjust your own game’s price.
With nuances surrounding subscription models, and differences across regional payment systems, it can be hard to successfully expand into both spaces. Luckily, Xsolla Subscriptions can help.
Xsolla Subscriptions
With Xsolla Subscriptions, you can start creating a consistent revenue stream, boost player loyalty, and increase engagement with subscription plans tailored to your players. We’ll guide you through the complexities of creating the right subscription model for your customers with a unified subscription management system, dozens of ready-made tools for activating and reactivating users, and the ability to customize automation tools. This solution can also help you reduce subscription churn. From centralizing your data to creating automated responses to reactivating customers with rewards, you can keep your players engaged at any stage of the subscription life cycle. Our Subscriptions One-Pager can also help you consider a few critical steps as you get started, like what to include in a web-platform subscription plan, which types of “extras” players are looking for, and even how to design a fair and profitable pricing structure.Ready to start?
Head to the Subscriptions Solution page and log into your Xsolla Publisher Account to try it out. Or, contact an expert from our team for guidance in setting up your subscription services – we’re here to help!
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