One thing seems to get lost in the current furore of Loot Crate saturation.
Let’s say that Big-Budget “Triple-A” Video Games are expensive to make. Okay. According to the last research, a publisher makes roughly $33 on each $60 game sale, meaning that a $40 million budget would need to sell 1.212 million units. That doesn’t seem unreasonable – right? Well… it shouldn’t, but it doesn’t take into account additional expenses either – nor the massive push upwards in marketing budgets in recent years. Your average “Big Budget” video game needs to sell between 2 and 5 million units, depending on the expense involved, and even then in business – they need big profit margins to sate shareholders, meaning that breaking even isn’t even a consideration.
Are loot crates and microtransactions the answer? According to the more vocal consumers – apparently not. They’re seeing endings now gated behind huge grinds that encourage additional expenditure (see Shadow of War: Middle Earth), or endings and story conclusions cut off and repackaged as season pass content (see Dead Rising 4). In essence, the consumer is getting shafted on content and the product they buy in order to make additional revenue.
… which is bad, but I think a full-on boycott isn’t the answer either. Publishers have multiple projects in line and hey, some can even go the Konami route and focus on gambling machines in order to make money if that’s all they want. The victims of boycotts will be the studios, who’ll invariably be forced to close if they can’t financially justify their own existence – look at EA, who this week added the scalp of Visceral Entertainment to their long, long, LOOOOOOOOOONG list of scalps (and BioWare, I’d be very aware that your heads are on the chopping block next!). It doesn’t matter to these big publishing houses – they can more easily transition, they can shed studios and projects, they can morph into whatever is necessary at the time. Boycotting won’t solve the situation – it forces the bigger publishers to effectively embrace fewer but more egregious business practices, whilst studios end up in shallow graves.
A healthy market is one that works for all involved and currently, the video game industry – and more specifically, the big-budget sphere – isn’t a healthy place to be.
This is what people tend to forget; this is a co-dependent relationship. We want video games, and these studios and publishers want our money. Unless you have both elements working in tandem, there is no relationship and more specifically, no actual market. In effect, the industry and its over-reach into charging more for the same product, selling it piecemeal, is driving more people out of the market, which in turn means less money and more need to charge for more piecemeal content. It’s a vicious circle; one that, in time, will destroy the industry if its not careful.
Why destroy? Well, consider the implications of if video games with loot crates were classed as “gambling”. First of all, any video game with loot crates would need to be age-restricted to 18+ in the UK or your regional equivalent. It also means that publishers and studios would need a gambling license – which costs money and means following tons of regulations. Then you end up with the problem of selling the thing; it means sellers of said product would ALSO need to be licensed, which means eBay, Amazon, CEX, Gamestop etc. would have to pay up for that or no longer stock said games (some might argue with GAME and GameStop this would be a good thing – I’ll leave that up to you and your conscience). Digital stores too would need to be licensed for this – and so would the online networks that power them, so there would be a ton more pressure on the likes of Sony, Microsoft and Nintendo, and the latter is in the early stages of building a new online system for the Switch. In effect, even the manufacturers might end up not being able to sell them, or even be able to play them without considerable expense and regulation. And for the gamers themselves, you’d need a credit card and likely a credit check before you even got to play the thing you’ve even bought, meaning your $60 investment could end up with you having to trade it in for less than you paid for it, unable to enjoy any of said content.
Does this sound like a great thing to you? It sure doesn’t to me.
This is what I mean by a “healthy relationship” – right now, the games industry has barrelled ahead and the law is threatening to catch up with them, and the end result would be that loot crates and some forms of microtransactions would be extremely limited, if not outright impossible to implement with additional laws and regulations to adhere to. And it doesn’t need to be this way – in fact, the games industry could… I don’t know… look for better ways of making money?
I don’t think people are averse to paying for additional content or extras – hell, Final Fantasy 7 cost $140 million and much of that over the years has been made back in licensing and merchandising, so it’s not impossible. But they want to know what they are getting; currently, there’s no guarantee if you buy a game that you’re even getting a final product. I think people should be more pissed off at Resident Evil 7 in that regard; oh look, Zoe’s conclusion and the continuation of the RE7 story with Chris Redfield, almost a year after the game launched. In effect – if you paid $60 for the product in January, then guess what? You bought an unfinished product. But look, here’s some “free” DLC and other bits of the games story sold back to you at additional cost, or as part of the season pass. How GENEROUS of Capcom!
To head off outside intervention, the games industry needs to realise that at the current rate it is going – such business models will be impossible to push if and/or when laws and regulations arrive to protect consumers. It means it might have to cut back, strip down or refine some of these models. It will radically change their approach to making video games; and more notably, it may have already irreparably damaged consumer relations, with many simply not buying anything with a season pass or loot crate model in them. That trust is gone, and it could take years to even get back to a basic level of trust.
If you thought the last few years of slowing sales was rough – wait until the industry is finished with this stuff. It’ll make the crash of 1983 look like an episode of Peppa Pig.
No-one will dispute that a company effectively wants to make money – that’s a given. I think we often assign too much morality to a business entity at times, we assume they’re our friend and we humanise them when in fact at a base level they are using us. And we, in turn, are using them. It’s a basic, primal co-dependency. They want our money. We want their content. That’s how it should work. Supply and demand.
Of course, when they are seen to be blindly robbing players, or encouraging them to spend up to four times the initial $60 price for stuff, there’s a problem. The industry has been putting off addressing this problem for way too long now and this is perhaps the straw that breaks the camels back as it were. Rather than find a way that works for them AND consumers, more of them have selfishly put their bottom line first, and forgetting that consumers don’t in fact have to buy your crap in the first place. You want peoples money? You have to give them something they want to start with.
But as I said earlier, the flipside is regulation and putting consumers first and foremost and whilst this sounds like an awesome thing – it would mean tons of new rules, regulations and laws in order to protect children, vulnerable adults and others who might damage themselves in the process. The impetus then becomes the industry having to effectively ensure that it monitors all players at all times to make sure that children don’t play their games – and I hate to break it to Activision, but you chaps do realise that will destroy the Call of Duty franchise completely right? No-one under the age of 18 sounds like my idea of heaven to be sure… but it would mean many games end up useless, and Activision and other publishers might even be necessitated to refund purchases of games in that regard. My kid wanted it, I didn’t know, we’ve been here before with in-app purchases so we know how this ends.
If there’s no healthy model or balance to be struck… well, then it’s fair to say that the big-budget sphere has officially come to an undignified end. If there’s no way to please both the creators and the consumers, then there is no future for this model at all – and that would actually also impact hardware in the future. If big-budget games are just completely fiscally non-viable, then what’s the point of pushing into 4K gaming? Why push graphics or processors at that point when the only viable model is the low-to-mid tier gaming scene, which requires considerably less power? Hell, one can argue it would also strangle investment into PC Hardware – why push for more, when no company has any hope of making even a moderate financial return?
If you think that this loot crate fiasco is “overblown”, then you’re not seeing the bigger picture. What happens in the coming months and years will radically inform the industry and the market on just what it can do, and just what it can get away with. The knock-on effects on hardware, studios, manufacturers and more would be challenging to say the least.
All of this because a few big publishers can’t seem to stifle their own greed.
It’s kind of pathetic that they could, ultimately, be the architects of their own destruction…