Search Results for consumer surplus

Surplus Deficit

Last week, Keen blogged about a tweet that should be filed under “Things that make you go Hmm… not really”:

In a world of $5 lattes a game with 50 hours of content is worth $1,000. Instead, many won’t touch a game until some stupid Steam Sale. (source)

Wilhelm has already penned an exceptionally good take-down of the latte vs game comparison. What struck a cord in me the most, though, was this follow-up tweet:

The unwillingness to pay what a game is actually worth is why we have on disc DLC, F2P, micros for single player games, season passes, etc. (source)

This, my friends, is the embodiment of everything I warned about six years ago.

surplus1

We as consumers have been beaten down so often and for so long that the argument almost makes sense. It seems “fair” that someone gets paid a proportional amount for the benefit received. But the funny thing is that reasoning only ever seems to go in one direction. Price exceeds the amount it costs to create? Capitalism, working as intended. Benefit exceeds the price? Suddenly there’s a whole lot of hand-wringing and articles about Millennials killing functionally useless industries.

Fight for your own Consumer Surplus! The difference between how much you paid for something and the amount of enjoyment it provided is yours. That’s your profit, not the game company’s. These corporations will try to erode your consumer surplus with ever more novel monetization schemes, and other people might try to guilt you into “supporting the devs” or admonish your “unwillingness” to throw your hard-earned money in a hole for literally no reason. But the fact remains that it’s the game company‘s responsibility to effectively manage their own resources, to figure out what payment models they should utilize, etc. Not yours. Their business is not your responsibility.

Don’t settle for the precise intersection between Supply and Demand. Don’t let anyone make you feel guilty for getting a deal. If you want to donate extra money to random devs in some idealistic hope they generate future value, go for it. But understand this: the only person looking out for you, is you.

Subscription Pass

When the videogame historians look back on this particular monetization strata, it will undoubtedly be the Season Pass era. Or perhaps the Microtransaction era more generally, to include loot boxes, but with legislators and science slowly turning against loot boxes, I feel like more and more games will be making a hard turn into the Season Pass model.

To be clear, I am not referring to the Season Passes of yore, in which you essentially pre-ordered DLC. The new hotness is basically a month-to-month subscription. This most recently slapped me in the face in Clash Royale:

Clash-Royale-Update-Pass-royale-1147670

The new troop doesn’t even officially get released until Season 2…

Someone on Reddit wrote up all the incentives that your $5 will purchase, and the list is somewhat enticing. None of them are technically P2W, which is itself a moot point because you could drop $99 on shit from basically day 1 in Clash Royale anyway. Indeed, if you look at the package in comparison to what your hard-earned cash could buy normally, you’re effectively getting 10x-11x the normal value. Five dollars will get you 500 gems, which can convert to 10,000g or two emotes or two Lightning Chests… or basically give you 40,000+ gold, 800 more cards (including 60+ Epics) and a bunch of other stuff.

Of course, Supercell doesn’t want it to be an either/or scenario. You can do both. Having an exceptionally generous Season Pass can lure F2P players into making their first purchase, after which it is easy to make another. One of the “perks” of the one in Clash Royale is an auto-announcement in Clan chat that you purchased the pass, and thereafter your name shows up in gold coloring in chat and battling. Turns out that adding gold leaf to a scarlet letter makes it rather desirable.

The dilemma I face is the same as always: I am caught in eye of the monetization storm.

ClashRoyale_AlmostMax.jpg

Could I be any more off-meta?

As the screenshot shows, I am one Miner card away from having a fully-maxed deck. I am sorely tempted to purchase the Season Pass entirely to get that last Miner card. It would normally not be too difficult to trade for it within my current clan, but there are at least three other members currently asking for Miners themselves, and none seem keen to trust me in giving up one of their so I can max the card and satisfy an effectively infinite number of trades thereafter.

After that though… what then? I have dozens of technically maxed cards that I cannot actually max out because I lack the gold to upgrade them all. Not that I would need to max them out in the first place, considering I don’t use them in decks. The deck I have is the one I enjoy the most. The last two slots are technically flex slots, but I have tried a bunch of alternatives and found them lacking.

Would the new Fisherman legendary card be a good fit? Completely irrelevant. New legendaries may as well not exist, because I would need literal dozens of them to get them anywhere near usable levels where I’m sitting on the ladder (~5800 last season) and in 2v2. Granted, the Fisherman has some utility outside of his base HP and damage – the ability to hook and pull troops around like Roadhog from Overwatch – but I’m still not bringing that to match that matters.

In any event, the Season Pass model gives me pause. In the context of cash purchases within Clash Royale, it’s a great deal. Would I pay a $5/month subscription to Clash Royale though? Nope. It’s not a subscription though, as there are no reoccurring payments. “Cancel any time!” And yet there will be tens of thousands who do re-up every month, for the rewards or the conveniences lost.

Technically this should be positive Consumer Surplus territory… so why do I feel so dirty?

Possibly because I felt the hook twitch. Supercell isn’t reeling in the line yet, but it’s there. Subscription versus Season Pass is a distinction without a difference, and yet those who would riot about the former in their game are praising the latter. It is a trick of psychology, a stark reminder we can be tricked, and evidence that we face amoral corporations that have a fiduciary obligation to their shareholders to trick us out of as much money as possible.

For however bad loot boxes may seem, never forget that loot boxes are apparently not enough.

GameStopped

Gotta love this news headline: GameStop’s stock in free fall ‘as business burns to the ground‘.

Couldn’t happen to a better company, am I right?

Still, I am a touch concerned. As the article notes, GameStop revenue is down as more and more gamers rely on digital purchases and streaming services than physical games. It’s been more than five years since I bought an actual physical game, myself. But it is vitally important to me that physical gaming continues to exist because otherwise we consumers lose the ability to resell our games.

While there have been attempts to make inroads in digital resell, the lack of recent headlines leads me to believe things have stalled. The most recent article I could find was from last year, wherein a new storefront (sigh) was going to be launched that could allow digital resell based on blockchain technology. Except, you know, the consumer’s own cut was going to be only 25%.

Which kinda makes GameStop look downright charitable in comparison, yeah?

In any case, if GameStop goes away, I am not entirely certain what fills the gap. There are a few off-market used game stores in my area, but none of them have any particular web presence or meaningful sales. Perhaps we will see more eBay storefronts open up, but where are they sourcing the games? My fear is that once GameStop goes under, there won’t be a big enough lobbying voice to dissuade game makers from pushing an all-digital future and thereby removing one of the last bastions of gaming Consumer Surplus.

Epic Shenanigans

In case you haven’t seen the news, the Epic Store has poached another timed-exclusive game release: Metro Exodus. The wrinkle this time is that rather than being planned from the start, Deep Silver must have been given a fat stack of secret cash because the game was already available on pre-order from Steam (which are still being honored, until removed from the Steam store). And, you know, the game was all set out to be released in 2.5 weeks.

I mentioned “fat stack of secret cash” because while the revenue split is more generous in the Epic Store, they are actually doing the only thing I said would matter in the competition space: Metro Exodus had its MSRP lowered from $60 (on Steam) to $50. Which means the gross revenue from this game would be:

  • Steam = $60 * 0.7 = $42
  • Epic = $50 * 0.88 = $44

That calculation demonstrates how a developer could still make a higher profit on the Epic store by dropping the price to $50, but here’s the thing: they are going to be losing a non-trivial amount of sales for not being on the PC’s largest storefront. Enough to matter? Remains to be seen. The Metro Redux (aka remasters) of the first two games sold 1.5 million copies back in 2016. That would be $3 million more in Deep Silver’s pocket if they sold the same amount of games… at full price… as the remasters of the last two games combined.

That $2 difference between revenue is 4.5%. If Deep Silver sells 4.5% fewer copies due to not being on Steam, then they lose almost $3 million. I mean, without even doing much calculations, you gotta know that for every Steam sale lost, they have to sell 22 copies in the Epic Store to break even. Ergo, I suspect that Epic was waving something more than simply the 88% cut in Deep Silver’s face.

And that’s kinda the baffling thing about all this. I’m not opposed to competition between companies, especially when it results in a gain in consumer surplus. Competing on price is a huge deal, and I’m sincerely amazed that Deep Silver pulled that trigger to sell at $50. But… why then yank the title from Steam as a “timed-exclusive release”? That isn’t consumer friendly or useful to anyone at all. Why not let the same title be purchasable on both platforms, and allow nature to run its course?

We’ll have to see how things shake out a year from now, when the game is finally released on Steam… presumably at a huge discount because it will have been a whole year.

Opaque RNG is Indistinguishable from Rigging

My patience with enforced 50% win rates is paper graphene-thin.

“A fair game is one in which you win half the time.” It’s hard to argue against such a notion. What is more fair than a coin flip? The problem is that players aren’t equal sides of a coin, nor are the thousands of potential actions reducible to two, easily predictive binary outcomes. Some approximation is required. Or a developer thumb on the scale.

I am still playing Clash Royale despite the disastrous pivot towards blood stone squeezing, and the conceptual breakdown of all progression for long-term players. But some of their shit is driving me up a wall, and will eventually drive me from the game entirely. Specifically, Clan Wars, and even more specifically, a particular game mode with preconstructed decks.

To be sure, there are learning curves involved. Supercell basically took some “top decks” and added them to a pool, from which you are randomly assigned one for a single game. The problem is that some of these decks are just objectively terrible with no redeeming qualities, and still others are straight-up countered by some of the other matchups. For example, these two Classic Decks Battles:

clashroyal_classicdecks

Bullshit on the left, winners on the right.

In the first match (at the bottom), my Royal Hogs are immediately countered by Valkyrie, Mega Knight is immediately countered by Inferno Tower. Amusingly, Royal Hogs are also countered by Inferno Tower and Mega Knight by Valkyrie, assuming my opponent times it right. Meanwhile, while I can counter his Goblin Barrel with Arrows, they both cost 3 Elixir and thus end in a wash… with the slightest error on my part resulting in easily >30% tower damage. Meanwhile, my Zappies are basically useless, my Inferno Dragon even more useless, and I can’t use Arrows to counter his Princess or Goblin Gang because then I become vulnerable to Goblin Barrel. I also can’t hope to Fireball him out because he also has Rocket, which deals way more damage than Fireball. The ONLY way anyone could possibly win with the deck I was given was if the opponent was AFK. 1

For a WoW analogy, think Warrior (me) vs Frost Mage (opponent).

The second matchup wasn’t technically as lopsided, but still awful. Bandit is straight-up countered by pretty much every card in the opponent’s deck. Rascals + Zap took care of Minion Horde every time I threw one down, and Hog Rider/Mortar/Goblin Gang meant I could be punished immediately for dropping Elixir Collector or Three Musketeers. Which is what happened, pretty consistently. If I played better, I might have been able to distract a Mortar with my Valkyrie or Bandit in the other lane, and then split a Three Musketeers or something in the middle, followed by a split Minion Horde. Even then, if he played defensive for 20 seconds, my shit would have been countered.

Were these match-ups truly random? Or “enforced” 50% win rates? There is no direct economic incentive for Supercell to “rig” the Classic Decks Battle mode, but the RNG is opaque and it would certainly be a method to ensure that winrates do not get too lopsided.

The third clan war battle I played was Draft. In this game mode, you are given a choice of one of two cards, four times total; whatever you don’t pick goes to your opponent. I’m not sure if the card pairings are 100% random, but you can absolutely get stuck with some extremely shitty decks and/or matchups. And yet I’m fine with that. You as the player have some agency, even with imperfect information, e.g. choosing Minion Horde when opponent might have chosen Arrows. Indeed, Minion Horde in particular is a classical risky pick because of how many cards can counter it… but if your opponent doesn’t have any of those counters, it can be an overwhelming advantage.

My feelings on enforced winrates have changed over the years. Initially, it seemed fine. Necessary, even. But it is rigging, especially in the methods that many game developers go about it: pairing you with terrible teammates, matching you against strong counters, etc. The end result is that I simply cannot trust game developers with (opaque) RNG anymore. They have no incentive to be actually fair – however fairness is defined – and every incentive to produce favorable (to the devs) results. Even if they showed me the specific game code that chooses the matches, I have no reason to believe it operates in that way. This age of monetization and consumer surplus erosion has pushed me past the Cynicism Horizon, from which no trust can escape.

The only thing that game designers can do, and the thing they should be doing, is increasing player agency in the RNG elements. Drafting feels fair, even when the results are not. Maybe it is just another psychological trick to employ, giving someone the “choice” between a rock or a hard place. But it is an important one for not appearing so nakedly rigged in favor of one particular outcome.

1 If you can produce some videos of pros beating non-AFK people with the decks I was given, I’ll concede that I need to L2P. I typically end the season at 4800 trophies and can acknowledge mistakes, but on paper and in practice, those match-ups felt lopsided as hell.

Meatspace2Win

Pete over at Dragonchasers gave a few parting shots concerning the Star Wars: Battlefront 2 loot boxes a few weeks ago. Who still cares, right? I do. Not just because I feel someone is wrong on the internet, but because it highlights one’s entire constellation of opinions on gaming, fairness, and life in general. And that sort of thing is interesting to me.

During our back and forth in the comments, the following argument was floated:

Even if [loot boxes = god mode] was true, there’s always going to be someone better than you, whether it is because they supported on-going development of the game, or because they live in their mom’s basement and play 8 hours a day, or just because they’re naturally a better gamer. Online gaming is never going to be an even playing ground. That’s what match making is suppose to solve, though it rarely does.

First, it should go without saying, but the better-skilled player winning a game is basically the axiom of fairness. So there really should be no possible complaints about losing to a “naturally better gamer” aside from the possible lack of fun if one is constantly matched against superior opponents. It is hardly sporting for anyone to have a Chess novice play against a Grandmaster, after all. But if the game is testing skill in some way, it is achieving its purpose if the better-skilled player is winning.

Second, there is no distinction between natural skill and skill derived from time spent. It boggles my mind any time someone tries bringing up the “unfairness” of those who “play 8 hours a day in their mom’s basement.” Are they more skilled than you, yes or no? If yes, they deserve the win. How is it unfair that someone who dedicates more time to something achieves greater results? Is practice itself unfair?

Even in the scenarios in which one can accumulate advantage via time-spent – perhaps by grinding levels or gear – I find it difficult to imagine the unfairness. Is it unfair that those who read more pages in a book are further in the story than we are? There are certainly long-term game design concerns if the game is set up with insurmountable advantages, but the concept itself is fine.

What we’re left with is the “supported on-going development of the game” to get an advantage.

Really, just repeat that sentence to yourself out loud. You became more competitive in a game because you paid money to the people who made the game. The difference between that and bribing referees in traditional sports is… what, exactly? And just like in traditional bribery, its mere existence suddenly makes everything suspect. Was that bad call because you didn’t pay, or was it legit? We just cannot ever know.

All of this sort of presupposes that fairness is possible. Pete certainly doesn’t think so:

If I give you $100,000 so you can quit your job for a year and devote yourself to playing a game full time, how is that not pay to win? Silly example, I know. But time = Money, Money = Time. Paying cash for an advantage or having the luxury to be able to spend significantly more time playing… either way one person has something others don’t. There’s zero difference in my mind. For that matter, on PC the person who can afford the rig to run at the best frame rate and has the fastest internet connection has paid to win over the person who has a modest PC and lives somewhere that broadband is still very slow. There’s dozens of ways one player has an advantage over another.

So, for the first part, that isn’t P2W considering they are practicing to win. That’s legit. Whether they have that time to dedicate to practicing is because they were given $100K or because they’re unemployed or they’re a student or a retiree or whatever, is irrelevant. They put in the time, they put in the effort. If that is unfair, show me your rubric in which fairness as a concept has any meaning.

Now, the second part is a little tricky. As even Raph Koster points out:

Pretty much every physical sport uses pay to win. You buy a better tennis racket, better sneakers, better racecar, better golf clubs, because you think it will get you an advantage. We just don’t like it in videogames because digital in theory frees us of that unfairness. Though of course, we cheerfully buy Alienware computers and Razer gaming keyboards… ahem. Anyway, pay to win is basically one of those things that people are, shall we say, deeply contextual in their disapproval (though they will deny it until the cows come home). There are lines where it’s excessive, but defining them is hard.

If you pay the money for a high-end PC with a 144 Hz monitor and fast internet, you absolutely have an advantage over someone who doesn’t in FPS (etc) games. By strict definition, that is indeed P2W.

The key difference, of course, is that your payment is not contributing to the perversion of the game’s underlying design. When you bought that GTX 1080ti, the developers didn’t transition all of the best-looking gear into the cash shop. That Razor keyboard didn’t pay the bonus of the asshole who turned progression into loot boxes. In other words, there wasn’t any impact to the game itself, its rules, and/or the closed system it represents. Your consumer surplus is not under assault when someone buys a fancy keyboard.

So even if you believe “P2W is P2W regardless of form,” or that natural skill and practice are inherently unfair, you cannot deny how only one form of possible advantage adversely affects the game’s fundamental design. Hint: it’s the one where you are bribing “supporting” the game designers beyond purchasing the game that they designed.

Temporary EAnity

EA has temporarily removed the loot boxes from Star Wars: Battlefront 2, right before the official launch of the game:

We hear you loud and clear, so we’re turning off all in-game purchases. We will now spend more time listening, adjusting, balancing and tuning. This means that the option to purchase crystals in the game is now offline, and all progression will be earned through gameplay. The ability to purchase crystals in-game will become available at a later date, only after we’ve made changes to the game. We’ll share more details as we work through this.

I am honestly quite surprised. The negative press surrounding GTA Online’s Shark Cards or Shadows of War’s single-player loot boxes affected zero change, but here we have EA, of all people, turning off the cash spigot right before the water main gets connected. Then again, EA did get mentioned in half a dozen news article for having the most-downvoted comment in Reddit history (-676,000 at the time of this writing). Not exactly the narrative you want to be having right before the game’s release.

It’s tempting to pat ourselves on the back, at least those of us who actually care about game design and our fellow human beings. But the victory feels… well, like EA says, “temporary.” They did the right thing… under withering criticism. It’s like a politician apologizing for a decades-old scandal – an apology is more than we can expect these days, but it would have been nice if they had apologized before it was news. Or, you know, never did the action in the first place.

Alas, here we are.

It will be interesting indeed to see under what conditions the microtransactions return in SWBF2, and what possible new permutations they might take in other EA games. Will Battlefield Whatever’s design be impacted by this learning experience? Is this a learning experience at all, or simply an unfortunately-timed (for EA stockholders) zeitgeist?

We already know that the suits from TakeTwo don’t give a shit:

It appears that the GTA Online/MyCareer model is going to be the standard for big Take-Two Games going forward. People have expected a GTA Online type environment for Red Dead Redemption 2, which launches next year, though Rockstar has not announced what its online features will be.

“One of the things we’ve learned is if we create a robust opportunity, and a robust world, in which people can play delightfully in a bigger and bigger way, that they will keep coming back,” Zelnick told investors. “They will engage. And there is an opportunity to monetize that engagement.”

And that sort of underscores the vice gamers are put in to begin with. SynCaine pointed out that anyone buying SWBF2 is complicit with its monetization scheme, even if they don’t spend cash on loot boxes. That is technically accurate. But by that same token so is anyone who bought GTA V, given the Shark Card shenanigans. Do we really need to commit to never touching Red Dead Redemption 2 or the inevitable GTA VI?

I dunno. On the one hand, I am obviously an idealist when it comes to the purity of elegant game design. When the pieces fit together, when the various game systems synergize so perfectly… it’s orgasmic. Microtransactions have literally no place in any such gaming schema, any more than the concession stand does for the symphony performance. The symphony or game might rely on outside money in order to exist originally (artists have to eat), but once created, the art does (and should) exist independently.

Also, Consumer Surplus. It’s a thing.

On the other hand, we live in an absurd universe in which any sort of meaning or value is surprising. Thus, EA’s capitulation here, however temporary, is something to be celebrated. I certainly don’t think any of us expected it, especially given the likelihood that whales would have justified the PR hit by buying thousands of dollars of loot boxes on Day 1. And even if EA hadn’t backed down, if it’s possible for you to enjoy playing the game, what particular sense does it make to deny oneself? They’re microtransactions, not blood diamonds. Go have fun – nothing matters anyway.

All things considered though, I do think I’m giving SWBF2 a pass for now. Who is buying a game at full MSRP a literal week before Black Friday? Wait a month or two, save some cash, play your thirty other Steam games, and see how it all plays out. At least, that’s my plan. You do you.

Matchmaker, Matchmaker

Often unnoticed, but never unfelt, matchmaking in multiplayer games forms the invisible core of our gaming experience. In the old days, happenstance determined the characteristics of our neighbors. Maybe one server was labeled “Recommended,” but for the most part players were left to their own devices. If you were lucky, you might discover that mythical “Good Server” which featured players with similar skill levels as yourself. If not, perhaps there was some means of at least balancing the teams occasionally, by forced shuffling or similar. Otherwise, players were left to “self-deport.”

Automated matchmaking has been around for a long time now; long enough to demonstrate both its virtues and its vices. The virtue is, of course, being intelligently matched based on a whole raft of heuristics. The vice meanwhile… is being maliciously matched based on those same heuristics. Gevlon has long warned about overt rigging of games for monetary profit, but we have truly crossed the Rubicon when Activision itself has submitted (in 2015) a patent specific to that purpose.

And it was granted a few weeks ago. Feel free to read the whole patent yourself.

Granted, it isn’t entirely an engine of evil. The patent covers a process in which matches are made on a variety of characteristics. For example:

In another example, if a player has been performing poorly (e.g., getting killed at a rate higher than the player’s historical rate), the scoring engine may dynamically adjust one or more coefficients to match the player in a game that will improve the player’s performance. For example, the player may be matched with easier opponents, matched with better teammates, and/or placed in a game that is more tailored to the player’s preferences (e.g., players that play in games more closely aligned with their preferences tend to perform better).

This sort of balancing matchmaking is not hypothetical – Supercell, makers of Clash Royale – have already admitted in a Reddit AMA last month that there is indeed a “losing streak” pool in which you are placed after X numbers of losses. Why Supercell thinks this is a particularly good idea in 2v2, I do not know. For every person who just happened to statistically fall into a losing streak (e.g. 50% win rate), there are many more who are losing because they are tilted, trying out new decks they have no experience with, and so on. Grouping people this way is a sure-fire method of condemning players to ELO Hell, until and unless they happen to be paired up with truly abysmal opponents. So, in this regard, I prefer Activision’s method of “correcting” winrates.

Of course, the problem with picking winners and losers is when you are selected to be the loser. For every time you are gifted strong teammates to help you out of a losing streak, your opponents are punished by withholding of the same. We all want fair fights, being matched not just on skill levels but progression level too. It’s cruel to have new Hearthstone players face people with dozens of Legendary cards, even if the impartial ladder states they are equivalent players. Actively sabotaging games, though? We want fair fights, but not like this.

That is not even the most nefarious part of this engine, though. The true evil arises in plain text, in an approved US patent application:

In one implementation, the microtransaction engine may target particular players to make game-related purchases based on their interests. For example, the microtransaction engine may identify a junior player to match with a marquee player based on a player profile of the junior player. In a particular example, the junior player may wish to become an expert sniper in a game (e.g., as determined from the player profile). The microtransaction engine may match the junior player with a player that is a highly skilled sniper in the game. In this manner, the junior player may be encouraged to make game-related purchases such as a rifle or other item used by the marquee player.

“Matched” in this case, largely reads as matched against. In other words, the matchmaking system will notice you choosing the sniper role, then placing a more-skilled sniper opponent with a P2W rifle on the other side, for the express purpose of “encouraging” you to also purchase the rifle. It is bad enough having P2W elements in a game generally, but here we have a mechanism by which it can specifically be rubbed in your face. On purpose. To get you to buy shit.

This level of evil is not Google reading your email and popping up ads for dandruff shampoo. This is Google sending Fabio to your workplace to specifically call out the dandruff on your shirt, in front of your coworkers.

Could things get any worse with this patent? Activision is asking you to hold their beer:

In one implementation, when a player makes a game-related purchase, the microtransaction engine may encourage future purchases by matching the player (e.g., using matchmaking described herein) in a gameplay session that will utilize the game-related purchase. Doing so may enhance a level of enjoyment by the player for the game-related purchase, which may encourage future purchases. For example, if the player purchased a particular weapon, the microtransaction engine may match the player in a gameplay session in which the particular weapon is highly effective, giving the player an impression that the particular weapon was a good purchase. This may encourage the player to make future purchases to achieve similar gameplay results.

There it is, ladies and gentlemen. Activision settled the debate. Because now even in scenarios in which in-game purchases don’t directly increase one’s power (e.g. naked P2W), it’s quite likely that a matchmaking engine engineers a scenario in which you are more likely to win. For having paid. So even “purely cosmetic” purchases can end up becoming de facto P2W.

And much like loot box reward odds, companies will obfuscate the inner workings of their matchmaking systems such that it will be impossible to know either way. Are we to just trust their word that no matchmaking shenanigans are taking place, when they otherwise have every possible economic incentive to do so? Activision is just the first company openly patenting the process, not the first company to use these methods. Who would actually go on record to admit it?

Patent

Actual diagram from the Activision patent.

Do you see now? Do you see it? This is precisely why you should be caring about Consumer Surplus; this is why you should be up in arms about gambling loot boxes; this is why you never act as an Apologist to a game (or any) company. There is a straight fucking line between Oblivion’s infamous horse armor and Activision (et al) literally patenting the rigging of games for cash. And that line is still going lower, and will continue to do so, until acted upon by an outside force.

We are nowhere close to bottom.

The days in which game companies made their money by selling more copies – and thus had every incentive to make the best possible game – is over. Voting with your wallet isn’t going to bring it back either; in the US, where money is speech, the voice of the guy spending $15,000 on Mass Effect 3 multiplayer loot boxes drowns out everyone else.

“You need to understand the amount of money that’s at play with microtransactions. I’m not allowed to say the number but I can tell you that when Mass Effect 3 multiplayer came out, those card packs we were selling, the amount of money we made just off those card packs was so significant that’s the reason Dragon Age has multiplayer, that’s the reason other EA products started getting multiplayer that hadn’t really had them before, because we nailed it and brought in a ton of money. It’s repeatable income versus one-time income.

“I’ve seen people literally spend $15,000 on Mass Effect multiplayer cards.”

When every economic incentive is directed towards Consumer Surplus extraction instead of, you know, improving the gameplay experience… this is what we get. Always-online multiplayer in every game, single-player game studios getting shut down, loot boxes everywhere.

Play stupid games, (pay to) win stupid prizes.

Gambling is Gambling

There have been a lot of posts about loot boxes lately, here and elsewhere. In fact, even the ESRB have weighed in on the subject, determining that:

ESRB does not consider loot boxes to be gambling. While there’s an element of chance in these mechanics, the player is always guaranteed to receive in-game content (even if the player unfortunately receives something they don’t want). We think of it as a similar principle to collectible card games: Sometimes you’ll open a pack and get a brand new holographic card you’ve had your eye on for a while. But other times you’ll end up with a pack of cards you already have.

This is the sort of absurd logic that allows Pachinko parlors to exist in Japan despite more traditional gambling being illegal. “It’s not real gambling because you’re buying and winning steel balls… and trading them for prizes… which you then sell for real cash at a sketchy booth literally 5 feet from the parlor doors. But no slot machines!”

Maybe all the casinos in the US should start giving out commemorative business cards or wooden nickles to people who lose, so that they can avoid gambling regulations. You wanted X, and spent real money to get it, but got Y instead. #TotallyNotGambling

Look, we can have the semantic argument if you want. But you know it, I know it, the devs know it, scientists know it: loot boxes are gambling.

“The player is basically working for reward by making a series of responses, but the rewards are delivered unpredictably,” Dr. Luke Clark, director at the Center for Gambling Research at the University of British Columbia, told PC Gamer recently. “We know that the dopamine system, which is targeted by drugs of abuse, is also very interested in unpredictable rewards. Dopamine cells are most active when there is maximum uncertainty, and the dopamine system responds more to an uncertain reward than the same reward delivered on a predictable basis.”

Psychologists call this “variable rate reinforcement.” Essentially, the brain kicks into high gear when you’re opening a loot box or pulling the lever on a slot machine or opening a Christmas present because the outcome is uncertain. This is exciting and, for many people, addictive.

“What about Magic and Pokemon cards then!?”

Also gambling. In my replies on the subject up to this point, I played the role of TCG Apologist a bit. You know, all “these games feature pack opening as a central conceit, which is completely different than in Star Wars Battlefront 2, in which the system is just bolted on as a cynical revenue stream.” But… honestly? The gameplay of paper Magic exists completely independently of how you acquire the cards. If everyone who played had every card available by default, the only real things that would change would be the game being more fair (e.g. less P2W) and WotC making less money.

Keen replied in the comments of his own post:

I think what most people are conveniently ignoring is that with loot boxes and card booster packs you are trading one form of base value for another form of base value.

I put in $5, I get back a guaranteed set of cards that I must be willing to accept as worth $5, otherwise the exchange would never have happened.

Even Bhagpuss stated:

Lockboxes contain precisely the value you pay for them: if you buy $5 worth of lockboxes you have, de facto, agreed that there’s $5 value in them – you just proved that by paying $5, after all.

Please excuse my tone, but that is some Econ 101 perfectly rational economic actor bullshit. And a complete tautology besides. Like, how do you conceptualize a reality in which that is true, and yet the concept of Buyer’s Remorse exists? People make dumb economic decisions all the time. Are the people buying $2 lottery tickets doing so because they expect at least $2 of value in return? If they are, and they’re buying them when the jackpot is less than $500 million, they are irrational. The expected value of a $2 Powerball ticket is -$1.38. Similarly, the expected value of any given paper Magic booster pack will quickly (if not instantly) fall into the negatives, considering that the alternative means anyone can make free money by just opening the packs.

We can try and put a value on the “hope” and “dreams” of getting X instead of Y, but the bottom line is always the same: by virtue of paying real cash money, you had a chance at getting X and instead got Y. That’s gambling whether its a Charizard, a Black Lotus, or Boba Fett’s Rank IV Death from Above star card.

Is it legally gambling right now? No. Does the ESRB consider it gambling? No. But we all know what’s happening here, and the psychological mechanisms involved. Rational people do not buy loot boxes – the entire target market is for irrational people. And its profoundly sad, in a sort of “did we seriously give little kids candy cigarettes for Halloween?” way.

What do I want to see happen? Simple: a spade gets called a spade. Games that feature gambling as a revenue stream get labeled AO by the ESRB,  and the exact odds of any loot box are posted on a company’s website. If that also means people have to show ID to pick up Magic boosters, then okay. The less odious things would still survive, e.g. TCGs most likely, and the more odious loot box offenders would shift on to their next novel revenue stream. Hopefully one that does not specifically and (arguably) maliciously target people who can’t help themselves.

Do you guys remember when video game designers only got paid more when they made their game worth purchasing by more people? You know, that golden age of gaming in which producer and consumer interests aligned? Those were good days. I’d like to get back there at some point, without all the Consumer Surplus erosion.

The Big F2P Correction

Big props to Eph for bringing my attention to a recent Gamasutra article entitled “How the Data Implosion will trigger the Great Game Dev Correction.” In it, the author put his “100% predictive accuracy” record on the line to portend the coming (Date: TBA) collapse of the F2P market.

If you want the short version of the 3100-word article, here it is: erosion of Consumer Surplus.

Really though, the author points to two primary trends that have entangled with one another in a negative feedback loop. The principle one is that the User Acquisition Cost, e.g. how much money spent on advertising/etc, continues to increase. One of the main drivers of that is the simple fact that there are thousands of competing titles on the market, with more arriving all the time. While we like to imagine that more options are better, the truth is that nobody really goes past the first two pages of Google results, much less browsing all 21,000 new games that came out in the last month. By “mathematical certainty,” costs go up trying to find new customers, revenue goes down as a result, and studios close their doors.

…but not before engaging in some Consumer Surplus shenanigans.

See, the second part of the feedback loop is how most F2P game companies are engaging in their data-driven quest to extract the maximum amount of Consumer Surplus from each user. Think lockboxes and timers and “special, one-time deals” that are psychologically honed to trick you into believing them to be worthwhile purchases. The very real problem though is that consumers have finite money. Shocking, I know. Since all of these F2P titles are trying to extract the same pool of dollars, all that happens is that each individual app only receives a smaller share of them.

And even worse than that is what we as gamers come to understand intuitively: these games just have less value as a result. In every sense of the term. Studios are spending more time and development dollars on ever more novel ways of tricking you to part with your cash, than they are with creating content worth purchasing in the first place. But even when those two points intersect, we’re left with little to no Consumer Surplus. At a certain point, you are better off watching Netflix than having to spend precisely the amount of money as enjoyment received from a game.

Now, the author is predicting a Correction at some point, with the Creative forces – as opposed to Big Data – rising up from the ashes of a devastated (F2P) game market and commanding a higher salary since we all suddenly realize we want better content again. I’m… not so sure.

For one thing, the F2P genie is out of the Cash Shop bottle. There is zero reason to believe that the surviving games of a post-Correction world will leave that extracted Consumer Surplus money on the table. Secondly, the game industry itself has proven rather resistant to the notion that content creators should be paid practically anything. Undoubtedly part of that is due to the fact that everyone wants to be a (armchair) game designer and thus there is no market pressure to improve working conditions/pay. Hell, I wanted that job so much that I spent two years of college studying programming and Japanese so I could try to break into the industry back in the early 2000s.

Finally, there’s Minecraft. You know, that little indie game that was sold to Microsoft for $2.5 billion three years ago? While an excellent case study in why Creatives are better than Big Data, the fact remains that this “simple” game won the lottery in a way that will inspire decades of copycats and dreamers, just as WoW convinced everyone that MMOs were the next big thing. The MMO fever has mostly died down, but that’s because it costs $60 million a pop to roll the dice. Meanwhile, there are hundreds of thousands of people creating apps in their basements for free, let alone the corporate code monkeys churning out thousands of Flappy Bird derivatives. The cost of each attempt is so low, and the payout is potentially so high, that there is no reason to believe investors wouldn’t keep some pocket change flowing into basically purchasing Powerball tickets each week.

So, while I do agree there will be a Correction of some sort in the game industry, it’s ultimately not going to fix the flooding of garbage games. What I expect to see is a return to Curation: a sifting through the river of shit for those few nuggets of value. People will find the voices that they trust, and those voices will end up picking the winners and the losers. At least, up until the Curators become corrupted by studios throwing money at them, and the great cycle repeats.