The Business of Video Games

Video games are a business. That statement sums up this entire article, so naturally I can stop writing, yes? Of course not, because I need to provide my argument for this audacious claim. The biggest hurdle to this “argument”, ironically, is that video games are fun to play, and we want to play them. We don’t want hurdles in the way of getting to the fun. Annoying obstacles like price tags, game versions, and the necessity to own the system or machine capable of running the game software already complicate things, but then we add in DLC variables on top of that and it can seem like gaming companies are doing their best to exploit us in our hobby. How much of it truly is unscrupulous, though, and how much of it is a feeling of entitlement on the gamer’s part? Each has its place in the argument, so let’s break it all down and try to see the bigger picture on each perspective.

At the genesis of gaming, well before the Sega Genesis system, gaming was truly a hobby. It was a passion project for those involved in the inception, and it felt much more like a technological study project than a true business model. Programmers were passionate about experimenting with what was possible, and companies funding them tried their best to not only make sense of the business monetization regarding video games, but also find where the target market was to begin with. Things were not exactly booming to begin with, but while technologically-minded adults certainly had their fun, it became quite obvious that the audience that was most ready to blend the rudimentary graphics with their own imaginations was teenagers and young adults, with children peering in from the side.

Entrepreneurial minds put together a method of monetization that would not only engage those that wanted to play the games, but allure and draw in those that would see the games. As coin-operated video game machines sprang up in malls, eateries, and all manner of other business locations, the arcade scene was born. Gamers of all ages, especially the target audience of teenagers and young adults, flocked to the arcades and happily emptied their pockets of quarters to fill the machines. Games of all sorts kept gamers playing and kept them wishing that they could play the games at home. Instead of just dropping in quarters to play for a moment, how amazing would it be to actually own the game and play it anytime? As video games became more profitable and developed a demand, it wasn’t long before video game systems and software were available to purchase and play at home.

Though playing games from our own homes was a nice option, it was far from perfect. In 1983 the infamous video game crash occurred. Companies knew there was a demand for games, but saturating the market with a plethora of systems was confusing to consumers who just wanted to play games. Also, the lackluster quality of games being developed for home consoles was in stark contrast to the excellent quality found in the arcades. Games stopped selling at home, and gamers were content to fend for games developed for their computers. One company saw not only the issue, but a way to correct it. Nintendo decided to make a system that was capable of playing quality games, and they were so concerned with quality that they employed a team to specifically ensure that quality. Thus, the Nintendo Seal of Approval was born, along with a new era of booming video game sales. Nintendo figured out how to properly produce and monetize home systems and software, and video gaming never looked back.

Technology was still very limited, however. Game quality was much improved, but the entire monetization model was through a consumer buying a game. If a company wanted to profit further on a gaming franchise, a sequel or other such product had to be made to capitalize on it. The internet was well in its infancy then, and most people didn’t even know what it was, let alone why it should be included in a console. No one cared about such things; the industry was booming and people were buying games in droves. The industry was becoming more profitable than many ever imagined, yet gaming companies were still thinking about other ways to capitalize on their properties.

Although console games needed sequels to keep a franchise going, this was not the case for computers. Realizing that files for their games were already installed on a gamer’s hard drive, the idea of an “expansion pack” was very enticing to developers since they no longer had to create assets from scratch and could add to their existing code to make an even bigger profit. Since the company’s property was already invested in by consumers, the idea of expanding their game meant less money to make more. Gamers largely supported these expansion packs because they already enjoyed the full game and now had the option to pay extra to add content to their game. Expansion passes were regarded as a sort of smaller sequel to a game, and were relatively successful to boot. Companies were still looking for more ways to profit, but technology needed to catch up.

Catch up it did, indeed. As gamers wanted the arcade experience in their homes, they also wanted the ability to compete with others not only on the couch with friends and family, but with many different opponents like they did in the arcade. Game developers understood the desires of gamers, and gaming was introduced to the internet. Gaming companies suddenly sparked with new ideas and experiments. From those were born Horse Armor, a Downloadable Content item, or DLC, Bethesda made available to their game The Elder Scrolls: Oblivion for $2.50. While technically not the first DLC since mobile gaming used them to drive their psychology experiments, it was the first time it snuck its head into a major PC and console game. It was widely mocked, and players instantly saw red flags. Change was coming, but gamers weren’t going to have it without a fight. Since horse armor had a lot in common with cattle dung, it was easy to avoid its temptation and hurl torches at Bethesda and video game companies for pulling a stunt like that. Of course, it was only the beginning.

Gamers began to get nervous as companies watched Bethesda’s experiment with visions of profit sums dancing in their heads. There was a short game of chicken that emerged from that debacle. Players couldn’t wait to lambast another effort, and companies searched for a way to give gamers something much more desirable and priced accordingly; something most gamers wouldn’t say no to. The trepidation with gamers wasn’t just with Horse Armor, but with everything being incorporated into the game development process due to the reliance on the internet. Where games used to be bought and played immediately, games suddenly needed updates to be downloaded before they could be properly played online. Horse Armor was simply the point where gamers had a real scapegoat (scapehorse?) to use as an example that games weren’t being released as full and complete games. Gamers stood their ground in anticipation for battle, but many saw the inevitable on the horizon.

The idea of a full game got gamers thinking. What constitutes a full game, and what is actually owed the customer when they purchase a game? Why do we need updates for bugs and balancing; are developers getting lazy and releasing half an effort just to get games out there and make more money? Gamers had to deal with the change as new DLC experiments and efforts made their way into many of the biggest games. Fans of the games couldn’t bear to wait it out and not play, so they had to deal with the inevitable. But gamers still voiced their concerns about games seeming to purposely leave out some material in favor of selling it as DLC instead, many times with that content showing on the disc itself. Gamers even questioned the legality of it all.

The lesson to be learned there is a jolting truth for some: video games are a business. No one is freely given a video game unless a company intends to profit by doing so. Companies provide a product for sale, and consumers pay for that product if they decide it’s worth the price. The hard truth for some is that a company has every right to create, distribute, and otherwise market and sell their product as it sees fit. Gamers need to do their part in understanding this: we are not entitled to any game product or service. We love to play games which is why gaming companies exist in the first place. But they are companies. They owe us nothing, and we owe them nothing. Video games are produced, developed, and sold to us as they are. The company tells us exactly what we’re getting, and unless they falsely advertise the inclusion of something on the disc as well, we’re not entitled to anything except what the company actually sells us. Companies have the right to distribute their games and add-ons however they see fit, and we, in-turn, accept what they offer with our purchase. If we like what is advertised, we purchase it. If not, then we can choose not to buy the product.

Some gamers seem to regard video games as something different than products created by a company to make money. They say that any DLC should already be included in the game, especially if it is released alongside the game. But think of it like buying a car. If you purchase a car you will be offered a vehicle that works according to its advertised purpose, meaning it can drive from here to there. But that does not mean you’re entitled to a sporty interior, SiriusXM, heated seats, parallel parking assist, remote ignition, or any of the other extras that may come with a car. Each costs extra, and we choose whether we want them or not. Does not having any of them make the original car incomplete? Of course not, you purchase a complete car regardless of which extras, if any, you decide to include. It’s the same with DLC: a game is absolutely complete without them, because a complete game is whatever was marketed and advertised by the company to be included in the purchase and nothing more. But each DLC adds something to the experience. We’re not entitled to them since the company decided to sell them as options. If we like the value, we buy them. If not, we do not.

We can also choose not to by the original game, for whatever reason; it’s how business works. But sometimes there is a legitimate reason why we shouldn’t purchase a game. Every once in a while a game actually advertises parts of a game that are not in the final product. Whether advertising something as included instead of actually being DLC, graphics and performance that do not factually represent the game, or other unscrupulous tactics, these forms of false advertising are not only illegal, they’re terrible for business. A bit of give or take exists to protect the company here, though. After all, many things often change during game development cycles, so a company may advertise a level that for whatever reason gets scrapped in the final product. The company needs to be transparent when this happens or they’re still guilty of false advertising. However, consumers must understand that any preview of a product can change, and when they purchase a product they’re only entitled to the game as it is officially advertised at the moment of release.

Outside of false advertising, intentional or unintentional, there are still times when a gamer has every right to speak their minds. With their wallets, or simply with words, gamers have a right to talk positively, negatively, or any other way about games, just like for any other product. Whenever a company offers a new game, they love to hear the positive voices regarding it, but they must be able to take any criticism it may receive as well. If something doesn’t meet a consumer’s expectations, it’s their right to speak on it and give their point of view. The finest companies will take those perspectives into account as they continue to mold the game or shape future games.

However, a company’s aim is still to make money. If the company notices that they make more money by including certain DLC or other forms of monetization, it is going to take those roads. We must remember that every single company’s main goal is to make more money. This doesn’t make a gaming company “terrible” for doing so. It’s literally their job to figure out how to make the most profit, and they will do everything they can to ensure that happens. Of course, companies must continue to develop products that consumers want to buy or else they will join the dodo birds in relevance and revenue.

During the course of figuring out how to make more money, video game companies hit a gray area: pay-to-win schemes. These are defined as the inclusion of DLC which will grant an instant or accelerated advantage to a gamer who pays for it over a gamer who does not. Technically, companies aren’t breaking any rules of business if they’ve properly advertised the game and the DLC, but there exists a moral quandary. Since gamers already paid an amount to receive the full game, having to play against others that have a distinct advantage just because they paid more is aggravating. This isn’t so much a problem in single-player games since gamers don’t have to experience other gamers through the course of play. However, with competition, it feels unfair, and gamers have a right to complain.

Using the car analogy, if someone buys a Ford Fiesta and someone else snags a Bugatti Chiron, the much higher-priced Chiron will blow the doors off of the Fiesta every single time in a race. However, these two cars wouldn’t compete directly in competition. In automotive competitions like F1, NASCAR, and IndyCar, the vehicles all have regulations to determine exactly how they may differentiate so that they all stay competitive with each other. As gaming companies endured the scrutiny of gamers complaining about pay-to-win schemes found in their games, companies quickly found another much more desired alternative: cosmetics.

Cosmetic DLC has become a welcome compromise for companies to profit while offering only a change in looks, not performance, to gamers. This wasn’t always the case, however. At the apex of DLC frustration for gamers, the game Evolve tried this exact approach. To be fair, it did have some other issues with DLC in the way that it handled extra monsters and classes included in the game, but that’s not what initially tripped the gaming alarms everywhere. Instead, it was the huge amount of customization DLC that was available from the first day. Gamers weren’t ready to include any kind of monetization in their games, and since Evolve was a brand new property, it was easy for it to earn the ire of DLC-hating gamers wielding the torches of “full games only” and “only pay once”. Evolve was quickly designated as a DLC-loving epitome of how not to launch a game. Companies learned from that, but instead of yielding, they adapted (evolved?).

After some time in the money-making lab, formulas were created that propelled gaming into a place where gamers were more accepting toward DLC and companies profited. Overwatch came out with “Loot Boxes”, and Dota 2 implemented the “Battle Pass” system, which was called the “Compendium” then. Each of these allowed gamers to access special customizations for their characters, but no competitive advantages were offered. Since DLC practices seemed to not be going anywhere, gamers began to accept the compromise, and companies were quick to play copycat. Several games began implementing their own versions of the Battle Pass and Loot Boxes, but not all were successful. Star Wars Battlefront II in particular tried to implement too much of its gameplay into the Loot Boxes and quickly earned the fires and brimstone of the gaming community. They were so obliterated for their Loot Box implementation that they took down the system and completely reworked their Loot Boxes in an effort to contain the damage. The game made a bit of a recovery, but the damage took a major toll on the projected sales numbers.

Successful implementation of DLC has been highly profitable for video game companies. Even so, has a true compromise been reached? Are gamers and companies happy? Companies are happy to make more money, so they’ll never be fully content, but they’re finding compromises that are working. With gamers, however, it’s partly cloudy with a chance of ignorance and asinine viewpoints. While many gamers do understand the business aspects of video games, there are some that still feel entitled to more than what they get. They refuse to accept that gaming companies should be allowed to make money and see the entire practice as dangerous. If they make so much money, why can’t they just sell us the games at a much lower price? With the DLC, they’d certainly make their fair share, right?

Video games are a business. Video game companies are not interested in selling at lower prices when they can make higher prices. We can make comparisons with the costs of other forms of entertainment, but business doesn’t work that way. The marketed price of a product isn’t compared to everything else selling in a medium except to discover the best way to market and profit from a product. The marketed price of a product is chosen based on what a consumer is willing to pay for a product. Outside of government-deemed “essentials” such as gas and electric, a company is free to price their product however they want. If consumers value a product as worth less, their wallets will determine that much more than their words.

Moving forward, gamers and gaming companies must exist as a symbiote with each other. Gamers want to have fun with the best possible games, and companies need to profit from their games so they can pay their employees and experiment to bring new and exciting games out to gamers. Both sides need to compromise and learn to see things from each other’s perspective. The more each learns about the other, the more understanding will come, and the better the games will be for it.

Gaming companies, listen to your consumers. Understand their plights and issues, grant all due transparency, and examine their suggestions. Don’t allow them to tamper with artistic greatness, but understand where they are coming from and what they’re truly looking for from their games and from you as a company. Gamers, allow a company to be a company. They owe you exactly what they offer with the purchase price and nothing more. We can certainly voice our concerns, but allow some give so the company can profit while offering gamers what they want out of their games. Allow mistakes to be made and fixed, especially when a company offers transparency and a willingness to listen and do right by their customers.

Video games are a huge and exciting part of mainstream culture! Let’s celebrate together by helping to thwart negativity. If companies can continue to make compromises that respect gamers, DLC and other profiting escapades will continue to be more accepted. If gamers can understand that there are business aspects and allow video game companies to conduct their business, we’ll all profit from it. Let’s be transparent with each other and respect each other. There’s a bright future ahead for video games because it has some incredible companies and gamers aboard the community train. For the rest, please shed off those negative garments and climb onboard! Let’s make an awesome, welcoming, and joyous video gaming community our business.

By Patrick Shields

I love the outdoors as well as the indoors, and when I'm not gaming, writing, or being musical, you can find me outside, climbing trees and getting lost off the road less traveled. It is a known fact that I've been blessed with the greatest kids in the world and an incredible wife who is an awesome nurse and my superhero. I've played games on nearly every system ever made and regularly go back to the classic games that helped raise this fine fellow. When asked which system or computer I prefer, there's only one answer: yes.

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