Franchise-as-a-service bleeds into subscription gaming to create supplemental revenue streams

Microsoft's fragmented but synergistic approach to software and services is helping introduce new business models to the $200 billion interactive entertainment industry.

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Xbox is making big disruptive power plays in the world of online gaming. Microsoft is no stranger to disruption, having shaken up the games market with its Xbox Game Pass subscription, the first dedicated multi-game subscription to define an emerging "Netflix of gaming" business model. Game Pass was only the beginning, and along the way it has helped iterate on multiple new gaming trends.

You might be familiar with Games-as-a-Service (GaaS), terminology that publishers use to refer to an online game with microtransactions and a cadence of updates. On top of GaaS, I think I've spotted two new business concepts: Games-as-a-Platform (GaaP) and Franchise-as-a-Service (FaaS).

Let's take a look at each one individually and then discuss how all three of these models--GaaS, FaaS, and GaaP--are interconnected.

1. Games-as-a-Service (GaaS) - Any live service title that has online gameplay in a social environment with multiple spending points (full game sales, microtransactions). Think of games like Fortnite, Roblox, Minecraft, Genshin Impact, Call of Duty Warzone, and Palworld as examples.
2. Games-as-a-Platform (GaaP) - This is a sub-category of GaaS. These multi-platform games are few and far between. Games must have user-generated content in order to qualify, and examples include Fortnite (with its various player-created islands), Roblox (also with player-created content), and even Minecraft (one of the top UGC money-makers on the planet). These games use multiple platforms to create an ecosystem of software, services, and content.
3. Franchise-as-a-Service (FaaS) - When the game franchise is so big that it commands its own subscription service. Key examples include Minecraft Marketplace Pass, and more loosely, GTA+ for Rockstar's Grand Theft Auto games.

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For a better idea of how these trends have impacted the industry, Xbox exec Matt Booty had this to say about the so-called "black hole games" that consistently dominate the games market.

"We've kind of seen this inversion over the past 5 years...it used to be that the platform was the biggest thing, and the games would tuck in within the platform. Today, big games like Roblox or Fortnite can be bigger than any one platform. So that really changed the way we think about these things," Booty said during the famous February Xbox business meeting, in which Microsoft announced that 4 first-party Xbox games would break exclusivity and launch on other platforms.

Few games are able to hit all three of these criteria, but one prime example is Minecraft.

Last month, Xbox announced the Minecraft Marketplace Pass, a $3.99/month subscription service that's exclusively for Minecraft. This is a key example of Microsoft's current ambitions which aim to fragment games into multiple monetization points that are not only individually purchasable, but also feed into one another--and feed directly into the online-driven, service-oriented, subscription-first business model that is modern Xbox.

"Play 150+ pieces of exciting content for one low monthly price with Marketplace Pass! Dive into worlds, mash-ups, skins packs, texture packs, and more. With fresh content added every month, there's always something new to play with Marketplace Pass!"

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Minecraft, alongside other key online games, are utilizing new layered monetization pathways as additional supplemental revenue streams. The idea is to create as many spending points as possible and then to wrap them up into a one-size-fits-all bundle.

For example, Minecraft meets multiple spending points:

• Additional microtransactions - Marketplace with both developer items and UGC content being sold
• Sales - Full priced $29.99 game
• Wrap-up monetization - $3.99/month subscription service
• Subscription value - Included on Game Pass

Its Games-as-a-Platform elements (marketplace, UGC) are also neatly combined with the Franchise-as-a-Service elements (wrapper subscription), whereas the main access points are further embedded within Game Pass or a full-priced spending point.

So what does this tell us? This trend indicates that popular online games will continue to experiment with new ways to monetize, whether it be through season passes, cosmetic content that actual gamers create, and/or some sort of additional subscription-oriented value proposition. It's not necessarily the fact that this model is being pursued that's the big news--it's the creative and different ways that the model is being splintered while also maintaining synergy and cohesion along the way.

Another key game that needs to be talked about in this space is Ubisoft's new experimental Assassin's Creed Infinity title.

It's less of a game and more of a hub or launcher for the IP. Ubisoft plans to release all future Assassin's Creed games within Infinity, which will be a kind of one-stop-shop that sells games, microtransactions, and in-game playable content across multiple games. Think of Infinity, and the GaaP concept altogether, as a game-within-a-game.

It's kind of like the old Bandai Namco Arcade Room "game" where you'd download the base launcher, but the arcade games themselves were sold individually as DLC. AC Infinity will operate similarly, although Ubisoft plans to sell Infinity as a full-priced release.

Infinity isn't out yet so we don't know specifics, but it's possible that it will tie all of these models together to create the best example of a modern AAA franchise morphing into GaaP and FaaS.