When you offer someone a service you're offering to do something for them. Giving a shoe shine. Towing a car. Giving a lapdance. Demolishing a building. Giving a palm reading. Performing a concert. Giving a massage. Fixing a sink. Having sex for money. Giving a haircut. Assassinating someone. Business consulting. These are services. (Note that not all of these services are legal in all areas. Please consult with your local regulations before performing any of these services. Especially business consulting.) These are all activities that take place at a specific time. The videogame business began as a service. You'd go to the bar or the arcade and put in your quarter and the machine would give you a few minutes of amusement. When it was over you didn't have anything to show for your quarter except whatever memories you'd accrued while the machine was in your employ.
But then came home gaming consoles and games went from being a service to being a product. Suddenly when you bought a game you were buying an actual thing you could hold in your hand and say, "I own this. It's mine." This is how games have worked (arcades aside) for most of my life. Once in a while you'd have an MMO game that would be a service, but for single player games the deal was straightforward: Pay money and get a tangible thing in return.
Thirty years after home consoles turned games into a product, Valve Software introduced Steam and began trying to turn games back into a service. You may have noticed that this was a little controversial. Over the years I may have written a word or two about it myself.
The idea of "games as a service" is a bit odd to me because when you buy a game you still get a few physical objects like a disk and a manual and a box covered with hilarious exaggerations, which makes it feel like a product. Calling it a service seems strange because the service is open-ended and doesn't take place at a distinct time. You know when a haircut or a lapdance or a concert ends. But when does your videogame service "end"? Supposedly the service goes on forever, although most of us know better than to take that at face value. (Of course there are ongoing services - like Cable TV - but those require ongoing payments to maintain.)
But you can't argue with success. Aside from suspicious old curmudgeons like myself, gamers are ready to embrace the service of gaming, as long as it offers them a good deal.
It's been a slow process, but other publishers have been moving in this direction as well. EA CEO John Riccitiello recently gave an interview where he used the "s" word when describing his company's products.
Unfortunately, the non-Valve publishers are still murky on what this new service is and how it should work. I'm not sure why. It's not like Valve's business model is a secret. Valve offers us universal access to the game from anywhere, an unlimited backup service with cloud saves, free unlimited multiplayer, achievements, and (for a few titles) full Mac / PC support so that you can buy a game once and play it on either platform.