Game Industry Shifts and Ethical Monetization
How the little fish can navigate the blue ocean before it turns into a red sea
The last two years have seen shifts in a lot of industries, but few have been so momentous as what has been happening in the game industry. This seemingly unending expansion was marked by a staggering $117 billion in acquisition deals in 2021 alone, and 2022 started strong with two of the largest acquisitions of all time (and we’re only halfway through).
This means a lot of things; but today we want to talk about what’s happening with all the proverbial fish involved in all of this. It’s a familiar tale: the game industry is like a big open sea with plenty of species of fish. And, as these stories go, the big fish are used to eating up more and more of the small and medium fish. This gives the big fish even more resources, making it hard for smaller fish to go it alone and make a splash.
These big game companies need to operate businesses at scale in order to deliver value back to their stakeholders, and the result can be very formulaic. Find what works and stick with it; that’s good business, after all. But the issue this causes is that lately, a lot of the top games in app store charts seem to possess those same “proven elements”, making it harder to find games that have a unique soul. There isn’t as much experimentation, which we think most game makers would agree is the most fun part of making games and often lead to the best results.
Acquisitions are not new in the game industry. In 2008, Activision acquired Blizzard. Before being acquired, Blizzard was renowned for two franchises: World of Warcraft and Diablo. The company had already been successful expanding the original Warcraft strategy game into one of the first MMORPGs, but Diablo had mostly stuck to its roots as an action RPG dungeon crawler. Diablo III was announced the same year as the acquisition, so most likely their plans for the game weren’t changed much, as they were conceived during the transitional period of company leadership. The game released in 2012 and was the last game in the series until 10 years later, when Diablo Immortal brought the franchise to mobile on June 2, 2022.
Activision is no stranger to controversy, especially when it comes to microtransactions. Diablo Immortal was the first release in the series with Activision’s noticeable influence, so it is not surprising that the game’s aggressive monetization strategy is met with mixed reviews. The thing is, free-to-play games are a very positive and benevolent idea at their core. Instead of paying a lot for something that players aren’t sure they will enjoy, why not try it for free before ever spending any money? Many free-to-play games do right by this idea. The best developers will build many organic opportunities for players to optionally spend money on things that enhance their experience, a reflection of how much they are personally engaging with the product. Often, these purchases are for cosmetic items so that players cannot spend money to get an unfair advantage in the game.
Sadly, this isn’t always how things work in the free-to-play world. Sometimes, a game will allow players to buy their way to the top of the leaderboard or beat the average player to the endgame. This is called “pay-to-win”. While Activision Blizzard stops short of direct payment for progress in Diablo Immortal, microtransactions can significantly increase the chances of getting valuable items over other players, which can very quickly become very unfair. Or worse, there are players claiming to have spent more than 5 figures on the game just to try and catch up, and they still are unable to find the “legendary items” that supposedly justify the spend. And while it may be technically true that you don’t need to spend money to play the story part of the game, this only opens up a crafting meta-game that is costly and time-consuming. People are doing the math and claiming that in order to get to max-level characters in the game, you either need to spend $100k - $500k OR more than 10 thousand hours of your life to get there. A Sophie’s choice where neither option sounds very fun. Wait, wasn’t this whole thing supposed to be for fun?!
Ethical monetization in gaming is possible in web2 and it will be possible to spend the time to do it right in web3.
There was another notable event in 2008 that marked the big leap towards mobile gaming as we know it today: Apple’s launch of the App Store. It was an exciting promise and still is; there is so much possibility when developers of all sizes could make an app or game, launch it in the App Store and potentially become an overnight success (remember Flappy Bird?). This is how a lot of indie game studios rose to prominence.
Now, while there are many original apps and games on the App Store still, it feels a little flooded by these cookie-cutter games that basically feel like the same exact game in a different costume. The same “proven” game mechanics are recycled time and time again, with a cute little refresh on the game’s theme. This can make the App Store feel like an endless scroll of sameness, making it harder and harder to weed through the pile and find inventive, original free-to-play games.
What about web3?
Web3 right now feels a lot like the early days of the App Store. It’s an experimentation phase for a lot of game studios trying to enter the space. Not to mention there’s a huge stigma against web3 games because of some early projects that focused too heavily on the play-to-earn model and accidentally took “fun” completely out of the equation.
As a small indie studio, we have an idea that we believe can be the antithesis to this problem. We see blockchain as a technology we can leverage to enhance our game product and experience, but it should not be central to the concept of the game. Just like free-to-play can either be used to enhance a game experience and allow players to try before they buy, web3 and blockchain can be a tool that allows players to form a deeper link with the items they acquire in the game world, by allowing them to own those things for real, and do with them what they may. Now, there is no denying that this is tricky — and a lot of people are trying to figure out how to make it work without falling into a trap that feels predatory. But the point is, it’s not web3 in itself that is the issue, it’s how it’s applied to the game design and how it’s layered over the player experience. We saw the same problem in web2 when the free-to-play model turned into a money grab in many cases (like the ones exemplified above), but that does not mean ALL free-to-play games are money grabs. The choice between dark and light magic is up to the wizard, not the wand. Ethical monetization in gaming is possible in web2 and it will be possible to spend the time to do it right in web3.
What does it mean now that Microsoft is in the process of buying Activision Blizzard for $68.7 billion? We don't know. But we are more interested in being part of helping the game industry develop on web3 as a beautiful, big ocean full of little fish schooling together for success.
You are reading Channel Zero by NFTV. If you’re looking for a fun way to engage with the metaverse, web3 and NFTs, then you are ready to become a Tubehead like the rest of us! Stay tuned for more stories as we work to get NFTV on the air by subscribing to our Substack and following us on Twitter.
Today’s words are from Luiza Justus and Marisa Smailes. Artwork from Lee Ann Holt.