How does the design of games change with digital distribution?
How selling video games online started and why cosmetic DLC isn’t as ethical as people think.
This is part two of my ongoing series “Monetization and Ethics of Video Games”. In the first part of this series, we looked at how selling video games started and how retail stores shaped the way video games used to work. Continuing our journey we will fast forward a few years until the age of online distribution. If you read the last part and are familiar with the structure of this series you can skip ahead to “Selling of games in digital storefronts”.
What are my sources?
Over the last few years, I started collecting articles about video game monetization. I already felt like something was off with the industry so whenever some big company did something amoral I saved the article. Over time I — unfortunately — gathered quite the collection. I want to use this collection to research what went wrong over the years. You can find my sources linked within the text.
My structure for writing this series
We will examine different monetization methods that accompanied video games over the years. Each examination will be structured into the following 3 parts:
- Summary of the method with focus on what exactly customers are buying in which way.
- Analysis of how the monetization method changes the design of games and how players interact with it.
- Evaluation of the method in terms of ethics and outlook on the future.
Selling of games in digital storefronts
In the last part, we looked at the pros and cons of selling video games through retail shops. One of the big pros was that video games were almost always in a fixed state upon purchase as broadband internet connections were not a widespread thing. The problem was that because of this video games had a relatively short time frame in which they generated revenue. Publishers had a big interest in prolonging this time frame as video game production is generally asynchronous. To better understand why digital storefronts are such a big advantage for studios we have to look at this production cycle more closely.
Asynchronous production cycle
Broken down into the most basic steps a typical video game production is usually split into the following 3 parts:
- Pre-production
- Production
- Post-production
The pre-production is generally about collecting ideas and getting a feeling about what a potential game could be about. It is the stage in which a Game Design Document (GDD) is created, a target audience is defined and the first prototypes are created. This process usually is done by a smaller core part of a larger team. When pre-production is done — or even better, shortly before it is done — the team gets expanded to more members to work on the main part of the project — the production. In the production phase artists, programmers, QA engineers, designers, modelers, writers, audio engineers and many more roles are designated to the project. This is the most expensive part of the project and it can take anywhere from 1 to 5 years. When everything is done and the game released the last phase starts. In the post-production, the team is shrunk to a small core part again. This part of the team might work on bug fixes, quality of life updates or content updates.
At least that is how it is done today. Now imagine the world 20 years ago. There is no widespread internet connection in households. What do you do with all the artists, designers, programmers, etc.? You could try to reassign them to the next project, but in reality this is very difficult to plan. Having people sit around is expensive which is why the strategy of “Hire and Fire” was — and still is — so widespread. For more on the subject I highly recommend the book “Press Reset: Ruin and Recovery in the Video Game Industry” by Jason Schreier.
20 years ago there basically were no post-productions except for expansions and a few games with online functionality. This changed when platforms like Steam and XBox Marketplace were released. Suddenly there was a technology that enabled studios to change the statuses of games post-release easily and very widespread. This way roles like artists, modelers and audio engineers can work on digital expansions when usually their job would have been done already.
Functionalities of digital storefronts
In 2018 83% of all video games purchases were made online. At first glance one might think that the same type of sale that happens in retail stores shifted towards an online format. Upon further inspection we will see that with this shift the type of sales changed drastically.
Most digital storefronts offer a lot more functionality than a simple page to buy games. Almost all big stores offer social functionalities like friend lists, chats, user profiles and competitive statistics like achievements and leader boards. All of these features offer more value for users. At the same time they contribute to driving sales by confronting users with games they might be interested in.
When starting Steam most people do so to start a game or to check out social features. However, the first screen most users are confronted with when they start up the platform is the store page. Through social features, users are always made aware when digital friends purchased or played new games. In combination, these factors lead to users being confronted with sale offers and potential purchases exponentially more often than with retail sales. To be confronted with promotions of retail sales users have to be in proximity to retail stores. With digital storefronts, this is a possibility whenever these hubs for playing games are being used.
Another issue is that digital purchasing does not work how most people think. When buying a product on Steam users do not complete a contract of sale. Instead, they pay for the indefinite right to use a subscription model product. In daily use this does not make a big difference. However, should Valve decide one day to no longer offer the services of Steam or should they go bankrupt users would not have any right to keep their games?
DLC and Microtransactions
While the concept of expansions existed long before digital storefronts the spread of digital distribution changed the scope these expansions had. Before digital distribution, added content was almost exclusively offered through physical expansions on storage mediums. For this reason, the scope of an expansion had to be big enough to justify the typical price tag of $15–$30.
With digital storefronts, this was no longer the case and the concept of DLC slowly caught on. But how did it start?
While DLC was an accepted model in Free-To-Play (F2P) games — especially on mobile — for a long time it did not make it’s successful debut in AAA games. This changed in 2006 when Bethesda offered a purely cosmetic item in The Elder Scrolls IV: Oblivion. For the price of $2.50 users could buy a horse armor that had no impact on gameplay. It was generally not well received but it laid the foundation for Microtransaction being accepted in AAA games today.
It no longer is an exception to find Microtransactions of $99.99 in games like Middle-Earth: Shadow of War (see picture above).
Every now and then the protests of users lead to these monetization methods to be removed. However often times these removals happen long after many whales already used these methods. This way many publishers can exploit the monetization until they gained x% of the expected lifetime revenue of the method to then profit from the positive publicity the removal earns them.
The problem with DLC in multiplayer games
There generally are two types of DLC in multiplayer games. Those which offer a competitive advantage and those that are purely cosmetic. While the first type is generally frowned upon for obvious reasons the second type usually is accepted by users as it is only visuals and offers no advantage over your opponents. While these arguments are valid this does not mean that this type of DLC are without ethical concerns.
The sale of DLC (this concerns both types of DLC) can be an incentive for studios to adapt their matchmaking algorithms to boost sales. Matchmaking algorithms are the processes that determine which players face which other players in multiplayer games. Usually, a matchmaking algorithm tries to match players of equal skill to ensure close and suspenseful games.
A matchmaking algorithm can be changed in a way that players who recently bought DLC face players that are calculated to be likely to also buy mentioned DLC but haven’t done so yet. By facing each other the likelihood of players who have not yet bought the DLC to do so after the game can increase by triggering an envious reaction in them.
The picture above is a patent by Activision Blizzard. By adapting their matchmaking algorithms they can trigger players susceptible to in effect purchases by matching them to players using the DLC they would like to own. Measuring which items and DLC players like can easily be calculated by tracking which items they look at in the digital stores. Unfortunately, this is not an exception. Electronic Arts is suspected to use a similar algorithm in their FIFA series. 3 plaintiffs are in the process of suing EA for their fixed matchmaking.
Conclusion
The convenience of digital storefronts are great and I personally love buying games online. However users should be made aware of the tricks publishers use to drive their sales. Social features are great, but customers have be careful not to let them influence themselves to purchases they might later regret.
In the case of DLC and microtransactions, the evaluation is more difficult. They can enable studios to prolong their game’s lives extensively. As long as DLC and microtransactions offer value to players I am all for it.
However, we can observe predatory practices creep into AAA games more and more often. And while there often is user outcry most of the time a normalization still is taking place. It is an open secret how FIFA’s matchmaking algorithms are biased towards people who have just bought Ultimate Packs. As of writing this article FIFA 22 nevertheless still leads the global top sellers on Steam. I wish we as a community would be more vocal about amoral monetization methods. Until then we can only hope for more regulations like in the case of Loot-Boxes.
Final Words
First of all — thank you very much for reading. My last article was received better than I hoped to imagine, so I am very excited to release part two.
In the next part we will take a look into Loot-Boxes and Battle Passes. If you enjoy my articles and would like to read more content like this feel free to follow me here or on LinkedIn.
