How video games make money: a brief history – Reader’s Feature

A reader examines the fair means and foul that games company use to make money, from remasters and remakes to loot boxes and deluxe editions.

With the rollout of Fallout 1st, I thought it would be timely to look through the history of the games industry and the new ways they have found of receiving income from the consumer. One caveat is I will be avoiding the mobile games market altogether, which by and large is a race to the bottom and could populate its own feature.

1971 – Arcade games
It can be argued that microtransactions have a root in the arcade games of yore. Lost your lives and want to continue? That’ll be another 50p please. Games would be very difficult or impossible to complete in one sitting, so that customers would continue coin-popping. Short of paying a small fortune for an arcade cabinet per game however, there was no real alternative.

1982 – Atari and Pac-Man
Atari, infamous for playing a significant part in the video game crash of 1983, decided to release a version of Pac-Man on their Atari 2600 console. All well and good, it would be a sound strategy bringing an arcade behemoth like Pac-Man into people’s homes. However, they decided to manufacture far more copies of the game than the number of consoles that had been sold at that point. There’s having confidence in your product, and just plain stupidity. They believed that the release of the game would increase sales of the console itself, which may well have happened but nowhere near to the extent that was required.

1986 – Remakes
As early as this, the first Ultima game was remade (even appearing on the Apple II, the same console the original released on). There can be real value in remaking games by updating classics using modern technology. Most importantly from a business point of view, nostalgia is a powerful marketing tool and can translate into easy sales. Ports of arcade games to home consoles were also starting to occur.

Games have been re-released or ported onto many different consoles, more commonly now via online storefronts (Okami has been released on seven different platforms in one way or another).

1991 – Enhanced consoles
The PS4 Pro and Xbox One X are not new ideas; the upgraded or enhanced console had just not been seen for generations (ignoring the New 3DS). The Sega CD was an add-on for the Mega Drive which, as the name suggests, allowed for games to be played via the CD medium. The most high-profile release was Sonic CD. The Sega CD had the hallmark of a stopgap until the Sega Saturn was ready and had limited support. Nintendo would later release (in 1999) the 64DD for the Nintendo 64 which only came out in Japan and was even more ill-fated.

90s – Expansion packs
The progenitor of DLC, expansion packs were a popular way of adding content or extending games on PC. As such, they would generally be cheaper than a full new release.

90s – Yearly releases
Predominantly the purview of sports games, FIFA is the most prevalent in this country. Since 1993, there has been a FIFA game released every year. In some years there have been more than one, with a separate version to tie-in with the Euros or World Cup. By their very nature it is difficult to improve or iterate massively on what came the year prior, however they are still released at full price. As the public is happy to pay for it at full price each year, this isn’t going to change.

1996 – Subscriptions
A game called Meridian 59 was released on PC. No, I’ve never heard of it either, however it appears to be the first genuine MMORPG (massively multiplayer online role-playing game) where a monthly subscription fee was required. There have been many since in this lucrative industry, with probably the most well-known and enduring being World Of Warcraft. While the term games as a service only emerged in recent years and has come to mean something quite different, this really began with the MMO.

2006 – Microtransactions and storefronts
The infamous horse armour for The Elder Scrolls IV: Oblivion is the earliest high-profile example. Microtransactions have been used to buy anything from in-game currency, to specific items, skins, skill points/experience for your character, and ‘time saver’ unlocks. These will always be a popular inclusion for publishers as it is practically free money and no real effort is needed to implement them. The problem is when games are designed around a grind and so it becomes more tempting to purchase so-called time savers, giving you a boost in experience/level/skill points, etc.

Recently, Ghost Recon Breakpoint’s storefront launched with pretty much everything you could think of that can impact the game being available for purchase.

2006 – Downloadable content (DLC)
Expansion pack style offerings began making their way to consoles by way of DLC. This would often be story-based expansions and for a time, map packs in Call Of Duty. Miniscule amounts of DLC would start to be included as pre-order bonuses as well, sometimes giving a bewildering number of different versions for different retailers, playing into the fear of missing out and encouraging consumers to pay full price to receive the bonuses.

Mid-2000s – Deluxe editions
I’m not confident on when this became a practice, however it seems to have exploded during the PlayStation 3/Xbox 360/Wii generation onwards. Deluxe editions will often include some sort of memorabilia like figurines, concept art book, and DLC. This then developed into further tiers and editions being made available, with some costing in excess of £100.

While writing this I stumbled upon a Jim Sterling video about special or collector’s editions that don’t have the game included (not even the download code), surely that’s false advertising? I assume these are primarily to catch kids or parents out who then have to buy the game separately as well. Would the film industry try to sell a ‘special edition’ Blu-ray that only had behind-the scenes features without the movie itself? Bonkers.
(It’s actually quite common, as it’s meant to be for people that already own or have pre-ordered the game separately. It makes much more sense to us than spending £100 on a game you don’t even know whether you’ll like or not. After all, special editions for movies will invariably be for a film you’ve seen and enjoyed already – GC)

2007 – Toys to life
Another game I’ve never heard of till I started this is called U.B. Funkeys. The likes of Skylanders and Disney Infinity would follow and for players to unlock everything would require financial outlays in the hundreds of pounds. Nintendo got in on the act slightly differently with amiibos, although these can be used for several games to unlock certain features. In general, toys to life has mostly died out.

Late 2000s – Digital releases
I’m not sure when digital releases of standard retail releases started, but I do remember when I first thought it was ridiculous. One of the Red Faction games for PlayStation 3 was also available on the PSN store for the princely sum of over £65 (or thereabouts). Standard physical retail prices would have been around £40 to £50. It continues to baffle me why digital releases are more expensive when there is no manufacturing cost (not to mention the logistics) and every sale is one less that otherwise could have potentially ended up in the second-hand market.

Recently, digital games can be pre-ordered as well, with payment having to be made at the point of doing so. Legally I’m not sure how solid this is, what if the company were to go bust and were unable to release the product? Pre-ordering anything physical the retailer will not take payment until the item has been dispatched for delivery.

2009 – 2013 Online passes
Publishers started to implement a system whereby a code would be shipped with the game to allow access to online features. This was in a concerted effort to discourage purchasing second-hand games. Curiously one of the first examples was Mass Effect 2, with some bonus content requiring an online code before EA realised it would suit their numerous sporting titles down to a tee. The practice ended in late 2013, which coincides with Sony banning the use of online passes for all PlayStation 4 games.

2009 – HD remasters
The God Of War Collection was released on PlayStation 3, and due to its success spawned countless others being released on all platforms since. More of a halfway house between a port and a remake, as the gameplay and design isn’t fundamentally changed but they are engineered to look a bit better. Due to low (or non-existent) backwards compatibility of modern consoles, these types of releases became much more appealing and viable.

With Microsoft making progress and pursuing backwards compatibility, I wonder if via the Achievement system they can use that to track the games that are linked to accounts and have them available for download/streaming for the next generation. As this would upset publishers this is probably a pipe dream.

2009 – Kickstarter
I believe the intention is genuine for a lot of developers searching for funding through this platform and in principle this is a great idea; however, what I see as the problem is how the backers are treated. This seems to be a grey area with little legislation around it, but to my mind the backers are funding a business proposition, and as such are investors and should be receiving dividends on the revenue of the product. There are very few protections around how the funding is used and it is a big leap of faith that they will not cut and run with the money.

Surprisingly, even a studio as well regarded as Obsidian has used Kickstarter to fund both Pillars Of Eternity games.

2010 – Loot boxes
Firstly, I want to go back in time to demonstrate a curious change of attitudes in consumers. As mentioned earlier, in 2006 horse armour DLC drew much ire and mockery from fans and publications. As far as I can tell this was a cosmetic item only and did not affect abilities or gameplay, etc. Fast forward to the present day however and the insistence now is that so long as loot boxes or items of this type are cosmetic only, that is acceptable. While I agree that if there absolutely has to be loot boxes in a game, it should not alter the gameplay mechanics or competitiveness of a player to their advantage, but it is worrying that our attitudes have changed in the first place.

Loot boxes made the transition from mobile games to mainstream games in 2010 in Team Fortress 2. Since then the market has steadily become more saturated with them, with Overwatch frequently used as the example of how to do loot boxes in an acceptable manner.

In terms of marketing 2K missed an open hoop (ahem) with NBA 2K20. If their infamous My Team trailer had been a mockery of the industry with an about-face that, actually, none of this is in the game – you can earn it all simply and fairly by playing (like the good ol’ days!) – it would have helped their reputation no end.

Elements of games are being designed around loot boxes as well, Middle-Earth: Shadow Of War had a very grindy endgame section to encourage loot box purchases to bolster your armies with higher-tier orcs. It should be said that they did, by and large, patch the grind out at a later date.

A common practice to protect review scores is introducing loot boxes, storefronts, or microtransactions after release. Reviewers are unlikely to revisit games on this basis, plus any online backlash by the community will be lessened by the fact it’s not a new game and fewer people will be playing it.

2011 – Season passes
These are often released for purchase at the same time as the game itself, with the idea being you are purchasing all DLC that will be released for the game, at a cheaper rate than buying it separately. The problem being, there’s often not much indication of what the DLC will be or its quality and, worse still in my eyes, the consumer is essentially buying a promise that the developer will make and release this content. For example, if Anthem had a season pass, following the game’s colossal flop EA have far less or no incentive to follow through with the original plan and would release content that is half-baked at best.

2019 – GTA Online Casino
PEGI’s reasoning as to why NBA 2K20 is rated age 3 and does not contain gambling is that while you can spend money on chance-driven aspects, you cannot win any money from it, which you could argue is actually worse than ‘real’ gambling. This brings me nicely to GTA Online’s casino… Now to be clear, this is present in a game that is rated 18, and so from that point of view it is less controversial. However, we all know the reality that many under 18s will own a copy.

There is no obligation to pay real-world money to avail yourself of the casino’s pleasures but more often than not you will lose in a casino, so once your in-game GTA money is burned out then the temptation to use hard currency will be all the greater. If this were present in any other game then by PEGI’s NBA 2K20 rationale it wouldn’t be gambling? Publishers are getting by on a technicality as the law (as is often the case) hasn’t updated with the times. There are signs that this will change in the future however, as MPs become more curious about these practices.

Similar to loot boxes being added post-release, if something akin to the GTA Online casino was added post-release to a game not rated 18 (and the law updated to say this is gambling), how would physical copies of the game get re-classified? They would have to be recalled completely to alter the packaging.

2019 – Fallout 1st
It seems pretty much every mistake that could be made with Fallout 76 has happened. The obvious comparisons to Xbox Game Pass have been done to death, along with the perfect timing of The Outer Worlds being released this year, which I will purchase at some point. Those who did boldly pay for this ‘premium’ service found that two of the main features did not work; I assume Bethesda thought it was a simple case of changing one or two parameters and everything would be fine?

Now in any other business you would get a refund but as it’s the gaming industry you get a promise that it will be fixed instead. Another gamble is that anyone who paid for a year’s subscription upfront is assuming the game’s servers won’t be turned off in that time. This would be unprecedentedly quick were it to happen but still, it’s a possibility.

With how shoddy the release of Fallout 1st has been, I do wonder if it was cobbled together last-minute following the delay of Doom Eternal until next year. Is this merely to prop up Bethesda’s financials now they have no Christmas release to bank on?

What’s more worrying about this episode is the ideas it will give other publishers. We may see ‘enhanced’ subscription packages for games like FIFA, whereby if you subscribe you have better odds at receiving higher-rated players in Ultimate Team.

That concludes the timeline. I am sure there are some that I’ve missed!

There is nothing wrong with finding new ways to make money as the world and industry changes, every business will adapt to stay competitive and relevant. The problem is the shady, manipulative and tricky means that have been employed in the past decade or so. It is only a matter of time before the industry gets taken to task and ends up having regulations forced upon them. And who knows what the next big gold rush will be before bad publicity tames it.

By reader Mark Collingwood

The reader’s feature does not necessary represent the views of GameCentral or Metro.

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