Here’s something Trip Hawkins just told us that shed some light on what could be a huge challenge for the video game industry in the not-too-distant future.
True addiction is not healthy, it is a social ill. The government regulates gambling for that reason. European governments think that some games like Candy Crush Saga should also be regulated.
A console purist may think they don’t need to consider this topic but virtual goods economies are the future and the only growth segment in consoles is downloadable content, eg virtual goods.
First of all, in case you’re not familiar with the name Trip Hawkins, he was something of a visionary back in the early 90s. He graduated from Harvard in Strategy and Applied Game Theory, worked at Apple for a while, then founded Electronic Arts, now one of the biggest players in the industry.
But in 1991, Hawkins went his own way. In the middle of the Sega-Nintendo console wars, he launched his own console, the 3DO. Sega had launched a CD console a year earlier, and Sony was working on the original PlayStation.
Hawkins bravely jumped into the new market and garnered a heap of media attention, but ultimately, his gamble failed as 3DO struggled to quickly build a catalogue of high quality games in order to compete with the heavyweights.
He’s still making games, and recently launched the first title from his startup If You Can, an intriguing project called If… that aims to teach kids emotional intelligence.
As for his former competitors, Sega dropped out of the console race, and even the mighty Nintendo is battling to keep its place in gamers’ hearts and minds as Sony and Microsoft duke it out for supremacy. But the console industry itself isn’t exactly healthy, battling a major threat in the form of mobile and social media gamers.
Margins on consoles and console games have been whittled away to the point where it’s just getting too risky to publish anything that hasn’t already been proven. Publishers are making money, but in much the same way that Hollywood and McDonald’s are – i.e. not exactly flooding the market with great movies or revolutionary cuisine.
Over at King.com, the company built on one game, Candy Crush, booked a profit of $127.2 million for the first fiscal quarter of 2014 on revenue of $606.7 million – the third quarter in a row it reported over $600 million in revenue.
And when it comes to Candy Crush, that money comes from one thing – in-game purchases. After you lose all your lives, you’re locked out of the game for increasing lengths of time, but you’re given the option to buy back in if you can’t wait.
It’s so addictive, even the pokie barons are impressed. Jamie Odell, Aristocrat’s chief executive, told the SMH in April that the “very sticky” Candy Crush reveals some of the secrets to monetisation.
In the same article, gambling researcher Sally Gainsbury said the game relies on “a trick of psychology, which poker machine makers also rely on, called an ‘intermittent reinforcement schedule’.”
Players win easily at first and that makes them happy. But as they progress, getting to the next level is a bit harder, which makes the payoff even more enjoyable.
The addictive nature of such games and the costs associated with giving in to them is now starting to make some waves. The European Union released a statement earlier this month which called for better protection for consumers in online games.
Google immediately made moves to ensure games that allow in-app purchases were no longer be called “free”, and has built in a default setting for Android devices that ensures approval is needed for each purchase. Apple is yet to commit, telling the WSJ that its goals “is to continue to provide the best experience for our customers”.
Currently, a lot of the focus is on mobile casino gaming, where pokie giants such as Aristocrat have quickly moved to get digital versions of their machines online and had surprisingly healthy windfalls as a result.
In November 2013, South Australian Premier Jay Weatherill called for social casino games to be restricted to adults only.
But addiction is addiction, and as Hawkins says, “(it’s) not healthy, it is a social ill.”
And if selling virtual goods and downloadable content is the only way console publishers can make their money in the future, they’ve got some serious thinking to do about how they’re going to sell it responsibly.
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