Difference between revisions of "Video Game Economics"
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====Gambling or Gaming==== | ====Gambling or Gaming==== | ||
Another debate that has gathered significant attention over the last 10 years is the loot box system in video games. Loot boxes are items that can be purchased for money that grant users a random item. These items typically are categorized into different rarities, with the most rare items having drop chances of under 1%. While statistics about these randomized loot boxes are published, this system has been directly linked to addiction and severe debt. Like a slot machine, you pay money and hope to gain a grand prize, but the majority of the time, you'll end up with a worthless item. The entire system is essentially gambling, only being classified otherwise because of the fact that these items are technically classified as objects that are "not money or money's worth". In 2018 alone, the U.S. spent over $30 billion on these loot boxes, and that number is only increasing. | Another debate that has gathered significant attention over the last 10 years is the loot box system in video games. Loot boxes are items that can be purchased for money that grant users a random item. These items typically are categorized into different rarities, with the most rare items having drop chances of under 1%. While statistics about these randomized loot boxes are published, this system has been directly linked to addiction and severe debt. Like a slot machine, you pay money and hope to gain a grand prize, but the majority of the time, you'll end up with a worthless item. The entire system is essentially gambling, only being classified otherwise because of the fact that these items are technically classified as objects that are "not money or money's worth". In 2018 alone, the U.S. spent over $30 billion on these loot boxes, and that number is only increasing. | ||
| + | |||
| + | ==Industry Examples== | ||
| + | |||
| + | ===EA and Starwars Battlefront=== | ||
| + | One of the most popular and well-known cases of video game economic controversy and regulation was related to Electronic Arts (EA) and one of their video games, Starwars Battlefront II. The base game was sold for $80, which is already significantly over market average for the cost of a game. On top of the high price tag, the game included several in-game upgrades which could be obtained by earning "crystals" via multiplayer combat, or by purchasing loot boxes. <ref>“Video Game Industry Responds to Regulation of Pay-to-Win Microtransactions and Loot Boxes.” JD Supra, https://www.jdsupra.com/legalnews/video-game-industry-responds-to-87298/. </ref>Shortly after the game's initial release, players complained that the crystal system was set up in a way that forced players to purchase loot boxes if they realistically wanted to obtain these upgrades. By limiting the amount of crystals players could earn via multiplayer combat, EA received unprecedented backlash since the loot boxes awarded players many more crystals that the actual game itself. | ||
==References== | ==References== | ||
Karlsen, F. (2022). Balancing Ethics, Art and Economics: A Qualitative Analysis of Game Designer Perspectives on Monetisation. Games and Culture, 17(4), 639–656. https://doi.org/10.1177/15554120211049579 | Karlsen, F. (2022). Balancing Ethics, Art and Economics: A Qualitative Analysis of Game Designer Perspectives on Monetisation. Games and Culture, 17(4), 639–656. https://doi.org/10.1177/15554120211049579 | ||
Revision as of 23:43, 10 February 2023
Contents
Introduction
The modern day video game industry is one of the most profitable and fast-growing industries in the world. With over $180 billion dollars of generated revenue in 2021 and 3 billion players, video games are cementing themselves as a staple among recreational activities, and with the help of the recent covid-19 pandemic, the numbers only continue to grow. Despite the seemingly overwhelming amount of positives that have come from this new industry, however, there are ethical issues that come with this success. This article will be focusing on the ethical economic dilemmas that video game companies face when marketing and designing their products.
History
Video games emerged in the 1970s with the introduction of Atari. Games such as Pong and Space Invaders swept the world, generating over $2 billion in revenue in the first 10 years, primarily through arcade consoles in malls, restaurants, and storefronts. From 1978-1981, revenue increased 18 fold, sky rocketing from around $50 million annually to $900 million, quickly surpassing pop music and Hollywood combined.
With the introduction of the Nintendo Entertainment System in the 1980s, video games continued to boom - a trend that continued through the 1990s when playstation was invented. Revenue only increased, and at the end of the century, video games were generating over $30 billion annually. The 1990s also saw huge changes in graphics. 3D polygon graphics became the standard for all games, and the introduction of the internet allowed for multiplayer and competitive modes to exist.
The 2000s served as the era of smart phone gaming with the introduction of smartphones. iOS and Android devices became popular modes of gaming, boosting the industry's revenue even more. Mobile gaming continued into the 2010s, surpassing both console revenue and personal computing gaming. With a market size of several billions of dollars, eSports (competitive gaming) was birthed, only increasing the popularity of video games.
The 2020s have seen the peak of the industry, with an average annual revenue of over $175 billion. The covid-19 pandemic resulted in a 20% market growth from 2019-2020, and even though the pandemic caused several issues such as the global semiconductor chip shortage, the video game industry has experienced net positives from covid.
Ethical Concerns
Although video games provide endless hours of joy and excitement, there is a dark side to the billions of dollars the industry generates. Ever since the industry was created, there have been countless ethical debates surrounding the subtopics below. From addictive engineering to targeted advertising, the video game industry has been under constant accusation of unethical practices.
Audience & Design
The first component of any ethical debate about video game economics is the audience these companies sell and target their products towards. It is no secret that gaming companies design their games to be extremely addictive. Through systems like level-based rewards and loyalty programs, video games are specifically engineered to keep their players returning. Similar to other addictions, video games cause an instant release of dopamine in the brain - the chemical in the brain that "makes you feel good".[3] Since there are no limits on when you can play, video games become a dangerous source of this chemical. In a study done by the mayo clinic, video game addiction has similar effects as tobacco, alcohol, or drug addiction. Video game addiction can damage your health, both mentally and physically, as well as relationships. It has been linked to other symptoms, such as insomnia, depression, loss of social skills, anxiety, and behavioral problems. These symptoms exist because the brain processes virtual scenarios as if they were real. For example, if a game depicts a violent scene, the body of the gamer will react accordingly. [4] This is where the argument stems from. If it is known that video games cause these negative effects in users, why do game companies continue to try and keep players coming back? Don't they have a responsibility to manage their product in a way that is not harmful to society? The answer is not as simple as it seems. While it's true that these games have negative side effects, these companies are ultimately selling a product so it is hard to fault them for trying to maximize consumer engagement and retention. Additionally, almost all modern video games come with warnings about excess screen time and setting daily limits. While none of these are strictly enforced, the companies do provide information about potential harm that these products can cause as well as ways to mitigate this harm.
Microtransactions
The large majority of video games on the market are free, meaning there is no upfront cost to play the game. However, nearly all of these "free" games offer micro transactions, or in-game purchases for virtual goods such as cosmetic upgrades, extra game currency, or downloadable content (DLC). The ethical debate here is that most of these free to play games that offer these transactions make it almost impossible to play or reach a certain level without an in-game purchase. Games will commonly give heavy advantages to players who have purchased these micro transactions, creating an imbalance between the gamers who purchase these, and those who do not. This is especially dangerous in mobile gaming, as a vast majority of mobile gamers are children. This is an issue because children are not equipped with the same knowledge as adults, and cannot clearly understand what is going on. In a study done by the UK Royal Society for Public Health, it was estimated that 1 in 10 children go into debt over these micro transactions. [5] When surveyed about this behavior, the most common answer that children provided was that they wanted to impress their friends, which is exactly what video game companies design these upgrades for.
Gambling or Gaming
Another debate that has gathered significant attention over the last 10 years is the loot box system in video games. Loot boxes are items that can be purchased for money that grant users a random item. These items typically are categorized into different rarities, with the most rare items having drop chances of under 1%. While statistics about these randomized loot boxes are published, this system has been directly linked to addiction and severe debt. Like a slot machine, you pay money and hope to gain a grand prize, but the majority of the time, you'll end up with a worthless item. The entire system is essentially gambling, only being classified otherwise because of the fact that these items are technically classified as objects that are "not money or money's worth". In 2018 alone, the U.S. spent over $30 billion on these loot boxes, and that number is only increasing.
Industry Examples
EA and Starwars Battlefront
One of the most popular and well-known cases of video game economic controversy and regulation was related to Electronic Arts (EA) and one of their video games, Starwars Battlefront II. The base game was sold for $80, which is already significantly over market average for the cost of a game. On top of the high price tag, the game included several in-game upgrades which could be obtained by earning "crystals" via multiplayer combat, or by purchasing loot boxes. [6]Shortly after the game's initial release, players complained that the crystal system was set up in a way that forced players to purchase loot boxes if they realistically wanted to obtain these upgrades. By limiting the amount of crystals players could earn via multiplayer combat, EA received unprecedented backlash since the loot boxes awarded players many more crystals that the actual game itself.
References
Karlsen, F. (2022). Balancing Ethics, Art and Economics: A Qualitative Analysis of Game Designer Perspectives on Monetisation. Games and Culture, 17(4), 639–656. https://doi.org/10.1177/15554120211049579- ↑ “Video Game Industry.” Wikipedia, Wikimedia Foundation, 30 Jan. 2023, https://en.wikipedia.org/wiki/Video_game_industry.
- ↑ “Video Game Industry.” Wikipedia, Wikimedia Foundation, 21 Jan. 2023, https://en.wikipedia.org/wiki/Video_game_industry.
- ↑ “How Do Video Games Affect Brain Development in Children and Teens?” Brain and Life Magazine - Trusted by Neurologists, https://www.brainandlife.org/articles/how-do-video-games-affect-the-developing-brains-of-children.
- ↑ Edward Luker, L.P.C. “Video Games and Screen Addiction.” Mayo Clinic Health System, Mayo Clinic Health System, 25 Aug. 2022, https://www.mayoclinichealthsystem.org/hometown-health/speaking-of-health/are-video-games-and-screens-another-addiction.
- ↑ Rsph. “#LidOnLoots.” RSPH, https://www.rsph.org.uk/our-work/campaigns/lid-on-loots.html.
- ↑ “Video Game Industry Responds to Regulation of Pay-to-Win Microtransactions and Loot Boxes.” JD Supra, https://www.jdsupra.com/legalnews/video-game-industry-responds-to-87298/.
