Monetising Video Games - Letter to Edge

19th June 2013

Hi Edge Team,

I hope you are all well and having a good 2013 so far. I was reading Leigh Alexander’s piece in Edge 253, May 2013 on games staying relevant in the changing digital landscape and I found her nostalgic musings on how games used to be both interesting and similar to my own. Her article did spark a thought in my head, mainly around how monetised games are now compared to when I grew up. You have probably had correspondence on this before, but I wanted to share my own take on the just how expensive it is becoming to access games and suggest that the big players in the gaming market aren’t just getting our hard earned cash in exchange for games, but we’re paying them to take much more than that.

Firstly, one of the biggest leaps in monetising the video game industry has undoubtedly been down to the internet. Whereas before we would have had to pay once for a game, now there are additional charges levied on many games. For example, Fifa 13, brand new, will have cost a minimum of £40, but to play it online on X-Box Live, you also have to take out an XBL subscription, my own costing £60 per year, just to play it with my friends and have access to all its features. Other games of course offer DLC add-ons, typically at a cost of 1/3 or ¼ of the price of a full game.

Of course, development time went into these titles and people need to be rewarded for their efforts, but in any other industry, this is just cross selling – ensuring you get extra money out of the customer you already have secured. DLC packages are a great way to reach people who have already spent money on your game and are highly likely to spend more. When you layer in the other costs, say for a decent broadband connection, the console itself, a HD TV, your basic set up costs for gaming are at in excess of £500 plus several subscriptions that need to be charged to a bank account. What I am getting at here is that while we do have unparalleled access to a wider variety of games than ever before, its also become much easier to monetise what would have been part and parcel to a standard game package in the past.

My point isn’t to criticise companies for doing this per se, but when you are talking about having to spend at least £500 to get the basics right for 1 console plus more than likely another £200 - £300 per year to have access to a decent selection of games on 1 console and play them online, you’re probably talking close to a £1k per year commitment on what is essentially entertainment. Oh, and if you’re like me and just have to play both Metal Gear Solid and Gearts of War, add another couple of hundred pounds on to that for the 2nd console. No wonder the videogame industry has grown as big as it has, but this has priced many people out of enjoying games – my younger brother for example can just about afford 2nd hand PS3 games, some of which he cant even play online because they ship with an “online pass” – another way to nudge people towards purchasing full price games. Oh and you could even have additional download fee’s as game downloads tend to be big and not everyone has access to unlimited broadband.

There is however a flip side to this – the industry which I work in relies heavily on customer data to make decisions. In fact, so much so, that we often pay significant amounts of money to ensure that we have access to up to date customer data (and, in the census’s case, out of date data). However, each and every time we connect to XBL or PSN, we are sharing our user data with Sony and Microsoft. No problem, except we are paying them for the privilege of this. Sure, they are providing us as service, but what are the main components of the service? Access to more game downloads that we can pay for and a great platform for them to send use tailored advertisements that we are more likely to like, and therefore spend more money on. In my business, we pay money for this information, in gaming, we are paying MS and Sony subscription fee’s that give them unparalleled access to our behaviours (what we play, how long we play it, what we buy, when we buy it) and their sales targeting and customer segmentation will only improve as their data set gets richer and richer.

By this point you could be asking, so what? Well, call me a cynic, but with the announce of two new next gen consoles over the last couple of weeks, both of which are emphasising online connectivity and social media integration, monetising the industry will only get more and more prevalent. In fact, I wouldn’t be surprised if we soon saw retail games shipping essentially 50% unlocked where you then had to pay a fee per chapter / racing track / weapon if you wanted to unlock it, and some games are already doing this.

Finally, just to turn this on its head, I don’t think this is necessarily a bad thing – in fact, my favourite gaming experience in the last year actually leveraged both of the above points on monetising the game and data collection perfectly and created a truly phenomenal game. Telltales “The Walking Dead” was a truly great game that had a chapter structure where I was more than happy to pay £15 for the full game (all 5 chapters). The game then shared feedback of how my decision data played out against other game players which greatly enriched my overall experience as I was able to see where my own moral compass played out against the wider community and buy bite sized packages in an really affordable way.

So there are my musings, I guess the challenge that I really have is where next for the next gen consoles – personally when I buy a game I expect it all to be there and not have to pay extra to download bits that should have been in the game, but equally I am all for greater flexibility of payment and use of data to enrich the gaming experience. My main worry is that the big players will dominate and place the emphasis on ensuring that as much advertising and selling to customers takes place as possible and I fully expect gaming to not only continue to be an expensive (and eventually, somewhat exclsusive) hobbywhere we are continually advertised and sold to. I don’t want my gaming experience to end up like the TV (adverts every 15 – 20 mins) or the cinema (30 mins of adverts before the film) or even football (corporate sponsorship everywhere), but I suspect that as consoles get more and more sophisticated and complex technology it will only get easier and easier to “sell to consumers” rather than deliver great games for games.

Apologies for the length, but I am both excited and fearful for the next gen consoles and I’ve already had to start a savings account to put money aside for a console. It was easier growing up – my dad just bought an amiga and my cousin sent me his 2nd hand games for free once he finished with them, those were the days.