In late 2008, Bobby Kotick – the CEO of Activision Blizzard – was quoted as saying the following after his company decided not to make sequel follow ups on certain intellectual properties they acquired: “With respect to the franchises that don’t have the potential to be exploited every year across every platform with clear sequel potential that can meet our objectives of over time becoming $100 million plus franchises, that’s a strategy that has worked very well for us.” This caused an uproar in the gaming community – using the word “exploit” in your strategy for games was not something you want consumers to get wind of. But Kotick’s vision of “exploiting” yearly franchises was something that would be pretty regular in the years to come – not just for Activision but for other companies. Running games into the ground while they’re popular and milking every last cent out of the consumer before throwing the IP onto the trash heap and moving on was profitable for the big names.
Just take a look at the following year, or as some like to say: “the year the plastic instrument died.” In 2009 alone Activision released: Guitar Hero 5, Guitar Hero: Metallica, Guitar Hero: Van Halen, Guitar Hero Smash Hits, Band Hero, DJ Hero, and Guitar Hero on Tour: Modern Hits. This doesn’t even include their competitor in the music game genre Harmonix who released The Beatles: Rock Band, Lego Rock Band, Rock Band Unplugged, and three separate physical Rock Band Track Packs for Rock Band 2 (which had released the prior year). This would basically mark the end of jamming out with your friends with fake instruments craze as the market became supersaturated and the franchises were no longer deemed profitable after dismal sales in 2009 and 2010.
The CEOs of the big video game companies have never shied away from showing that they are only in this to make money. After all, the video game industry is a billion-dollar industry. In fact, international video game revenue was estimated at $91.5 billion US dollars in 2015. That’s a lot of cash.
But here’s where the problems lie: the video game entertainment industry as a whole is still very young. While it started in the 70s and has been growing exponentially ever since, there’s been little to no regulation on what developers can and can’t do outside of the ESRB (Entertainment Software Ratings Board – i.e. the people who decide if a game is for Everyone, Teen, Mature Audiences Only, etc.). As such, the people in charge of the big companies will buy out smaller companies and close studios at a whim. They will force crazy overtime crunch hours on developers (think 80+ hour work weeks) only to lay off people after the game is complete. And, of course, they will try and squeeze the consumer for every penny they possibly can by trying out as many different “exploitative” practices as they can.
The unique thing about the video game industry is that it has grown and matured almost hand-in-hand with the internet age. As such, lots of the anti-consumer practices the video game publishers have tried have only been possible with the rise of the internet for everyone. But because it’s grown with the internet, social media and instant feedback has also had an effect on publishers and their exploitative policies – because the consumers could fight back immediately and harm sales. So as per usual the internet giveth and the internet taketh away.
Let’s take a look at a few of the highlights of the video game industry’s attempted exploitation of its consumers, culminating with the most recent loot box fervor.
The first big controversy was the famous “Horse Armor” scandal. In 2006, Bethesda released what they called “Horse Armor” downloadable content (DLC) as an add-on for their single-player game Oblivion. For the low price of $2.49, you could buy armor for your horse. At the time DLC was a relatively new thing – and gamers were not on board with this. It was a purely decorative skin for your horse…and it was an offline, single-player game so the only person that would see the armor was you. It was ridiculous and caused an outcry. People thought it was a bad practice, and developers watched and learned as Bethesda took it on the chin for them. “We will not be exploited!”
Oh, how $2.50 for cosmetics seems quaint now.
Downloadable content became an accepted thing over time. Some games would offer skin packs for reasonable (or unreasonable depending on your view point) prices, others would actually add new, meaningful content to the game – extra areas, new weapons, new characters. Gamers eventually warmed up to the idea that – if priced right – more content for a game they love would be a good thing. But as we all know – video game publishers want to push their audience’s good will to the limit. They poke and prod and see just what they can get away with until one goes over the line. Bethesda was the first, but they wouldn’t be the last.
In 2012, Capcom released Street Fighter X Tekken. It was a much hyped crossover game featuring characters from two of the most popular fighting franchises – Street Fight and Tekken (duh). Everyone was excited about it…until it dropped and people who bought the game discovered that not only did the disc have all the characters and stages and what have you – it also had fully-fledged characters that had been promised as “future DLC.” People were able to crack the disc and play as fully functioning characters that you were supposedly going to have to pay $20 more for in a month’s time.
It was a PR disaster for Capcom. After all, gamers had understood “DLC” as just that – downloadable content. Content that wasn’t finished yet for the game, but would be meaningful additions in the future. So why am I paying $20 more for things that are already finished? More importantly, it’s already on the disc I bought, what am I paying $20 for? A key to simply unlock stuff that’s already there? The game’s popularity tanked pretty quickly. It didn’t meet Capcom’s sales expectations and was generally regarded as a failure after the intense backlash.
Other publishers were watching and learning – consumers expect DLC to be meaningful and not just already finished components that they’re blocked off from accessing. Which is our right as consumers. But Capcom wanted to see just how much blood they could squeeze from that consumer rock. Turns out – not that much.
Now one of the huge things that publishers liked to complain about was the sale of used games. They felt that used game stores like GameStop were cannibalizing their overall bottom line – and remember, their bottom line is what matters here. There was a slow but steady push toward a digital future – where physical games would cease to exist and publishers would always get money from digital sales – and could also control the prices.
Microsoft tried to spearhead this movement in May 2013 when they unveiled the XBox One. With their new system, they announced that game discs would essentially be “licenses” for gamers. Essentially you would pay for the disc which would install the game and connect it to your XBox account. Moving forward, your XBox would then have to connect to the internet once every 24 hours to prove you owned the game; otherwise you would not be able to play any games with that account. The thought behind this was because the license could only be linked to an account once from the disc, the physical copy would become worthless and unable to be traded in – thus used game sales would drop. Borrowing games would become non-existent as well since you could not give your friend a copy of your disc as the license would not activate. Microsoft was clearly keen on keeping publishers happy over consumers.
As you would expect, there was intense and immediate backlash. Two sides emerged – one side said this was the future of gaming and that Sony’s PS4 would have the same used-game prevention technology. The other side said this was an anti-consumer policy that violated rights of consumers and that Microsoft had really overstepped their boundaries in trying to keep publishers happy. At E3 2013, Sony dropped its bomb: there would be no restrictions on used game content and games would play as normal. You can watch the crowd reaction below – it speaks for itself.
Within a week of Sony’s announcement – Microsoft had rescinded its used game policy and said that its XBox One would not have any of those things that they’d announced it would have a month before – no online authentication, no licenses, nothing. Could it have been because Playstation 4 pre-order sales had shot through the roof and XBox One pre-orders had plummeted in comparison? Possibly. But Microsoft’s pandering to publishers left a lasting impression – even now, four years later, Sony and the PS4 are still overall selling better than the XBox One.
Surprisingly, publishers complaining about used game sales cannibalizing their profits also disappeared after the public backlash. Almost as if they had been pushing and prodding and seeing what they could get away with all along.
Speaking of pre-orders, pre-order culture has long been a problem with video games. Publishers love pre-orders: it allows them to see if their marketing is working, how much product they can expect to sell in the first week, what their market share and mindshare look like…and best of all, if the game sucks they’ll already have your money. Game publishers love hype and Day One sales, because if they crank out an awful game they can still profit because so many people were already getting it on pre-release hype alone.
Because of this, publishers have poked and prodded and seen what they could get away with in terms of bonus pre-order content – things further incentivizing players to pre-order their favorite games so they get extra cool stuff they wouldn’t get if they waited. It started out small – if you pre-order you get some cool cosmetic skins for your characters. But then it got worse – there would be specific content locked to certain retailers – if you pre-ordered from Amazon you got this cosmetic for this character, but if you pre-ordered from Best Buy you got this cosmetic for this character. (All pre-order bonuses would eventually be available for purchase through DLC for a small fee, of course). It got ridiculous, to the point that small missions and actual game content would start getting locked behind retailer-specific pre-orders. Video game enthusiasts were grumbling and complaining about this pre-order nonsense for a while, and of course a publisher would poke the bear and bring it all to a head in the name of seeing what they could get away with.
In 2015, Square Enix announced Deus Ex: Mankind Divided. With it, they announced their “Augment Your Pre-Order” campaign. Essentially there were five “tiers” to pre-ordering, and as more people pre-ordered the game, better tiers of pre-order rewards would be unlocked – culminating with the best reward being everyone who pre-ordered it got to play the game 4 days before everyone else. This was the end result of many years of gaming the system through pre-order bonuses – a publisher trying to wrench money from consumers through reward tiers of extra content and the promise of getting their beloved game a few days earlier than everyone else -because people love having something before anybody else does. But if you don’t pre-order, you’re not going to get all your content for free – so pre-order and tell your friend to do it too!
The reaction was swift and punishing. Pre-orders for the game flopped hard, and within a month Square Enix had walked back their campaign, saying that all the reward tiers would be available to everyone who pre-orders or purchases the game day one regardless of how many actually pre-order. But the damage to the game had been done. Mankind Divided ended up delayed and then when it came out it only did meager numbers. And so greedy publishers learned not to lean into pre-orders as hard, or the consumers would fight back.
Which brings us to today. Last week, I talked about how Electronic Art’s Battlefront II had predatory gambling components in their game. At the time they had reduced the cost of the important characters so it was less of a grind (game-wise or monetary-wise) to obtain them. Well, a lot has happened since then. Consumers were cancelling pre-orders and complaining en masse about the unfair loot boxes and microtransactions associated with them. After this intense backlash and a phone call from the Disney CEO (this is Star Wars, after all) – EA removed the ability to spend real money on microtransactions within the game. Not permanently, they said, but for now. (This is publisher speak for we’ll see if we can sneak them back in at a later date without anyone noticing.)
This, of course, put EA in a bind because its investors are expecting a tidy profit from a Star Wars game. So out of one end of their mouth, they’re promising that the removal of microtransactions aren’t going to hurt the profitability of Battlefront II. But if that’s so, why are they even in there in the first place? Obviously – they’re trying to see what they can get away with. And boy, did they screw the pooch on this one.
Because it’s not just the game players that are getting in on the action here. Governments in Belgium, Australia, and the great state of Hawaii are saying they’re going to launch investigations into whether loot box microtransactions in video games are considered gambling. And if they are, they’ll have to be regulated – because we can’t be letting children gamble, now can we?
Battlefront II’s launch has been a complete mess of public relations for Electronic Arts. After all, this is yet another time where the video game publisher thought they could push the good will of the consumer just a little bit further, only to have to blow up in their face. But this isn’t just going to affect sales of their game – no, if the government actually gets involved this could have ramifications for the future of the entire industry. A whole, gigantic way for the big guys to drain money out of the little guys could be closed off.
Time will tell how this eventually plays out. But as of right now – I couldn’t be happier to watch yet another video game publisher learn a little humility.