As a video game consumer, I am deeply concerned about recent trends in game design and monetization.
Over the last few months, several major premium "AAA" game titles, including Middle-earth: Shadow of War, Star Wars Battlefront II, and Forza Motorsport 7, have launched with a relatively new and controversial type of in-game item known as a loot box. Loot boxes, when opened, provide one or more random in-game items, which are not known until they are opened. Depending on the game, these can range from cosmetic modifications such as skins that have no impact on gameplay, to weapons, armor, and other equipment which significantly alter gameplay. Items in a loot box are typically grouped by rarity, and some items available from loot boxes can be more desirable than others, such as a rare skin for a playable character or a particularly powerful weapon. This encourages players to acquire more loot boxes for more chances to get better items. Depending on the game, loot boxes can be obtained over the course of normal play, with in-game currency, and/or with real money.
The random nature of loot boxes leverages the same psychological principles behind gambling to make the process of obtaining and opening them addictive. This is further reinforced by the fact that games which use loot boxes often do not permit players to purchase specific items directly, even with real-world currency. The game's mechanics are also often designed to encourage purchasing loot boxes by making it difficult and time-consuming to progress in a game through normal gameplay. As a result, loot boxes have drawn regulatory attention, with some jurisdictions considering treating loot box systems as gambling. The gambling-like nature of loot boxes has also drawn sharp criticism from both the press and the player community, which consider such systems to be predatory to consumers while degrading the game experience for those who do not pay for loot boxes. Compounding this is the fact that players already need to spend up to US$60 to begin playing the game in the first place.
More generally, the use of microtransaction systems which allow players to purchase in-game items with real money has drawn criticism, especially where such purchases allow paying players to obtain a significant advantage over others in competitive multiplayer gameplay or where the game's mechanics are balanced in such a way that they make normal progression unusually tedious without real-money purchases.
These trends in video game monetization have led to gamers claiming that the video game industry has become greedy and exploitative of its customers. With major game publishers like Take-Two Interactive reporting significant increases in revenue and profit, this can certainly appear to be the case. However, the truth is far more complicated than this.
The cost of developing a AAA title has dramatically increased over the last decade, and an increasing number of games have budgets exceeding $100 million. At the same time, the retail price of a premium game has stood at $60 for more than a decade, with the Great Recession and its aftereffects limiting consumer spending power and making it economically difficult to increase the base price of a game. As a result, developers are turning to microtransactions and loot boxes to generate a continuous revenue stream after the release of a game, leading to the aforementioned controversies. Even with these economic difficulties, it is my opinion that video games seriously need a price increase to remain economically viable, especially as consumer dissatisfaction and the threat of regulatory action make loot boxes and other aggressive monetization practices increasingly undesirable.
Before you tell me that developers should be able to dramatically reduce game development budgets, it's important to realize that video game consumers have very high expectations about game content and production values. Consumers expect cinematic experiences and ultra-realistic graphics for major franchises like Call of Duty and Assassin's Creed, and these are not cheap to make, especially when game assets such as textures and character models must be sufficiently detailed for display resolutions as high as 3840×2160 (4K). And while modern game development tools have made it easier and more affordable than ever for small teams and individuals to create functional games, they do not eliminate the substantial amount of time, effort, and money needed to create the large quantities of highly-detailed assets required for premium AAA games. The growing complexity of video games means that more time must be spent finding and fixing bugs and glitches, both before and after release. Furthermore, as game developers try to keep costs in check, employees are increasingly required to work long hours under highly stressful conditions in the days leading up to a game's release, a phenomenon known as "crunch", while being underpaid for their effort. This Motherboard article on the final stages of the development of Gears of War 4 provides some insight into what it's like to make a marquee AAA title today.
With respect to the rising revenues and profits of major game publishers like Take-Two, it is not out of pure greed. Precisely because video games are more expensive than ever to make, the risk of losing massive amounts of money due to a game commercially failing has never been greater. The loot-box controversies that plagued Star Wars Battlefront II resulted in a massive sell-off of EA stock (warning: autoplaying video with audio), causing it to lose more than $3 billion in value within a month of the game's launch. Let that sink into your mind. Three billion dollars.
Shareholders and investors are to a degree complicit in this. Investors tend to care mainly about immediate profits rather than drive long-term revenue by building customer loyalty. Because microtransactions have proven to be profitable in mobile games, investors want traditional games to have microtransactions as well, even if adding them would alienate customers. Investors don't like seeing companies spending huge amounts of money with the expectation that they would only make it back several years down the road; they want to see profits now, even if it means hurting customer satisfaction and loyalty. It's counterproductive for everyone involved.
I don't like loot boxes. I don't like microtransactions. But something has to give when $100m+ budgets are the norm. When you look at all the facts, it becomes evident that a $60 base price is just not enough to cover the costs of making a modern AAA video game. If we want developers and publishers to not engage in predatory monetization practices, we need to be ready to accept a higher entry price for premium gaming experiences.
Draco
Edited on December 31, 2017 to add information about investors' demands.
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