Why the $183 billion video game industry can't quit microtransactions

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Two of the largest video game companies in the U.S. now make the vast majority of their money from live-service games, subscriptions and in-game spending.

In fact, two of the largest video game companies in the United States — Electronic Arts and Take-Two Interactive — now make the overwhelming majority of their money from live-service games, subscriptions and in-game purchases, according to their recent earnings reports.

Popular live-service titles such as Fortnite, Call of Duty: Warzone, and Clash Royale were built around this revenue model. Game publishers must provide updates throughout certain game life cycles to retain player attention, which is where the term"live service" comes from. Gamers pay for those updates through season passes or subscriptions.

"The industry is really moved to more of a what they call a battle pass system, or some kind of packaging of seasonal content," said Mat Piscatella, executive director of video games at Circana."Those systems have found much warmer response because I think people are finding that they're getting more value, and more reliable value for their money."Sign up for NBC LA newsletters.

 

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