Video Game Subscription Market Growth Slows: Challenges In Attracting New Subscribers

Recent data from Circana's Games Market Dynamics report indicates a significant slowdown in the growth of video game subscription spending.
The report reveals that, in April 2023, subscription spending in the United States was only 2% higher compared to the same period in 2022.

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This stagnation in growth has raised concerns about the industry's ability to attract new subscribers beyond the existing console ownership base.
"Finding new subscribers beyond the console ownership base has proven very difficult thus far," Mat Piscatella, Executive Director at Circana, wrote on Twitter on Wednesday.
However, he added that the major new premium releases in 2023 have performed "exceptionally well" in traditional sales channels. "On the other hand, the big new premium releases in 2023 have done exceptionally well in good ol' fashioned sales, particularly in digital (although Nintendo Company, Ltd. (OTC: NTDOY) 'The Legend of Zelda: Tears of The Kingdom' has sold HEAPS physically as well)," he tweeted.
The struggle to attract new subscribers is evident in the video game subscription market, especially for Sony Interactive Entertainment's (NYSE: SONY) PlayStation Plus and Microsoft Corporation's (NASDAQ: MSFT) Game Pass.
Sony recently shared that its Premium tier has 8 million subscribers (17% of the total user base) and PS+ Extra has 6.1 million subscribers (13% of users). However, the number of PS Plus subscribers has remained unchanged at 47.4 million since the previous quarter. This indicates a lack of significant growth, with the numbers staying relatively the same since June 2020.

Meanwhile, Microsoft's Game Pass reached a milestone of 25 million subscribers in January 2022. However, the company has not provided any updated figures since then, leaving the current state of the service uncertain.

According to Phil Spencer, the head of Microsoft's Xbox division, the company doesn’t expect Game Pass to become its main source of income and is fine if the service "will stay in that 10-15% of our overall revenue, and it’s profitable for us."

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