“Land Upgrade coming in 46:59:38. Upgrade instantly for 499 stars.” Thus goes one variation of the quintessential social game Tap Zoo, which actually makes you wait to play unless you pay (499 stars costs around $39.00). Many gaming enthusiasts today consider the predatory tactics of social game developers like Zynga to represent a cancer in the industry, but a look back at the history of pay models in video games suggests that while distribution models have certainly changed, the underlying logic has largely stayed the same.
Arcade games held a public fascination for a decade starting in the late 1970s, and their pay model closely resembles the “pay more to play more” mentality of modern social games like Farmville. Every time you die in an arcade game, you are given the option to pay a quarter to continue playing. Naturally, the further you’ve gotten into the game or the higher your score is, the more compelled you are to spend more quarters to continue playing. This concept, which we will call Virtual Value, sits at the heart of the economics of video games. Despite the variety of pay models that have existed in the video game industry over the last three decades, this central question has always remained: How do real people value the virtual space?
Introducing the Apogee Model
It was 1987 and legendary developer Apogee Software was having trouble making money. Eschewing retail releases, Apogee often sold their games as shareware: you could download the full game for free and retroactively pay for the game if you liked it enough. Shareware distribution wasn’t profitable enough to sustain the fledgling developer however, and thus the Apogee Model, better known as the game demo, was born. Apogee started to release their games in an episodic format; you could download a portion of the game for free and then had to pay to play the rest of the game. Virtual Value is established by inviting the player into a space they want to spend time in, and then forcing the player to pay to achieve the feeling of resolution that comes with a completed experience. The role of the demo has started to change however; nowadays a demo for a very popular game will be bundled with a niche title to incentivize buying something you don’t actually want.
Danger and Digitalization
As video game consoles like the Xbox 360 and PlayStation 3 and online gaming platforms like Steam expand their online capabilities, more and more video games have relied on Downloadable Content (DLC) to supplement the interactive experience. DLC allows the developer to make extra content for a game even after the game is completed; a player can spend an extra $5-15 for a few extra single-player levels, more multiplayer maps or better weapons. Virtual Value becomes contested here, as gamers feel like they have to pay extra to get what they deserve: the full experience. This problem is compounded by the fact that DLC is often offered exclusively with new copies of a game, an attempt by publishers to combat the threat of used games sales. When the retail model is completely eliminated by online stores like Steam, the virtual value problem becomes even more pronounced. When a man tried to sell nearly $2,000 worth of games his Steam account was banned, suggesting that you don’t truly own what you pay for in the digital world.
Although most pay models discussed up until now concern themselves with paying for a certain amount of content, the popular massively multiplayer online (MMO) genre typically offers a subscription model, where players pay a monthly fee to play the game, but no content is actually restricted. Whereas the arcade machine pay model favored skilled players who didn’t need to pay quarters for continues, the MMO-subscription model favors players who can devote more hours to justify their purchase. If an MMO starts to lose profitability, it will often resort to a Free-to-Play model, where a player can play the game up to a certain level for free before they have to start paying the subscription fee. The dark side of this comes with Zynga’s popularization of microtransactions, where players can pay to rapidly improve their game character, ultimately leaving non-paying players unable to compete. Critics of Farmville and the many “social” games that the hit Facebook game spawned note that you don’t so much play the game, but are rather forced to return at odd intervals throughout the day to collect your rewards and justify your commitment to the game. Games like Farmville make their money by allowing you to pay for the right to not have to play when the game tells you; if you don’t want to get up at 4:00 AM to water your crops (sleep is something the player values), then paying to speed things up becomes a tantalizing idea and the extra expenditure becomes justified.
Changing the Game
The economics of video games are changing once again. Tim Schafer’s development studio Double Fine recently decided to fund their next game through Kickstarter, an online site dedicated to giving consumers an opportunity to directly fund interesting projects. They set their goal at $400,000, and they recently broke the $2,000,000 mark. Yes, that’s two million dollars donated to fund a game that hasn’t even started development yet. While many are rightfully calling this a paradigm shift for the industry, it’s really just another approach to the concept of Virtual Value. At the end of the day though, virtual value is actually just real value, and whether it’s a physical product or a digital one, gamers are going to have to pay to play.