Just One More Go – Loot Boxes and how game firms make money under scrutiny
Now, top level games such as Grand Theft Auto V and Red Dead Redemption 2 have a cast of thousands and gross millions more than any movie and forthcoming titles such as Cyberpunk 2077 starring Hollywood A-listers like Keanu Reeves launch with all the glitz and glamour of a premier.
With all the additional talent, design work, writing and technological advances, the funding model of the industry has to be adequate to meet its demands. £50/60 or so for a top title is the average price and most gamers would think that’s fair.
So what happens when software companies want to monetise their products further?
A lot of games have additional content made available six months or so after launch that adds new missions, characters, clothes, weapons etc that aren’t available in the base game. This Downloadable Content or DLCs can be as much as £20 or £30, half the cost of the original game but add genuine additional content that isn’t essential to the main gaming experience.
Some games have two or more DLC additions a year so users can purchase Season Passes which while expensive in their own right, see the purchaser saving money if they were to buy all the DLCs individually.
Most gamers understand and accept the concept of DLC and it’s very much left to the customer to decide if they want it or not.
Things have gotten more complicated recently with the addition of Loot Boxes to certain games.
These could be seen as micro-DLC and offer cosmetic items to add to a character or in games such as FIFA 19, a footballer who you can add to your Ultimate Team – your online XI that you use to play other players and can include football superstars from all over the world. The best players, Lionel Messi or Christiano Ronaldo for instance, are the rarest and most valuable.
They can only be obtained through purchasing Ultimate Team player packs using in-game coins. The coins can be acquired through completing various challenges within the game but the quickest way is to buy them using real money.
There is also no guarantee with a player pack as to which players you are getting so if you are looking for your favourite player, you might have to buy a lot of packs which could quickly add up to hundreds of pounds.
Now executives with the software companies will point to the fun element of collecting players and the addictive surprise when it comes to opening packs. They recently told a panel of MP’s that they are more similar to Kinder Eggs in that respect, where the purchaser is just happy to receive any prize – not specifically the one they want.
More sober commentators and experts reject this and think Loot Boxes are gambling aimed specifically at children, which a lot of evidence supports. Problem gambling and child gambling are becoming hot-button issues and games companies will be desperate not only to preserve this lucrative revenue stream but also avoid being labeled as child corrupters in an increasingly woke PR climate.
EA, publishers of FIFA 19 also have previous when it comes to embedding loot boxes within a games mechanic and a public uproar saw them having to remove it from their Star Wars Battlefront 2 title.
They will have taken notice of the ramifications facing the high street bookmakers industry when their main revenue driver – Fixed Odds Betting Terminals or FOBTs – saw their maximum stake limit reduced from £100 to £2.
It’s an important lesson for any business with a defined revenue stream – things might be great when the sun is shining but one day the government or a lot of angry parents could suddenly decide that you’re persona non gratia and suddenly it could be game over.
Many parents are finding children running up hundreds, even thousands of pounds on these loot boxes, with the money disappearing from their bank account or run up on their credit cards, putting them into debt problems. Basic parental controls don’t seem to be enough anymore as children are getting around them.
Chat to one of our expert advisers now and we’ll arrange a free initial consultation to discuss what your business can do if the money tap is turned off for good. We can advise on business funding for struggling companies or how to restructure and reinforce your business now before the difficulty level gets too much.