In 2012, a studio created a game without a publisher. So we tried something new. Many studios are now adopting a “live service model.” Rather than costing money upfront, the game is free with “in-game purchases.”
MARY LOUISE KELLY, HOST:
The first way to make money playing video games is obvious. It's about selling video games to players. But about a decade ago, another method began to gain popularity. It's an in-game purchase. This is a typical part of the so-called live service model. My colleagues at The Indicator From Planet Money, Darian Woods and Wailin Wong, explain how it works and why more and more players are against it.
DARIAN WOODS, BYLINE: In 2012, Rebecca Ford was part of a team that had been making video games for years. The problem was that they couldn't sell it to game publishers.
Rebecca Ford: I had to pay my team's salary that month. And if we didn't have the means to support ourselves, everything would fall apart.
WAILIN WONG, BYLINE: Rebecca is a creative director at game development company Digital Extremes. And this company was like a band that had spent years making a beautifully orchestrated album, and now no label wanted to pick up the album. So Digital Extremes went indie. They self-published this game called Warframe.
Woods: And taking advantage of this newfound freedom, they released it in a way that's gaining traction in the gaming industry. Instead of selling a one-time game, this game is available for free download…
Ford: If you like it, buy the in-game currency. We update the game as often as possible to make it worth your investment.
Wong: In 2012, when Rebecca's company decided to release Warframe through this relatively new live-service model, she was panicking. That meant we needed servers, 24-hour chat, and a way to accept payments in-game.
Woods: It's like building an airplane while it's moving…
Ford: That's exactly what happened.
Woods: …to keep people there (laughter).
Wong: And she asked the game's players for help. Rebecca thought there should be a feature where players could provide update ideas. And this kind of player feedback was extremely important, especially when dealing with the sensitive issue of money.
Woods: So in the game, you might be able to pay real dollars for a new sword that gives you weird new powers, or you might be able to buy a special character that controls fire. Rebecca recalls this particular purchasing option that backfired.
Ford: For example, if a player spent a dollar to double the strength of their character, they would get very angry.
Woods: It felt unfair and unsportsmanlike. So they offered players a way to do the same thing for free.
Wong: And this ability to change paths is a benefit of live-service model games. You can always adjust and iterate. As the company added functionality, it noticed that the paid category of changing the look was gaining popularity.
Ford: We started adding things like scarves and alternate helmets. These are the kinds of things that really impact our ability to be a stable, stable place that we can put our payroll department.
Woods: For many games, cosmetics are one of the biggest sources of revenue.
Wong: And that revenue comes from just a few players. In the case of Warframe, only about 10% of Warframe players pay any kind of fee. In the gaming community, the people who spend the most money are called whales. They maintain this large ongoing production team, which can be expensive.
Forest: Warner Bros. Discovery publishes games like Hogwarts Legacy and Mortal Kombat. And this year, the boss said he wanted to lean more into live service games to reduce the company's volatility. That being said, he does have one title in particular that is underperforming at the moment. That's “Suicide Squad: Kill the Justice League.”
Wong: That may speak to growing fatigue with live-service games by gamers.
Woods: Rebecca says the criticism of the live-service model is valid. Especially when companies that are simply trying to make money aren't playing these games very well. Let's think about other types of games. Even if you pay $80, that's all the company will get from you.
Ford: But free-to-play games have no limits. For example, if you look at the amount of money I've spent on his Warframe (a game I made), he's spent over $1,000 on his games.
WONG: And the Federal Trade Commission has sniffed out that the monetization is going to be completely predatory. In 2022, the FTC accused Fortnite maker Epic Games of deceiving users into paying money in the game. Epic Games agreed to pay $245 million in refunds.
Woods: The lesson seems to be that getting too attached to money can backfire.
Wong: I'm Weilin Wong.
WOODS: Darian Woods, NPR News.
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Kelly: And if you want more articles like this, our colleagues at The Indicator From Planet Money are doing a whole series this week decoding the economics that fuel the gaming industry.
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