Video game monetization
Retail purchasing has previously made up the bulk of game-related transactions, but it has been on the decline since the 2010s due to the rise of digital distribution and mobile gaming.
These aspects may range among new playable contents, in-game currencies, cosmetic options, and otherwise unavailable or restricted gameplay advantages.
Developers can opt to reward premium currency for playing the game, such as the ability to recoup the cost of a Fortnite battle pass by completing it, and can discount in-game store items.
A related concept is the battle pass which provides access to a number of in-game cosmetics and other items for players as they either complete challenges for it or gain experience within the game.
Most of the times,[1] The publisher can get a percentage from every transactions, like Steam community market,[14] or from a difference between buying and selling price of the in-game currency, like World of Warcraft.
[15] However, player trading can lead to a gray market where through third-party websites, these virtual items can be bought and sold with real-world currency, which, for games that use gambling-like mechanisms, can violate regional laws.
[16] Related to player trading is the incorporation of blockchain technology, which purports to provide an encrypted record of ownership and transfer for a digital item.
These models are based on where the publisher and developer anticipates the bulk of the revenue to be acquires from upfront purchases of the game's title.
[31] A subsequent Ninth Circuit case, MDY Industries, LLC v. Blizzard Entertainment, Inc., affirmed the Vernor decision to video games.
[32] The video games industry continues to grow as it is expected to generate $138 billion U.S. dollars in 2018, showing a 13.3% increase in revenue from last year.
[33] In 2014, digital download model made up 52% of all game sales and overtook retail purchase, the long-time industry standard.
As a result, a game tends to get extended support and more contents post-launch so that it can be monetized via other methods in addition to retails and digital downloads, allowing the consumers to make the most out of their purchase.
Games that pull in large numbers of players do well thanks to their advertisement model while those that fail to garner wide appeal do not last long on the market.
[44] Games such as 2017's Star Wars Battlefront II have been criticized for gameplay elements that require extensive grinding which can otherwise be bypassed through loot boxes.
[47] The increasing adoption of loot boxes in gaming has led to some viewing the mechanic as a form of online gambling, with many countries revising their laws in response.
However, when America On-Line introduced flat-rate Internet access packages, that gate disappeared, allowing players to play online games indefinitely, which impacted revenue from these titles.
One of the first examples of a massively-multiplayer online game (MMO) was Achaea, Dreams of Divine Lands, a text-based multi-user dungeon (MUD), released in 1997.
[56] In the first decade of the century, the game monetization was affected by the booming of the e-commerce, as well as hardware, software and other information technology developments.
Standardization and the ubiquity of mobile platforms that allowed for easy purchases by customers, brought on initially by the iPhone App Store and followed closely by the Android Marketplace and other competitors, resulted in a wide spread move towards microtransactions and indirect monetization.
The late 1990s saw the emergence of the triple-A industry, video game developed by large studios with multi-million dollar budgets.
While many player expressed outrage at the cost of what was decorative elements in-game, the horse armor pack was one of the top ten expansions that Bethesda sold for the game by 2009.
[62] This approach also helps to insulate publishers from impacts of discounts and sales on digital game redemption keys from third-party sellers by requiring additional purchase of content as part of their services to gamers.
[62] Take-Two Interactive, in an investor call in November 2017, reported that 42% of their revenues were from "recurrent consumer spending" in their latest financial quarter, obtained through the Grand Theft Auto Online component of Grand Theft Auto V, and the "MyCareer" mode of NBA 2K18, both which offer players additional content and activities over time.
[60] Electronic Arts (EA) had developed the idea of "Project Ten Dollar", attaching content to a code packaged with the game for its upcoming titles for that year, Mass Effect 2, Dragon Age: Origins, and Battlefield: Bad Company 2.
[60] However, due to changes in digital rights management for the upcoming eighth generation of video game consoles and player complaints, EA ended its online pass program by 2013, with other publishers following within the next few years.
[60] Simultaneously, the use of season passes to assure access to a large number of downloadable content items that were to be doled out several months after the release of a game become popular.
[60] Publishers were able to gain another retail revenue by selling "deluxe editions" of games that included the season pass as well as other bonus features.
[67] Fortnite had proved a successful model, as while the game is free-to-play, microtransactions to purchase battle passes or to directly buy certain items have brought in hundreds of millions of dollars per month in revenue following their introduction.
[70] Upon the introduction of the seventh generation of consoles in the mid-'00s, publishers started pushing at a US$60 price point for games, corresponding with ongoing economic growth at that time.
[69] This was primarily due to the more advanced technology that the new consoles offer that can run more impressive games but require greater developer resources to commit to supporting those features.
