Pay to Play and Pay to Win

Everyone is entitled to their own opinion, but I believe that opinion should be based on facts. There is a lot of misinformation about microtransactions and DLC out there, and when there is so much misinformation on a topic, the real issues tend not to get addressed. But I’m not an expert, so while researching this subject, I spoke to people who were. I’ve personally spoken to economists who specialize in video games, I’ve spoken to people who have worked at big AAA companies that use microtransactions, and I’ve done a lot of personal research. The topic of microtransactions is important to me because I love video games, and I care about the gaming community.

For the sake of this article, any time I mention a price, unless otherwise stated, I’m talking about USD, and I am mainly discussing microtransactions of major releases on PC and consoles, primarily AAA releases. I’m limiting the discussion mainly because I feel when we complain about DLC and microtransactions, we’re mostly talking about major releases anyway, like COD or Crash Bandicoot, not games like Candy Crush or Pokémon Go. I will also touch upon mobile games briefly.

Let’s first talk about the cost to make video games, why we have microtransactions, and the problems companies and consumers face. Then I’ll discuss possible solutions to those problems.

GAMING IS THE BIGGEST ENTERTAINMENT INDUSTRY. WHY DO THEY NEED MY MONEY?

One of the many things I hear people say about microtransactions is that they’re unnecessary because the amount of money the video game industry makes, especially compared to the movie industry. According newzoo.com, the video game industry will generate $152.1 billion in 2019. Compare that figure to the film industry. IBISworld.com projects the film industry has made a total of $103 billion in 2019, which includes box office and home video income. However, these figures aren’t exactly a 1 to 1 comparison. Firstly, these values are just straight revenue, not profit. Secondly, as this chart from newzoo shows, over $68.5 billion (45% of the videogame industries’ revenue) is from mobile gaming. Mobile games, such as the freemium games, are typically cheaper to make or utilize some sort of games-as-a-service model.

That leaves $83.6 billion for console and PC income, which, to be fair, is still a lot of money. But mind you, how much of this income is actually profit is iffy. We do know that this revenue includes microtransactions and DLC, so to say that the industry doesn’t need microtransactions because the amount of revenue it makes isn’t exactly fair when those revenue calculations include microtransactions and DLC.

Well, you say, movies cost a lot of money to make, too, but you don’t have to pay DLC to watch them. Well, when a movie is released it maintains its price. While in theaters, ticket prices won’t get cheaper over time, and when that movie is released on digital or DVD, it’ll typically keep the same price for a long period of time. A brand-new movie that released a year ago will still be $19.99. However, when a game is released, it starts out as $60. Within a few months, it’ll be dropped to $40, then $19.99, and then one day that game is free on PSN or Xbox market place. Most games don’t hold their initial value for more than few months.

Also, how films and games are created is very different, so dollars-to-dollars revenue generation is not an accurate comparison to make. But, how much does a video game actually cost to create? Well, this question is a doozy to answer. The best answer I found to this question comes from Jason Schreier of Kotaku, who spoke to multiple industry members. The common answer he got was it cost about $10,000 a person per month, taking into account salary and overhead. This means your average AAA title taking 3 years to make with a staff of 400 people will cost around $144,000,000 to produce. And this is lowball estimation. These estimates are also corroborated with what Raph Koster *** writes on his websites, siting that the cost to make AAA titles has gone up in the last couple decades. Stating in 1995, it was around $2 million. In 2005, it was $12 million, and in 2015, it cost $120 million or more to make a game. Mind you, these estimates don’t include marketing or delays. For instance, using Schreier’s formula, delaying the development of the Last of Us: Part 2 until May could cost Naughty Dog roughly an additional $20 million on top of what they have already spent. With all this considered, how do you sustain on a box price of $60 per game? Well, you don’t.

Then why do publishers keep the price of video games $60 when they cost so much to make? I can answer that question with a box of cereal and a jar of mayonnaise. See, now you’re scared because you’re not sure where this is going. People don’t like paying more for things, but usually when a company raises the price of something it’s because they have to. Maybe the product has become more expensive to make or maybe there is an economic downturn. Companies either must raise the price or give you less product for the same price. They know if they raise the price of product, then that will drive customers away. It’s called “sticker shock”. So instead, they try to keep the price the same. Mayonnaise does this with the divot at the bottom of the jar. The tub looks the same but thanks to the indent at the bottom, you’re getting less product for the same price. Cereal boxes always face you, the customer, on the shelf, so you don’t notice that they’re getting skinnier. The video game price issue is in a similar situation in that they are struggling to maintain their $60 price tag, while also paying employees and keeping their lights on, but the way publishers handle it is very different.

Let me give you a couple scenarios on how publishers can handle the rising costs of producing video games:

1. Some companies, specifically AAA developers, raise their prices to be between $80–100, while other smaller games stay at $60. The problem with this is that video games are recreational items. The industry suffers when gamers don’t have a lot of recreational time and/or money, and $60 is kind of a lot money whether you’re a casual or hardcore gamer, though some of us out there would probably prefer to pay more if that means fewer microtransactions. Conversely, there are a lot of people who would be upset if they possibly had to pay double for a game with no added bonuses.
2. The prices of all video games are raised. Everyone would be up in arms.

ESCALATION AND SCALING 

Gamers want content. We want each new game to be bigger and better than the last. We want better graphics, longer games, amazing story telling, and for games to utilize the latest technology. All of that is expensive, so to offset those costs, we have DLC and microtransactions. “But Elijah,” I hear you start to say, “Not every game has microtransactions and DLC. In fact, Resident Evil 2, one of the biggest games of the year, had free DLC.” And you’re right, but remember my mayonnaise example about giving you less for the same price to offset cost? Video game companies don’t need to do that, instead they have pre-orders, deluxe editions, and collectors’ editions to help offset rising costs. Resident Evil 2 had the standard editions for $59.99, the Digital Deluxe Edition for $69.99, and the collector’s edition for $199.99. Another big game that managed to avoid microtransactions was God Of War, which had the standard edition for $59.99, Digital Deluxe for $79.99, the collector’s edition for $130, the stone mason edition for $150, and the PlayStation 4 pro bundle, which included the game and a PS4 Pro for $400.

God of War is critically acclaimed, and it deserves every accolade it has received (and then some), but it was extremely expensive to make because of the care put into the game. For instance, that iconic score. Instead of just using a Latin choir, which is common, they went to Iceland to find a choir that could sing in old Norse, so the music would be more authentic. That type of care and attention to detail takes time and money, so the pre-orders and collectors’ editions helped offset those massive costs, while still allowing there to be $60 versions for those of us who can’t or won’t spend $80+ for a game.

I mentioned collectors’ editions, and before any of you mention Bethesda, calm down. I’m getting to that. Apart from collectors’ editions, there are games that rely on DLC to offset costs. To me, when DLC is done right, I really appreciate it. I mean, there was a time before DLC when we got five Street Fighter 2 games. Street Fighter 2 Turbo was the fifth installment, came out in 1994, and cost $70 ($80 in some places). If you account for inflation, that would be like paying $136 for the game today. So, video games have not only gotten more expensive to make, they’ve also gotten cheaper to buy.

The point I’m trying to make is this: Video game companies need a way to offset the cost of production, not just so they can make profit and give us bigger and better games, but also so they can pay their employees. In the last year, we’ve seen multiple game studios go under. There’s only a handful of AAA developers left because it is such a risky business.

With that said, a lot of you are probably screaming at your screen because of what you feel are shady practices that businesses employ, such as Activision adding microtransactions into Crash Team Racing after the Launch, or Activision charging $1 for a little red dot. Also, gamers have complained about games that feel purposefully incomplete to encourage buying DLC, not to mention, the biggest transgression, loot boxes. Now, if the industry needs microtransactions to stay afloat, then there needs to be more regulations put into place to protect consumers, and the government shouldn’t be the one doing it. By and large, the world’s governments don’t usually understand technology, especially gaming. This is why game ratings are self-regulated to let developers have creative freedom. The same thing needs to happen with microtransactions. If microtransactions are there to offset costs, then the industry needs to do better at regulating it.

Yes, the ESRB already has a label that says if there are in-game purchases or not, but I think it needs to go further than that. When Crash Team Racing was released, multiple gaming news outlets praised it for not having microtransactions, and reviews said it had no microtransactions. Later on, Activision added in microtransactions. Chances are, if they added them later, then Activision knew they were going to add the microtransactions at launch. At best, it makes them look shady, and at worst, it makes reviewers and journalists look like liars.

A BETTER RATING SYSTEM.

That shouldn’t be a thing that happens. Companies should disclose if they plan on adding microtransactions, and I think there needs to be more transparency besides the game just saying it has “in-game purchases”. Keep in mind, this is just an idea I have, and it may not be something that will work, but I think microtransactions need their own rating system. Besides your typical rating, the game should let you know the type of microtransactions being implemented. For example:

• A 1 could mean the game just has cosmetics you can buy, like skins, but nothing that changes core gameplay, and there must be a way to obtain those same items without paying for them.
• A 2 can mean the game has cosmetics that you can only get by paying real-world money.
• A 3 can mean the game allows you purchase things like characters and weapons, basically, allowing you to purchase things that could change the gameplay and offer you a different playing experience or advantage from someone who doesn’t pay for those.
• A 4 could be for games that purchasing is necessary or encouraged for the progression of the game, such as freemium games.

Games that contain loot boxes should disclose their odds, and an average price of the microtransactions should be listed at the time of purchase. Also, the types of things being sold should be regulated. Charging consumers $1 for a red dot that goes on a reticle doesn’t seem like something a company should charge for. Out of everything I’ve suggested, regulating what is sold would probably the most difficult thing to implement because determining value of digital goods is difficult. Just because something looks simple doesn’t means it was simple to design. I know people who have had to work for days or weeks just to debug an article of clothing. But, I feel as if some guidelines are needed.

Lastly, loot boxes. I don’t think they should be a thing. Yes, multiple organizations say loot boxes aren’t gambling and that’s fine, but the fact is, we know they have triggered people who have gambling addictions. I think it’s a bad business practice to RNG for something that costs real money. This just seems twisted to me: ‘Here, pay money, but you probably won’t get the thing you want and that will encourage you to spend more.’ I just think loot boxes need to be more tightly regulated if they’re going to be a thing. At least make a rule that publishers can’t allow you to get double items if you’re buying a loot box, so that each time you buy one, your chances of getting what you want increases. Or, better, just ban them completely.

These are just some ideas to improve the current microtransaction problem in gaming. I’m not sure they would work, or if they could be implemented. If we want to make progress on this issue, we need understanding. Understanding that there are a lot of employees who are going through burnout, crunch deadlines, and many late nights to bring you the next big AAA title. Understanding that developers need to be paid for their work, and the industry needs to understand that in their pursuit to make money, their customer should be protected from predatory business practices.

We need to be open to having a dialogue about this but also remember there’s a time and place for that. This goes without saying, but don’t attack or harass the people that work on the games. I saw on twitter that when Destiny 2 Shadowkeep was released and users were having trouble connecting to the server, someone suggested that people should search for anyone that shows they work for Bungie and tweet them directly. I can’t tell you how bad an idea this is. There seems to be an thought out there that entire studios are small groups of people that each have intimate details about every expect of the game, which can’t be any further from the truth. Bungie employs about 600 people, so a random coder or developer isn’t going to know why a server isn’t working nor have any knowledge or power over anything to do with microtransactions. Most likely, if you had tweeted anyone that worked at Bungie, they would have had the same information you did and would probably be as annoyed as you were that they too couldn’t connect to the server.

The point being, there is a way to do things and randomly yelling into the ether is never the way to go. And for a lot of you, I know the reason you don’t like microtransactions is because you see them as this yucky thing that besmirches this art form that you love. I’m not even trying to change your mind. I just want you to have a little more understanding and to dispel the misinformation on the topic.

It’s fair for you to say you understand that video game companies need a way to offset rising costs, but you don’t like that they do it through microtransactions. I just don’t want you to think every game that implements microtransactions, pre-order bonuses, or DLC are greedy and corrupt companies, and I definitely don’t want you getting mad at people who have nothing to do with those decisions. We want newer and greater content, and that comes at a price, but I’m talking about people, the people who work hard to make these games come to life. The last thing they need it to be yelled at for something they had nothing to do with.

As we open up the avenues of conversation, I think you’ll be surprised by the companies and people who will be willing to listen and more transparent. But, I think a center ground needs to be met on this issue. Companies should be able to pay their employees, and consumers shouldn’t be taken advantage of. I don’t think that’s much too ask for.