The Dark History of Video Game Monetization

in 2021 the gaming industry pulled in over 180 billion dollars in revenue it is currently the most profitable entertainment industry in the world making more than music and movies combined and it's also one of the fastest growing expected to make over 200 billion in the next few years so exactly how do video games make this much money well if you take a second to think about it it actually makes a ton of sense movie tickets and album sales are a one-time purchase and even streaming services are only a measly 10 bucks a month for however many of the hundred of them you're subscribed to compare this to gaming and the amount of monetization options for even a single game are through the roof a full price aaa title costs about 80 dollars here in canada which for you americans translates to about 15 big macs then you've got dlc which can cost more than the game itself then there's hundreds of microtransactions for fortnite skins or a weed sticker to put on your gun in call of duty then you've got battle passes charging 10 bucks a month and loot boxes so of course the gaming industry makes this much money with this many options for monetization how could they not so why don't we jump down the rabbit hole of video game monetization try and break down each of the ways the video games make a profit how they all started and why most of them are really really bad [Music] so the first type of monetization for games beyond just buying them is your old school expansion packs this is a holdover from tabletop rpgs and collectible card games where you would buy additional books or packs of cards that expand the scope of the game taken to the realm of video games these would be physical cds or game cartridges you could buy that would add in-game content or entire new campaigns to play these were the very first type of additional content for video games and expansion packs started to be introduced as early as the 80s with games like dungeon quest or populist being the first recorded examples and if you're over 16 you probably saw store shelves lined with expansions for games like the sims or world of warcraft at some point this type of extra monetization is the most classic and what i would consider to be the most fair you paid for the content of the game here's some more content for some more money and a lot of the time expansion packs are so big that they classify as sequels or entire games unto themselves so to see a price tag on them seems more than okay as a fun example of this the classic sega game sonic and knuckles is not actually a game it is technically an expansion for sonic the hedgehog 3 as the two were developed as the same game and split up before release and the sonic and knuckles game cartridge even has a dock that you could put the sonic 3 game into to connect the games together it's actually a really cool technique for old genesis games to combine together just google docking to learn more about it but the true evolution of expansion packs came in the form of the internet as expansion packs are physical disks that you buy we slowly move from them to downloadable content or dlc and dlc expansions have continued on like this to this very day with some of them being really really great dlc for the witcher 3 or monster hunter world are bigger than the base game and some expansions like the citadel dlc for mass effect 3 are considered some of the best content in gaming again it's just more game for more money it's a very commonly accepted practice nowadays what's crazy though is that paid expansions have not only become common enough to be accepted but expected and this leads to one of the first problems where this expectation for dlc has set a precedent for the games industry one where they'll plan out expansions for a game before it's even released and so we don't know if that expansion was originally intended to be part of the game a hot button issue in the 2010s that arose from this was the worry that games were going to release incomplete cutting out parts of the initial release and selling them back to you as dlc especially because at the time there was controversy around on disc dlc where a game would come out with the expansions already on the physical disk or in the initial download and would still ask you to pay to unlock it the dlc was already finished it was part of the game so to put up a paywall is essentially just asking you to pay money to unlock something you already bought though i haven't seen too much of that controversy still around today we do have what might be more damning evidence in the form of dlc bundles where most games now will come out on release with a premium version usually called the deluxe edition or ultimate edition or some other dumb name and these premium versions of the game essentially just promise to have all of the dlc included and can go for well over 100 meaning the full game that you're buying isn't even 60 or 80 dollars anymore it's closer to 120. just the call of duty black ops 3 deluxe edition which came out over seven years ago still costs a hundred and thirty dollars and you can tell a lot of effort went into it because on steam they couldn't even format the text properly the second problem with dlc is that taking away that physical aspect of expansion packs meant that dlc could be split up into smaller and smaller chunks because they didn't have to burn a whole cd to sell it to you and it's here where you have the birth of microtransactions aptly named for the small amount that they charge and oftentimes smaller amount of content they give you a good example of this which isn't the first but rather my favorite is 1997's redneck rampage which had a dlc called the cuss pack that added strong language to the game and it's my favorite because one the price was set at a dollar so the developers could confirm you were over 18 by owning a credit card and two the game was already m rated so i have no idea what strong language they would even add to it or rather i'm scared to ask that because these two look like they're itching to call someone the n-word and where this light-hearted use of micro-transactions is fine by me the fact is we can't have nice things the second that game publishers heard that they could charge money for small amounts of content we began this race to the bottom for developers charging as much as possible for as little content as they could give the most infamous example of this is horse armor for elder scrolls oblivion where on the xbox 360 microsoft added microtransactions to oblivion with one of the possible options for you to buy being armor for your horse and to clarify yes this was 250 for a cosmetic item in a single player game that nobody but you will ever see in a series known on pc for its abundant modding scene where stuff like this gets added for free the internet naturally did what they do best and completely lost their and horse armor was so ridiculed that it became a meme in the video game community to this day a common term for microtransactions that aren't worth the money however while i'll just let this quote from the big man todd howard speak for itself horse armor was one of the most popular dlc packs we've done believe it or not what's funny is we went away from horse armor and the rest of the industry has gone towards horse armor well todd you were half correct because the rest of the industry did move towards horse armor because of its financial success the most common form of in-game transactions now is for cosmetics and skins in games like fortnite overwatch and call of duty where todd got a little bit confused though was the wii went away from horse armor part because one of the most egregious examples of microtransactions in recent memory was bethesda's own fallout 76 the game had an in-game shop with a bunch of totally not horse armor dlc like skins for your armor and weapons and on top of the game being so unfinished i would hesitate to say they even started it you can start to see where a lot of people might be angry at mr howard i know i'm mad at him but it's for an entirely different reason he actually broke into my house and made me buy skyrim on ps5 at gunpoint and i don't even own a ps5 so with the modern advancement of gaming since oblivion you also have the modern advancement of dlc and thus the introduction of live service games it's a topic complicated enough for its own video but it basically boils down to the fact that games used to release then add some dlc and then move on to the next one but now games were released with the intention of the developer to stick to the one game and continually add content to it while this can be great because it means lots of updates to the game that keep things fresh and the online community active it also means nearly limitless microtransactions for infinitely less work than making a new game and you can't even just buy the skins and cosmetic packs on their own in these games no that would be too simple and not profitable enough you need to buy a season pass or a battle pass a season pass is the older method that's kind of been phased out but it essentially means you would buy a pass for the game that would get you all of the future dlc for whatever arbitrary period of time the publisher decides a season is this not only introduces what is essentially an opt-in subscription model but tons of artificial scarcity because once the respective season ends you can't purchase those cosmetics anymore and with the segmentation of those seasons they can also get very very pricey rainbow six siege for example has had six seasons so far each of them having their own characters and cosmetics to unlock and each of them also costing thirty dollars oh and there are still additional cosmetics outside of that season pass for you to buy so don't worry about that you want your gun to be blue that'll be an extra four dollars you though season passes have essentially been replaced in a lot of games with battle passes which is very similar except every season of the game will have its own progression system where every five or so levels that you earn by playing the game will get you a free item or skin and then if you buy the battle pass you earn a separate set of levels with their own items and skins that you can unlock until the end of the season now you might be saying but that just sounds like a season pass with more work involved and yeah instead of getting all of the skins up front that you bought by buying the pass you now have to play every day to grind to the max level to earn all of the content you paid for but don't worry because you can pay more money for a premium battle pass that automatically gives you free levels in the progression system and we're still not even into the scummy parts of video game monetization yet these are the good ones because again these are all cosmetic and you can just play most of these games for free without any disadvantage besides having a nine year old call you the f slur for using a default skin and of course i should mention that plenty of live service games and even regular games have plenty of free dlc and updates like how the witcher 3 added a bunch of free dlc that you could just download for free and overwatch put out like a dozen free playable characters and a strategy as old-fashioned as their company's treatment of women so to talk about virtual currency we have to go back to the history of microtransactions since in-game currency is by far the most popular kind and where expansion packs came from tabletop rpgs and card games this form of monetization actually came from arcades arcade machines already monetized by having you put in quarters to get a certain amount of lives in the game but double dragon 3 in 1990 actually added an in-game store where you could buy health power-ups items and even characters with those same quarters and with arcade machines being replaced by home consoles and pcs this money making method had to be replaced as well you see sticking a quarter into an arcade machine is pretty easy you don't have to think about it but to put your credit card number into an online store to buy an in-game item that's a lot more work so to solve this problem in 1997 one matt mihaly invented the first virtual currency as well as the first virtual economy for the game aka dreams of divine lands akea actually ran as a free-to-play game where you could download and launch the game without spending a dime which was an incredibly bold move since most mmos at the time used a monthly subscription model imagine it kind of like netflix with infinitely less potential for sex so to make up the lost revenue from subscriptions aka actually had an in-game option where you could sell your items to other players for virtual currency and while that currency was free and could only be obtained by playing the game there were some items which required a second premium currency that you could only buy with real money also fun fact matt mahali wrote a blog post on the intrinsic value of bitcoin in 2013 because a course he did but anyways the important aspect of matt's work for this video is that if you've played a game in the last five years you've probably encountered one that uses his business model because since 1997 it's been adopted by pretty much all of them yeah when i was talking about buying fortnite skins earlier you don't just buy them with real money you buy them with v-bucks same with fallout 76 which used atom points or league of legends which uses riot points or even call of duty which uses cp wait it's not really called cp is it well never mind that these virtual currencies are an incredibly shady tactic because like quarters in an arcade machine they obscure just how much real money you're spending instead of a skin costing real money it now costs 900 v bucks or 1200 child predator tokens and the micro and micro transaction means that a lot of these currencies are priced in four or five dollar increments sometimes even as low as one dollar if it's a mobile game so of course it's tempting to just spend five bucks on a fake currency to get a cool skin but of course if a skin is worth 900 points you're always going to be forced to buy them in quantities that add up to a thousand and so then you have a hundred left over and you've already bought some currency so some more couldn't hurt and uh-oh now you're a hundred dollars in credit card debt and the fbi's knocking on your door because you google search where to find cp online for free and the skins market is again one of the tamer ones they don't change the way the game plays or give you any advantage besides an anime wifo and your gun and call of duty giving you a higher chance of never feeling the touch of a woman but not all games are like this not all of them restrain themselves to just cosmetics most aaa titles have some self-control usually due to the backlash against the games that have gone too far but some just couldn't help themselves so pay to win games are pretty self-explanatory from their name though it is important to mention that with the stigma around the name pay to win there have been lots of sneaky rebrands games have had such as freemium games oh it's a free game but you can pay if you want a premium experience yeah sure man and subway is health food right in any case all of these slick rebrand genres under the pay-to-win umbrella are all games you can usually play for free but have heavy micro transactions that affect gameplay in some way most of these games will give you an edge over other players the more that you spend and some games will even make it nearly impossible to win without spending if you need any examples of this just go to the app store on your phone and look at literally any game because the mobile game market is absolutely saturated with pay to win mechanics i mean just look at that gaming revenue graph i showed at the beginning of this video because mobile games account for half of all revenue generated by games and that is all from microtransactions just pokemon go which is a free to play game that offers micro transactions has made over 7 billion and pokemon go's monetization is pretty tame compared to most mobile games it just offers some consumables for money candy crush for example will let you pay for more lives or items to make the level easier and with the rng in the game some levels will be next to impossible to do without these items clash of clans has you building up your little base and upgrading any of the structures in it will take anywhere from a couple of minutes to several days to complete unless you spend on crystals that can speed things up dungeon keeper a mobile remake of a 90s classic had day-long wait times for building as well as timers on nearly every action in the game and the way the game tries to help you overcome these obstacles is by having literal satan try to sell you microtransactions i mean at least they're honest and so people that are invested in these games and happen to have disposable income can pay hundreds or thousands of dollars to unlock everything quicker or just play more of the game and this gives them an insane advantage over non-paying players even in games where the main focus is online competition the type of people who spend ridiculous amounts of money are so common that they're referred to as wales and even acknowledged by game publishers as a major part of their revenue stream but mobile games like these have long been considered the cesspool of gaming and a big reason why a lot of people don't even acknowledge mobile games as real games it's still shitty that they do this but these games are shitty to begin with they have no depth they're free to download and they're pretty transparently just trying to empty your wallet also a lot of them will just play ads in the middle of the game which is kind of disgusting i mean who would play ads just in the middle of some free content hoping to make a quick buck so while consumers as a whole have just kind of given up on the mobile game market entirely where a lot of controversy still is is in egregious micro transactions or pay to win mechanics coming to already full priced games aaa titles that advertise themselves as fair and fun to play and then just add in shitty mobile game mechanics just two months ago gran turismo 7 released and along with getting great reviews from critics for its amazing graphics and innovative ability to let you drive a car it also got review bombed into oblivion for being blatantly paid a win you see the game is a racing game and one where usually the better your car is the better you'll do and most of the cars in the game cost in-game credits to buy ranging anywhere from 10 000 to 20 million so to be able to drive the fastest car you'll need to grind through possibly hundreds of races just to get it but a player with a fat wallet can just buy credits two million of them costing twenty dollars meaning to get the best car in the game without playing it like a full-time job you'll need to pay two hundred dollars just to get a digital porsche and this is on top of the seventy dollars you already paid to buy the game which is an american of course for any canadians watching that translates to about 60 boxes of craft dinner in battlefront 2 the whole game's selling point was being a hero shooter where you take kids in battlefront 2 the game's whole selling point was being a hero shooter where you play as different characters in the star wars universe and yet the series most iconic characters were all locked behind in-game currency people ran the numbers and found out that to unlock a single character without paying you would have to grind for 40 hours just for that one character and you'd have to do that for every character in the game for a total of over 4 thousand hours or you could just buy them all for like 2 grand in response to this a fan made a post on reddit asking why they paid 80 dollars in the game and still couldn't play as darth vader and ea actually responded with a well-written and informative comment that said the intent is to provide players with a sense of pride and accomplishment for unlocking different heroes and the redditors in that thread immediately understood where ea was coming from and everyone lived happily ever after just kidding the comment received over 600 000 downvotes which is still to this day in the guinness book of world records for the most downvoted comment on all of reddit did i mention that ea was the same company that made the game where satan himself is asking you for money and there are a bunch of other great examples of full-priced games that have just scammed their customers with pay-to-win mechanics nba 2k18 for example added one of the worst virtual currency systems in gaming with it costing over 20 dollars to upgrade a single member of your team to a playable level the newest ghost recon game briefly added the ability to straight up buy experience points from the in-game shop before they sneakily removed it there are tons more examples of this and i'm sure many of you watching at home can comment ones i didn't even think of and you might think that this is the worst of it just blatant pay to win mechanics and aaa games that can have you spending thousands nope not even close because we haven't even covered the worst one of them all loot boxes are far and away the worst money making method in gaming and might honestly be my least favorite money-making method in general somewhere in between selling drugs to children and mob protection money before recording this video i did a poll on my channel asking what everyone's least favorite monetization model in gaming was and loot boxes won by over half people despise them and for good reason loot boxes are a form of microtransaction where instead of buying in-game items or skins directly they are instead all randomized and put into boxes that you can buy for in-game currency or real money these came from loot tables and rpgs where at the end of a dungeon or level you would open a treasure chest with some amount of randomly generated items inside except now you can buy as many treasure chests as you want as long as you cough up some dough with loot boxes instead of just buying shitty gold horse armor directly you'd now have to buy a loot box with a five percent chance of dropping that armor and the other 95 filled with useless items or stickers well you must be thinking how is that any different from just gambling with less regulations and i'm glad you asked games like overwatch or rainbow six or call of duty all use loot boxes as a way to get in-game cosmetic items and most of them allow you to get those items by just playing you play a couple matches you get a loot box the first hit's free but after that it might cost you everyone's favorite battlefront 2 even utilized loot boxes for a lot of their in-game cosmetics though they also took the evil route and put upgrade items and gameplay affecting stuff in there too because of course they did and even single player games like middle-earth shadow of war just couldn't help but get in on the action shadow of war being built on this premise that there was this nemesis system where you would build rivalries and develop relationships with all of the orc npcs in the game and what's this you can just pay to get orcs with better stats and loot boxes effectively destroying the progression of the game if you didn't pay enough wow fantastic i love being scammed though the worst offenders by far are games like fifa fifa in particular had an ultimate team mode where you would get random players with varying stats from loot boxes who would be the only players you could use in online matches this effectively ties your in-game ability directly to how well you can gamble and of course gives players who spend more money on loot boxes a direct advantage with just better players this is just straight up pay to win mechanics with added gambling and there are stories of people spending thousands of dollars on fifa alone and do you want to guess who publishes the fifa games i'll give you a hint their initial stand for electronic arts it's almost like there's a pattern here and apparently the uk and netherlands government saw this pattern too because they actually stepped in in soudier for their use of loot boxes in battlefront 2 and fifa on the premise of them being illegal gambling during the lawsuit for battlefront 2 in particular ea made the bold claim that loot boxes were not in fact gambling at all but rather surprise mechanics and they went on to call them quote quite ethical and fun i don't think i need to explain to you how funny that is considering it sounds like dialogue from a georgia orwell novel though while these lawsuits didn't even put a dent in the 1.85 billion dollars that ea makes on their live service games every year it did lead to some regulations in some countries australia and germany for example have added in-game purchases to their video game rating system china passed a law that made it mandatory for loot boxes to tell you the items inside as well as the odds of getting them and put a daily limit on the amount that you can buy the netherlands and belgium have straight up banned loot boxes on a federal level on the premise that they are indeed illegal and many places like the us and uk have had debates on whether they should regulate or outright ban games with loot boxes in them but sadly in most countries they are still able to be sold and are mostly unregulated because a politician young enough to know what video games are is even rarer than winning something from a loot box loot boxes in the majority of the world have no regulations on telling you the odds of getting an item or even what items are in the loot box these are in games primarily sold to children and are the biggest cash cow for a lot of these companies they are despicable and i haven't even started talking about so you might be thinking to yourself loot boxes are terrible and predatory but what if they were somehow worse and let you collect photos of anime girls oh you weren't thinking that well let's talk about gotcha anyway gotcha short for gachapon is a term derived from the sound that capsule toy dispensers in japan make capsule toy dispensers being little vending machines that you can put a coin into crank a wheel and get some random toy usually part of a collectible set and just like expansion packs and microtransactions this form of monetization moved away from the physical and into the digital with the advent of video games becoming a form of loot box where players could pull a virtual slot machine to win in-game prizes and this mechanic was so popular that it invented an entire genre called gotcha game where the game's main mechanic revolved around its gotcha system sure the game might have some gameplay involved but in reality these are just slot machines with games slapped on them to separate themselves legally and of course most of them feature anime girls of questionable intent like a maid who calls you master or school girls who also just happen to be militia fighters or this i can't even show most of that since i want this video to be monetized but that jpeg alone could cost you over 300 dollars of in-game currency to try and win with no guarantee that you even will and the game it's from is considered one of the most generous in the genre games like battlefront 2 wish they could pull off the that gotcha games do you've got low drop rates unknown probabilities and a list of complex rules that are meant to confuse you in fact here is a list of all of the types of gotcha that wikipedia has listed i'm not even going to try to explain them all because this video is long enough already and of course every item you pull in a gacha game directly affects gameplay most of them are playable characters with different tiers of quality and the rest are items that directly affect your gameplay performance but gotcha games are not just pay to win literally the only way that you can get any characters or items in these games is by pulling them you cannot earn them through gameplay you cannot buy them outright even with premium currency the gambling mechanic is the only way again this is just a slot machine with a game attached the game attached might be pretty good like in the case of gench and impact but it just exists to serve the gotcha most mobile gotcha games like azure lane even have an autoplay feature which plays the game for you you literally don't have to think about anything but gambling and when most characters in gentian impact alone which isn't even the worst offender have a 0.6 chance of being pulled it's no wonder people spend thousands of dollars just to unlock a character they want to play gotcha games are loot boxes cranked up to a thousand you can spend hundreds of dollars in these games and still be considered a low spender in the community they are the worst of the worst and completely irredeemable to me i mean there's a gotcha game focus subreddit i visited while researching this video and on top of being one of the saddest places i've ever seen on the internet and that's saying something one of their top voted posts was this i think this perfectly sums up my thoughts don't do gotcha kids not even once and that should be nearly every monetization model in gaming i hope i've done an adequate job explaining where most of them came from and why most of them have massive problems games are already more expensive than ever costing over a hundred dollars if you want a full aaa title with all of its pre-planned expansions on top of that most games will have hundreds if not thousands of dollars for various micro transactions for cosmetics the nicer ones might let you earn all of them in-game but most of them will have you buying some form of battle pass or virtual currency to unlock them all and the scummiest of these games will force you into paying to avoid various obstacles and arbitrary time limits or make you buy premium gear and currency to have a chance at winning and that's not even talking about the infinite money sync that is loot boxes and gotcha which just add unregulated gambling to games targeted at kids and people vulnerable to gambling addictions hooking them in and preying on them like vultures the truth is the gaming industry makes more money than they know what to do with and even if you want to support developers and their continuous projects with things like dlc that might not even happen just ea who if i need remind you published three of the worst games i talked about in this video has shut down 14 studios on the basis of them not being profitable enough most fans of dead space myself included remember dead space 3 coming out with randomized loot and crafting items you could buy against visceral game's wishes just for the studio to be shut down immediately after and the same happened to the original developers of battlefront with a layoff of over 200 people before ea rebooted the franchise into the monstrosity of pay to win mechanics that it is today so while i'm all for supporting game developers the big game companies do not use your money for anything other than more opportunities to take money from you it's really just the small studios that are going to put that money to use but they're also not the ones adding 50 different ways to empty your wallet hollow knight and stardew valley are both less than twenty dollars and they give you the entire game no loot boxes or micro transactions or anything so this should go without saying if you've watched the entire video up until this point but don't buy games from companies like ea don't buy 130 deluxe editions or 20 battle passes don't spend a dime on terrible loot boxes and gotcha instead spend that money on me lextorious subscribe and join my channel membership for only one dollar a month and spend your hard earned money on loot boxes and gotcha need to be regulated on a government level or outright band microtransactions need to be removed from games marketed towards children pre-planned dlc needs to be cut back and game prices need to come down from their ridiculous level a decade ago we laughed at horse armor just for it to be everywhere today and now we're laughing at 200 cars and thousands of dollars in microtransactions what do you think will happen 10 years from now and hey you might ask what if i still want to play some of these games but i don't want to support the developers financially and well that's that's a real tough question you know that's a real that's a real thinker that's a real that's a tough one i don't even know what to tell you there oh man if only there was a way right if only there was a way well i'll see you next time

Channel: Lextorias

Views: 50,428

Keywords: lextorias, the dark history of video game monetization, the history of video game monetization, the dark history of microtransactions, the dark history of dlc, the dark history of loot boxes, the problem with video game monetization, the dark history of gacha, the problem with loot boxes, the problem with dlc, the problem with microtransactions, how video games make money, the dark ways video games make money, how video games really make money

Id: hPSHwc9H43Y

Length: 30min 15sec (1815 seconds)

Published: Thu May 19 2022