Studio Closure

News of Telltale Games’ closure highlighted the fact that quite a few game studios have closed this year. There has been a lot of reflection on everything from the precarious nature of work in games, to the viability of certain types of games, as well as an outpouring of support for at least some of the developers affected. I count at least two personal acquaintances among people affected by studio closure this year, and so have wavered in even approaching this topic. The closing of a business is unremarkable, but the disruption it creates to owners and workers can be life changing. My problem is that I am only equipped to talk about the closing of a business, and so can only offer an impersonal take on a personal issue. My hope is that despite this limitation, I can offer a possible explanation for what is going on, what it means, and how we might respond to it.

Why do studios close?

A studio closes because it has more money going out the door than coming in and it is unable to bridge the gap. This is a boring reason which accounts for the majority of closures of any business, not just game studios. It has nothing to do with hot takes on there being ‘no audience for that kind of game’, the developers being bad at their job, or an asserted (and counterfactual) correlation between wokeness and brokeness. These explanations are great examples of reasons that seem obvious until you think about them and then they make absolutely no sense. So we’re going to think about them.

A studio’s revenues are going to be tied to their ability to sell games, and so surely if there is no audience for its games it won’t be able to stay open. This is certainly possible, but it ignores the fact that the studios that have closed have fairly established track records and it assumes that a studio’s costs are fixed, which they are not. I had never heard of a game called ANATOMY until just now, but it’s the top selling game on itch.io. There’s an audience for that. Tastes change, and audiences can grow and shrink, but if there’s an audience for a $3 indie I’ve never heard of, there’s an audience for an established developer and their back catalogue. Now, reaching that audience, setting an appropriate price, making sure the lights stay on before the games are released, and scaling operations to match circumstances are all factors that will affect a studio’s ability to stay open, but this is a much narrower scope than what is implied by pontificating on ‘the state of the market.’ Business management often isn’t sexy, but it’s what’s at play here. Spiderweb Software and Grey Alien Games have been around a long time, despite armchair market analysts declaring there being no market for those types of games.

For the same reason, the skill of the developers has very little explanatory power. The majority of studios being discussed had established track records, and only two of the 10 major closures had an average metascore of less than 70 (and most were in ‘green’ territory). Anyone who has worked in a poorly run office knows that the first people to detect problems are the rank and file staff, and they are often able to do a good job despite the situation they find themselves in. The number of people who directly control the kinds of decisions that ultimately determine if the studio has enough cash to keep going is very small and management quality is not a characteristic you can directly observe in a game. You cannot point to games you don’t like and say which one was the product of poor management without some external source of information.

There is, however, a perfectly plausible and boring reason for a profitable development studio to be shuttered. We’ll start by considering a subsidiary of a larger company. If the parent company sees opportunities to earn a greater return than what it can earn from continuing operations at a given studio then, from a purely economic standpoint, it makes sense to allocate those resources towards their most effective use. This is the same logic that applies when someone decides to take an office or teaching job instead of being a cashier at McDonald’s. This is not intended to be a normative claim (at least without a number of qualifiers and clarifications) so much as it is an intuitive illustration of how a studio that is successful by one criteria (profitability) may be untenable to another criteria that may be more relevant to the final decision maker.

Companies that are not subsidiaries face a similar risk. Telltale’s closure was surprising because it had seemed to be successfully turning around from its earlier troubles, with critical success for the latest Batman game and sequels to its most noteworthy releases (The Walking Dead, and The Wolf Among Us) in development. The culprit seems to have been withdrawal from financers, Lionsgate, AMC, Smilegate, or all three. As with a parent company, the inability to find financing is as much a product of the opportunities available to the financiers as it is their assessment of the studio’s future prospects (it is also worth noting that gaming is outside the core business of Lionsgate and AMC). Anecdotally, it also seems that Telltale was attempting to reduce the cost of producing its games and so it makes the failure of the financing round all the more frustrating, since it seems to reinforce the idea that Telltale could very well have successfully continued save for the fact they could not be financed long enough for the turnaround to finish.

None of this is to say that no game studio has failed because the underlying product was bad, or that they released an overpriced game into a crowded market. Gamasutra is filled with those kinds of post-mortems. But these kinds of explanations don’t credibly explain why 10 studios with experienced teams have closed, while the boring accounting explanation lines up with the known facts. The question is, what do we do with this information?

Human resources

It’s upsetting that something so boring from a business standpoint creates so much turmoil for individuals. Nobody who has lost their job as a result of the processes above is likely to take much comfort in knowing that the parent company perceived them as a lesser opportunity, or that the bosses failed a funding around, nor should they. But is there anything more I can say beyond pointing out that it’s foolish to blame the people who are now looking for a new job for their circumstances?

The closures have added a sense of urgency to a broader conversation about working conditions and the possibility of unionizing. There isn’t a lot to add to that discussion when focusing on closures. It would be better if large numbers of workers did not need to lose their job without severance after working countless hours of unpaid overtime for this conversation to resonate, but we play the hand we’re dealt. Beyond the possibility of it being a catalyst for change, I do have a slight sense of optimism that stems from a longer term view and a particular perspective of what a game studio is.

In simplest terms I think a company that makes video games is a machine that turns person hours, computers, and software into games. If that machine can produce the same game with fewer hours, computers, or software then it has become better at making games (this is equvalient to saying they make a better game with the same resources as well). Computers and software are not able to organize all of these factors in more effective ways, but people are. The real thing that differentiates one video game making machine from another are the processes it has in place to make sure it makes video games better than all the other game making machines. People learn over time and also compete which means that we are getting better games at lower prices than ever before. To put this in perspective, you can buy the full game Deus Ex today for the inflation adjusted price of the Doom shareware demo in 1994.

We are left with two facts: a company/video game machine failed for one reason or another, and that the people, the most important part if you want to build a company of your own, are now available to be put to better use. This is where my optimism comes from.

The closing of a studio means the destruction of that process that organized the factors that make a game unless someone steps in to preserve it. Most of the time it’s not worth saving since it was one that resulted in a closure, but since the closing of the previous company had little to do with the people who are now unemployed, there is a wealth of experience and talent just waiting to be put to good use and comes with the added bonus of being able to tell you “Don’t do that, that’s a really dumb idea” if you repeat the same mistakes. My personal hope is that some of the developers who are affected by the layoffs don’t wait to be picked up for a new venture, but are the ones who develop the better way of doing things. If this happens, then we can continue to expect more, better, and less expensive games in the future.

This optimism is not simply a product of wishful thinking. Poor treatment of the talent, and so poor management, certainly was a factor in the closing of some of these studios. You simply cannot expect talent to flourish in an environment where it is overworked and viewed as expendable without severance. Talent may persevere in such an environment, but how much productivity was lost through the failure to attract/retain talent and the inefficiencies created through overwork? A future Telltale should retain the features that allowed it to be a unique voice in gaming, while making sure those working there are taken care of and that management has their interests in mind when times get tough. This does not even need to be altruistically motivated (though it would be nice), since an experienced worker familiar with the process will simply do more and better work than an equally talented but unfamiliar worker.

Some of these dynamics in terms of unrealized value being unlocked with the closing of studios are on display through the willingness of other studios to hire some of the people affected by the layoffs. Better run studios don’t just gain the value the former employee was bringing to the studio that was closed, but the value that wasn’t being realized by an inferior process.

In the short run the layoffs are tragic and I wish people didn’t have to go through this sort of thing. In the longer term, this can be a more positive thing. Because life is short, and while it may be comfortable in the short term to remain in the status quo, I am not convinced that anyone is well served by staying in a position that is not using their talent to the fullest. Is it really better to carry on through a succession of mediocre years at a firm that values you less? Or is the short term shock in employment worth moving to something that better uses your talent? I suppose to some extent this is a matter of preference or risk tolerance, but this is how we seem to sort out the best allocation of our time and resources as a society.

Of course, different countries handle this allocation better than others. Canada may enable the creation of some of these new studios through government funding. Some forms of social assistance can help ease the transition. Unions and employers can help in this regard too, as industries with substantial booms and busts often do need to encourage the workforce to save for low points in the cycle. With all this in mind, I do believe it is better that unproductive uses of people’s time go away and that they be freed to do something they are better at, and this is partly due to my own experience.

Dismal science fiction

After high school I worked in the film industry. Specifically I worked in the camera department and worked on quite a few science fiction shows that are a bit old now but are still the sort of thing I’ll hear “I loved that!” about. This is the kind of job I know lots of people are desperate to get into, and I made decent money doing it. I never took a holiday or a break until a strike came and there simply was no option to work. After a few weeks I realized how much I had come to define myself through this work and how unhappy I was without being occupied with the 12-16 hour days of setting up or rolling.

I had a few false starts but I ultimately went to a college, originally with the intention of studying philosophy. When I took an economics class I was fascinated by ideas like comparative advantage and wanted to learn as much as I could. I needed to overcome some truly atrocious math grades from high school and a lack of sophistication with that subject, but the interest in econ got me through it. College turned into university, which turned into admission to the honours economics program, which turned into graduate studies.

That’s at least one way of looking at it. The truth is, my friends who knew me during the film years and after (before I enrolled) said I would be very well suited for university and that I would love it. I’ve always loved reading, and what time wasn’t spent on set was spent at the library. I was focused on the short term certainty of a profession that I was competent at, but, on reflection, did not truly align with my deeper passions.

Would it have been better if I didn’t do film? Probably not. I did get a better work ethic when working in it, and I was an undisciplined student as soon as I knew I was going into film. Would I want to repeat the transition period? I would probably want to hit the person writing this post if I read it during that time, because things got very dark indeed. But with the benefit of hindsight I can say that whatever my limitations as an economist (and there are many), I am better suited to it than moving camera stuff for the rest of my life.

I  also recognize that my optimism is also a reflection of the fact I was fortunate enough to land on my feet. This is why I do not take it for granted that existing social programs are sufficient, or that nothing should be done to make these transitions easier. The fact is we all do better if people have the least friction possible in being able to find that better use of their talent. I am no longer taking up the job for someone who was born to lug camera gear and movies got a little bit better than they otherwise would have, while I’m now at one of the few places that uses a fairly arcane subject I studied at university.

Even if I didn’t count friends among people affected by this year’s layoffs, I’ve read enough about the difficulty of working in games that the closures sound like insult to injury. But I’ve also gotten a peek at how the story ends. These workers are smart people with a unique set of skills. Some may find they’re happier or better suited to another line of work, while others will find themselves at studios that better appreciate their contribution. Some may finally have had enough and found their own studio and realize the projects that went ignored. And so my disappointment at hearing the misfortune of others must always be mixed with a hint of excitement at the possibilities of what they may now accomplish.


Note on affiliate links: I have an affiliate status with GOG.com for which I am given a portion of sales for traffic I drive to the site. The inclusion of a given title is for illustrative purposes first, but when it is available on GOG I will provide such a link. As always, I encourage you to do your own price comparison or buy on your preferred platform.

Finding your next (not so) hidden gem

Every once in a while I get the question “Where do you find all these cool games?” so I thought it would be good write about it. It just so happens that a Kickstarter for such a game is happening right now, so if you do nothing else, please check out Nighthawks.

I should admit that I don’t know of any special technique that ejects cool but relatively undiscovered games. Answering the question means describing a fun way I’ve been engaging with games that has also resulted in me finding some interesting stuff. The question about finding “those games” is an acknowledgement that there are more and better games to play than ever before, with the side effect that it is harder to find an individual title by browsing. We’re not so much looking for new information as we are looking to effectively sort through what we already have.

One obvious place to look is where you’ve found good games in the past. If you played Transistor or Pyre, there’s a good chance it’s because you enjoyed Bastion. But follow ups to popular products take time, and sometimes you’re looking for something brand new. When I reflect on how I’ve found some of my uncommon choices, it’s not very different from following developers who have made things I’ve liked. The only difference is a greater emphasis on people over products. Studios are active on social media, but so are the people behind those studios. Taking an interest in those people, and following the ones you find interesting lets you peek backstage.

There are reasons why following developers who are active on social media is an effective way to find new games in the early stages, but we should focus on why this is worth doing on its own. Following these kinds of accounts is fun. Beyond the sneak peeks, you get to see the personalities behind the games. This can enhance your enjoyment of games as every once in a while that personality slips through and you recognize it. Social media does not always produce positive encounters, so being a source of positive interactions (even just a simple ‘like’) is mutually beneficial and so worthwhile in its own right. It will also expose you to different perspectives.

The inclusion of different perspectives is what gives you access to new games. This makes sense because we are looking for information about a game that someone else has. We don’t know when it will happen, which is why this isn’t a fast track to ‘scoops’, but this should be good news since we enhance our enjoyment of our existing games, as well as find out about new ones.

Following individuals gives you a direct view of what people are playing. Better still, sites like Twitter also display interactions such as likes and retweets of other developers, allowing you to find other people with interesting perspectives. Individuals talk about what they’re working on, keeping you informed up front. As a bonus, they talk about what friends are working on, which means there will be links to demos and crowdfunding. These mechanisms complement each other, since it is remarkably easy to overlook Yet another Early Access/Kickstarter/Itch Demo. Repetition from multiple sources does a nice job of finally getting you to act.

I am always looking for new and interesting games because I like games and there is a benefit to me as a small streamer to find cool and underplayed games. I have every incentive to be on the lookout and yet I fail much more than I succeed. I love the Shadowrun games but needed HBS to e-mail the slacker backer campaign for Battletech before I was aware of it. A friend let me know about a voice audition for Unavowed (which I  chickened out on, partially because I thought it looked really neat and so no place for amateurs), and yet it took everyone Tweeting about it for me to finally check out the Steam page. It required three people tweeting about In Other Waters before I finally Kickstarted it and that one turned out to be a project mentored by Weather Factory (which is a heavy recommendation for me since I enjoyed Cultist Simulator so much). I had a chance to get a Shadowhand key which I didn’t take because I didn’t think I could make time for it, though I have since bought, played, and enjoyed it. All these games clearly have value to me through either my backing decision or my enjoyment on release, and yet I’ve come to them kicking and screaming, not Kickstarting and streaming.

Repetition from multiple accounts is a powerful way to get you to pay attention, which is why the benefits from following developers extends beyond their own products and out to the accounts they follow and engage with. And if you follow interesting people, you get to learn things. Yes, I see things that annoy me or that I consider unfair, but I do my best not to treat Twitter as a complaint box. Since the exercise is about finding information I don’t have, listening is better than talking.

Social media is a convenient tool, but it’s not the only one. I have flogged Cultist Simulator and Nowhere Prophet at a local gaming bar to anyone who will pay attention. In return I found out about Slay the Spire. I also visit a local gaming collective to see what what is being made in my own backyard. I also did this before I moved to where I am now.

None of what I’ve written here is new. It’s an exposition on a perspective and why it has been effective at refining a search for new games. Even if we were indifferent to the people making the games (and shame on you if you are), they talk to and support each other when they have something new coming up. Tapping into that network doesn’t just inform us of what is going on, but gives us a beacon to guide us out of our suspicion of untried products.

Of course, no article like this would be complete if I didn’t talk about some of the things I’m interested  in right now. I’ve seen Richard Cobbett as a punny commenter on a lot of Alexis Kennedy’s tweets, along with hints from the latter that something cool was coming up. There’s a Kickstarter for his game Nighthawks going on right now which very much fits the “You’ll probably like this when it comes out, so why not make it a reality” mold, and came to my attention exactly through the channels outlined in this article. Eric Billingsly let me try out a game he was working on called Hexagon Falls which was really enjoyable and had a funny tweet. Sean LeBlanc always seems to have something to show at each meetup, and I will never forget how he had the entire room in the palm of his hand with his MMO. Sophia Niergarth showed off a prototype of her game Full Feather, which looked really interesting, and she was remarkably thoughtful and articulate when we spoke on Twitter. Jesse Ringrose has been showing off these interesting little clips of a game that I now know is called Spek.

All of these games are in various stages of development, and if I even know anything about the people behind them at all, there are no common threads in terms of personalities or interests. Each of these games and their creators had something that caught my attention. It is too easy to walk by cool stuff like this and never think of it again, which is why I like following as soon as I can. Even if these projects don’t turn out, or become the thing that originally interested me, these are people who have made something I found interesting at some point. I am much more likely to find something interesting from them, than I am a Steam or Kickstarter sorting algorithm.

 


Note on affiliate links: I have an affiliate status with GOG.com for which I am given a portion of sales for traffic I drive to the site. The inclusion of a given title is for illustrative purposes first, but when it is available on GOG I will provide such a link. Naturally I encourage you to do your own price comparison or buy on your preferred platform. I include, on occasion, affiliate links from other broadcasters to support people who helped me in a given post or the cast in general. For this article, Humble Links support the streamer JessyQuil.

Your EA Takes Suck

EA is an awesome company that makes good games and you sound like a moron when you bash it. EA bashing is the gaming version of clapter. If you’ve ever watched Real Time With Bill Maher, you’ll immediately know what I’m talking about. Clapter sounds a little something like this: “Hey, how about [politician] right? What a moron!” waits for applause. There’s no real joke there, but that doesn’t stop people from clapping. Here’s some EA clapter:

img_1856

There’s no point. It’s just taken for granted that EA is so terrible and out of touch that a premium subscription service that costs less than Netflix or a WoW subscription is beneath comment. My new favourite hobby when I’m in a gamer bar is to mention EA and watch total strangers come up and unload on the company. And this is the mild stuff. YouTube is full of shouty men whose only purpose in life is to heap scorn on the publisher. This week we hit a new low in blaming EA for the recent shooting in Jacksonville.

None of this makes any sense. You may not blame EA for the shooting, but there are still way too many people using that company as a shorthand for the worst in gaming. If I play the odds, most readers will have liked some EA clapter in their social media feeds, or have issued one of their own. I am here to tell you your takes on EA suck. I will bring evidence for this fact. I’ve brought enough evidence to deal with as many goalpost shifts as I can stand and I still know the response is going to be “Yeah but…” So let’s get this over with.

If you hate EA so much, why do you keep buying their games?

We can now add the response to Cowen’s report on Battlefield V’s pre-sales to the long list of times idiots have crowed about EA’s imminent demise. This genre is pretty old now and has its origins in finding out that watching YouTube and dumping on the hobby is easier than having an original thought. But you want finances? I’ve got finances.

There are five game publishers traded on US markets: Activision Blizzard (ATVI), Electronic Arts (EA), Microsoft (MSFT), Take Two Interactive (TTWO), and Zynga (ZGNA). I’ve removed Zynga since it’s a mobile focused publisher, and had to do the same with Microsoft since the information will be tangled up with a majority of non-gaming activity. Since these companies trade on US markets, they must file with the SEC and these filings are available in the EDGAR database. If you would like to follow along while finding out why your EA takes suck, I will be using form 10-K, the annual report.

This is also the point where I expect a bunch of whining “Biased analysis” objections since publishers like Ubisoft, Paradox, Capcom, or SquareEnix aren’t included. These companies don’t file with the SEC since they are not on US exchanges. If you think an analysis of the publishers of Battlefield, Call of Duty, Grand Theft Auto, Civilization, XCOM, Need For Speed, Diablo, Bioshock, World of Warcraft, and Dragon Age is not representative, give me a good explanation why and then I’ll consider addressing the inevitable objections based on obscure European accounting differences that will follow when I add the other publishers.

Since everybody’s talking about how EA’s going to fail because of their business decisions, let’s talk about profitability. Here are five years of financial returns (note: the year is the period ending, so 2018 = 2017’s games etc.).

profits

EA wins three out of five years, usually with a healthy margin. Overall EA brought in $191 million more than its closest competitor, Activision Blizzard. Case closed.

But this isn’t convincing and it’s not because EA won. When EA stumbles there will be no shortage of commentary about why financial success is the only true measure, but since I am not a half-wit I must hold myself to a higher standard. If EA spent $1 trillion to achieve the results in that chart, while Activision Blizzard only spent $20 (coffee and muffins for the design team), then Activision Blizzard would be the better publisher. To normalize these results let’s see how many dollars in revenue (not profit, but total goods and services sold) each dollar spent generates:

efficiency

Here EA beats the competition in all years but 2014 and is the only publisher with a clear upward trend. For every $1 EA spent last year, it generated $4.03, while Activision Blizzard generated $2.76. Why do gamers care about this number? Unless EA is robbing banks or putting a gun to your head, it makes its money like its competitors: making and selling games. This measure says EA has a really good idea of where to spend its money, because when they spend a $1 making a game, the result is something we are willing to spend $4 to play.

“Aha! This proves that EA is screwing us!” I hear you, a moron, say. For this to be true it would have to mean that despite a ‘guaranteed fun’ refund policy, streaming, and Metacritic, EA (and EA only) has been fooling gamers for five years and not only has nobody caught on, but they have only become more credulous. Or we can say that EA’s pretty good at finding out what the value of their games is and making you pay up for it. But let’s leave aside your obvious appetite for EA games and look at what goes into the costs we are talking about.

Everyone knows that EA is a greedy corporation that doesn’t care about games and is only concerned about making fat, cigar chomping businessmen money. Hell, we just need to look at Kotaku’s piece on Mass Effect: Andromeda to see this inefficient bureaucracy in action. I bet they only sell so much because they spend so much money marketing their games. For our next chart, we will assume that all administrative and marketing costs are the same as putting the money in a big pile on the floor and setting it on fire. This chart shows how much of each dollar has been burnt upon the alter as an offering made by fire for a sweet savour (lower is better):

markAdmin

While not the lowest, EA consistently spends less on marketing and administration for each dollar of expenses than Activision Blizzard, and by a wider margin than the difference between itself and Take Two. The worst you can say about EA is that it does no worse than its peers in this regard, which is a quite the concession given how pathological the hatred of the company is.

(As an aside, I would like to take a minute and say how unfair and totally detached from reality this measure is. To see why the premise of “Marketing and admin doesn’t count as gaming” is nonsense, you only need to spend 10 seconds reading marketers like Haley Uryus of Failbetter. Watching a trailer for a game like Stellaris will also help you appreciate how marketing can play a role in helping to create the fantasy that is played out in the finished product. Anyway, back to your terrible EA takes.)

If you invert this measure and ask what proportion of expenses go towards the elements of the game you see on screen (higher is better), EA is at the top in all periods but 2014.

inverted

This is because the assumption that all expenses other than marketing and administration go into the games is not a good one for Take Two Interactive. That’s right, EA isn’t even the worst company when I bias the measures against them. The SEC filings show us that EA is a company that makes a product people want to buy, and puts more of its costs directly into that product than its peers. People buy EA games because they’re great games made by talented people.

But what about the quality!?

Let me guess, now financial reports don’t capture the true essence of gaming. How do I know that talented people are making games there? This is EA we’re talking about, the publisher that kills anticipated games and eviscerates beloved studios. I know because the people who work at these companies told me. Here are the Glassdoor rankings for the three publishers:

  Rating # Reviews Recommend to a Friend Recommend CEO
ATVI 3.8 130 82% 87%
EA 3.8 1900 79% 89%
TTWO 4 56 84% 98%

Identical between EA and Activision Blizzard, with Take Two pulling ahead by 0.2. EA’s finding comes from 1900 results, over 10 times more than the other two publishers. EA only lags in recommendations for a friend to work there. But this is just the corporate side of these companies right? I’m sure if we started looking at ‘real game development’ we’d see how bad EA is. Once again I’m sandbagging EA on this one, because if I drilled down to individual divisions I would be presenting EA Montreal’s 4.8 to Blizzard’s 4.5 and you’d accuse me of biased measures.

What about the games themselves? Everyone knows EA makes terrible games that everyone hates! Here’s Metacritic:

2018 2017 2016 2015 2014
ATVI 75.7 71.0 72.0 67.1 62.5
EA 73.2 79.7 71.9 74.5 74.7
TTWO 72.8 77.2 77.7 75.7 78.0

EA achieved the highest score over the five year period and is in the middle of the pack for the five year average (74.8). EA is last in only one period by 0.1 point. Activision Blizzard’s five year average doesn’t even break 70. Which of these publishers has the most franchises that have sold at least 100 million copies? EA. Too high of a bar? What would you prefer? 50 million copies? 20 million? 10 million? 5 million? EA, EA, EA, EA. And that’s after I included Barbie for Activision Blizzard.

Your complaints are stale

Hate loot boxes? What publisher removed lootboxes due to player complaints rather than regulatory change? EA. What company completely removed them and expansion DLC from the latest iteration of a major franchise? EA. And then you complained about women being on the cover. Because it’s never really been about the games has it?

The only reason you hate EA is because some guy on YouTube said EA was bad and he was angry enough, or British enough, or maybe angry and British enough. Either way, you were definitely stupid enough to believe him. The funny thing is, there was even a time you could rightly criticize the direction that EA was going, and it changed right around the time people developed these unshakeable priors that the company could do nothing right. Commentators who had no idea what they were talking about unloaded on EA for every last perceived slight in gaming as a whole. Remember when day one DLC was beyond the pale? How dedicated servers were non-negotiable? Commentators changed their minds on the individual business practices, but EA retained its Goldstein status. Influencers’ private gripes with a publisher were uploaded into an internet hive mind that will believe anything it is told. There will be people who die hating EA who have never once experienced any of the things the internet complains about.

This is why your EA takes suck. The EA you’re attacking doesn’t exist and never did. All that this baying signals is that you’re someone who believes any nonsense they hear on the internet and will repeat it ad nauseam. Think $100 a year is too much to pay to access EA’s premium titles? Don’t buy it. I only got the Basic level myself because I’m scared if I go for Access Premier I’ll never stream anything else. But reducing it to a response of “HAHAHAHA” only tells me you’re going to pay that much to play one game instead of an entire library of them, and that you don’t really know that much about gaming other than what people on the internet tell you. This is true of all EA clapter. It’s unfair, it’s old, and it makes all of us dumber.

Fortunately, it’s never been cheaper to tune you out. For $5 a month, I can try out some EA financed indies like Unravel or Fe and not think about people being angry on the internet. You know, like a real gamer does.

Subscription Conniption

A new generation of consoles is released and PC gaming dies again. Google makes us stupid. YouTube serves up algorithmically chosen banality over quality shows. Television replaced the golden age of cinema with tawdry soap operas. Radio distracted children from their studies and turned their brains to mush. The printing press made our thoughts sloppy and cheapened scholarly work. Writing itself made us forgetful and replaced instruction with the illusion of wisdom. In short, everything you love is being replaced with the worst kind of nonsense.

I have a quiet admiration for people who warn of the dangers of technological progress, because they know their track record and will always be terminally uncool. Most of these takes weren’t even wrong, just incomplete. We can point out the problems, but the long term benefits are hard to spot. So what do we make of the present interest in streamed and subscription gaming? Is it a threat to developers as gamesindustry.biz (GI.biz) would have it?

History

To answer this question we need only look to the recent past. US movie production in 2000 produced 2,000 titles and approached 7,000 by the year 2012. This is despite the introduction of subscription streaming services by Netflix, Amazon, and Hulu. The share of box office revenue from non-MPAA member studios increased from 20% to 50% over the same period. These movies also take the largest share of ‘top movies’ for their year measured by Metacritic, Rotten Tomatoes, and user scores. TV production more than doubled from 100 new series to about 250 over the same period. Digitization drove this growth and a significant part of that change was in distribution. The worst we can say is that subscription streaming did not hinder the growth in movies from 2000 to 2012. The same can be said for music and book publishing.

Netflix began to produce its own shows in 2012 and it is instructive to know why they did this. Licensing costs were increasing as rights holders realized the value of their content. Netflix’s choice to create content was as much a bargaining chip in these negotiations as it was an effort to gain and retain users. Disney is expected to make its own streaming service, and HBO is already streaming.

This anticipated landscape resembles a likely future for gaming. Humble, the last non-publishing subscription service, started in 2017. Netflix established itself because studios did not realize the value of their libraries. This experiment can only be run once, and so incumbents are the ones driving this model for gaming.

The Threat

At its core the GI.biz article is more concerned with subscriptions. Streaming may be a catalyst for subscriptions, but the threats come from subscriptions. The distinction matters since subscription services exist now and do not require the same kind of investment streaming does. If a subscription model is a threat to developers, then that threat is here now and does not go away if streaming fails.

This means I am less interested in concerns based on streaming such as the availability of mods. This is a problem consoles have been living with for a while (and for which there is a solution). It is better to focus on how developers get paid and how they navigate the marketplace in the future.

The article identifies discoverability as a threat to developers. Specifically, it worries that a platform’s games will have priority over third party ones. It also fears a drop in financing, though I think this begs the question. A concern about access to sales information stems from a real problem with Netflix.

In essence, the article is worried that developers will receive less money for their work. The most convincing objections present specific mechanisms that make this happen. The subscription model is consumer friendly, but at a cost to developers. We should not be indifferent about developers or view the relationship as adversarial. Intellectual property protection is not consumer friendly, but we value new works enough to make it law. Adverse effects on the supply side will find their way back to the consumer.

Are these threats serious?

One comparison we can make with GI.biz’s list of threats is to the status quo. Here discoverability and market information are less convincing. How many copies did Cultist Simulator sell on Steam in two weeks? Only Steam and Weather Factory know. Weather Factory practices open production and is transparent about their sales. However, Steam  does not permit developers to publish sales information for their platform. Valve has a notoriously testy relationship with SteamSpy, mirroring the Neilsen/Netflix spat. Title specific information will likely depend on whether the rights are bought outright or on a per-play basis. Not having access to sales data is still a loss, but we are already reliant on 3rd parties for market information.

Discoverability is another problem we already deal with, but could it become worse? A platform prioritizing its own games over third parties sounds like it would. Would a platform have any reason to do this? A glance at Origin Access shows EA titles in the top 10. But then, a purchase of Origin Access implies an intention to play EA games. Extending the list to games I can see on my screen, I find Orwell: Ignorance is Strength, Mad Max, and Cities: Skylines above Titanfall and Battlefield 1. Scrolling down there are a number of excellent indie games listed above cherished titles in the EA back catalogue like Mass Effect or Dragon Age. The costs of making these games are sunk, and so the goal of any platform is to maximize the number of subscriptions. Mediocre games boosted by tweaks to the algorithm carry the risk of the platform being percieved as low value. The only case where such a tweak might make sense is a per-play license that exceeds the cost of maintaining an internal title. But we need to ask: Just what kinds of independent developers are we talking about there? Have I missed an entire genre of independent games that are lower cost and direct competitors to Madden, Need for Speed, Assassin’s Creed, and Battlefield? Platforms should be trying to buy these developers if they exist, not license from them.

Financing is the final concern, but I’d like to reframe it into more than an assumption that revenues drop. If an individual title’s influence on a subscription choice is low, licensing terms will be unfavourable to developers. Reduced revenues mean future projects of similar scope are less profitable, making investment less attractive. Alternatively, since projects are largely self-financed budgets necessarily shrink. But project scope is not fixed. Profit margins can be restored by making smaller games or reusing existing tools and assets. If the resulting games are too small, platforms will need to pay up. This is a different environment for developers, but not necessarily a hostile one.

These concerns aren’t baseless, but are they a threat to developers beyond normal shifts in the industry? Does the fear that developers will face lower revenues outweigh the concern that Fortnite is successful at the expense of other games? Is the potential for algorithmic tweaks a greater threat to discoverability than the shift to Steam Direct? Perhaps we are better served in viewing subscription services as a shift in gaming that carries opportunities along with threats.

Differences under subscriptions

Here is a good article on Eurogamer about game endings. It charts the progress of, well, progress (like the title says), guided by commercial context and technological constraints. Every one of these changes could have a “threat to developers” article written about them, and in a sense they would be right. Arcade machines are not what they once were. Saving permits players to ruin the experience for themselves. MMO’s really do require investments unavailable to independent developers. Steam Direct has meant it is harder to get your game noticed than before. And yet gaming has never been better and more people are making them.

The printing press did not usher in an age of peace and quiet contemplation, but we do not consider that a vindication of its critics. Recognizing the difficulty at appreciating the benefits of a given innovation, how might we think about changes that might come from a broad adoption of a subscription model?

If games are bought outright or licensed for a term (as opposed to a per-play like on music services), this seems to bring a degree of certainty to developers. Developing around expected revenues from a license is a less uncertain prospect than trying to triangulate tastes, price, and attention into a successful release. Furthermore, just as streaming has not replaced Blu-Rays (or even DVDs), we’re more likely to see a hybrid future. Licenses can provide a cushion for a less successful release, or even give a game a new lease on life as is already happening with Humble and Twitch Prime.

The consumption behaviour of players in a subscription service will change. Marginal costs for new games on a subscription service are zero. Players will no longer need to ask “Is this game worth X?” before playing. Not too long ago we were talking about the death of the single player game. Removing the implied price/time ratio puts single player back on a level playing field. What matters is if the game is attractive enough to play and if the time spent is worth it.

Even the GI.biz threats carry their silver linings. Tyranny, Orwell, The Witness, and This War of Mine, are nowhere to be found on the Steam Top 100 but are on Origin Access (Top 70 no less). Even if platforms were to prioritize their own games, third party games can be compared across platforms. This doesn’t just provide an estimate of how well a given game is doing, it identifies niches for particular platforms. Instead of betting everything on ‘charting’ on Steam, a game can leverage success on one platform into launches on others.

There are also clear negatives. Subscription services will likely reintroduce gatekeepers. This benefits incumbent developers, but means we miss out on unexpected successes. These games are good candidates for an ownership model or a niche platform. Signing with a subscription service may just as easily become an aspiration for developers instead of a necessary evil.

One way to gain perspective is to ask if we were to invent the games industry again, would we choose the status quo we seem so attached to? We’ve switched to digital distribution, but in some ways we’ve just replaced walking with clicking. We still buy the product, and the expansion packs are now smaller and cheaper. MMOs and Free to Play are notable and successful exceptions, but the majority of games still follow the old model. Is there any reason to see this as any more natural than an arcade?

One major shift in perspective a subscription model will inspire is a view of games as complements instead of substitutes. It’s hard to see the purchase of a game that’s not yours as beneficial on a storefront. Games in a subscription model will benefit from players being able to switch between games without cost. This is an environment that rewards faster, innovative work.

The benefits and detriments of a subscription model are far from certain, but we should resist the temptation to see it as a threat over a technological shift. Developers who can work on a budget and produce unique experiences are well positioned for a future where players can experiment without cost.


Note on affiliate links: I have an affiliate status with GOG.com for which I am given a portion of sales for traffic I drive to the site. The inclusion of a given title is for illustrative purposes first, but when it is available on GOG I will provide such a link. Naturally I encourage you to do your own price comparison or buy on your preferred platform. I include, on occasion, affiliate links from other broadcasters to support people who helped me in a given post or the cast in general. For this article, Humble Links support the streamer JessyQuil.

L’Affaire le Laissez-Faire

A little over a month ago Valve issued warnings to the makers of adult visual novels and others which became publicized resulting in controversy and uncertainty regarding the status of games with sexual content on Steam. A few weeks later Valve reversed this implied decision and announced that they would open the store to anything that they “…decide [is] illegal, or straight up trolling.” A lot of commentary seemed to react to, or at least occupy the same space as, Leaf Corcoran’s (of Itch.io) response that the new hands off approach was “ridiculous” and to keep “malicious, derogatory, discriminatory, bullying, harassing, demeaning content” off of Itch. Gamasutra summarized a number of reasonably high profile comments here.

Given that this news is already a month old, the best I can offer here is a room temperature take, but I’m struck by how the focus has been on free expression when I don’t think this is really what is at stake here. For all the effort to form two poles between the Itch and Steam approaches, the main differences are technological. Before weighing in on any of the commentary, I’d like to begin by examining possible reasons for Valve’s actions.

The economics of keeping games on Steam

Valve’s announced laissez-faire approach to Steam should be viewed in light of the original news that there was a coming crackdown on sexual content in games, which invites us to ask why Valve might want to take a game off of its platform. Valve has a pretty good deal going with the Steam where games pay $100 to be listed (recoupable after $1,000 in revenues), and they take 30% of revenues, meaning their variable costs are matched by increases in revenues and their slotting fee ensures the developer is on the hook for at least some of the on boarding/vetting costs of a game that does not sell.

Since the on boarding costs are sunk, why would Valve ever want to stop selling a game? There are likely two sets of explanations: Costs directly relating to the title itself, and knock on effects from a certain class of product. Direct costs are fairly intuitive to understand. For instance, Grand Theft Auto (GTA) seems to be a perennial favourite when it comes to identifying entertainment products bringing about the decline of civilization and so carrying that title also means assuming the liability of angry people complaining that you are carrying a product that brings about the decline of civilization. In physical stores these encounters are diffused among different locations and staff. For a digital storefront they are taking on the sum of complaints which will be directed to their staff who could be tending to other requests from other games, and are doing so on the internet which tends to alter the character of the interaction. Nobody would seriously consider removing GTA from Steam, but dealing with the associated complaints do represent a real cost for carrying that particular game over a less controversial title.

Indirect costs are a bit easier to understand when considering a class of games. A common complaint about Steam now is the discoverability problem: Getting a game in front of its audience when more and more titles are being released. Some genres take less time to create games for and so it is to be expected that there will be a proliferation of low-cost titles entering the market on a daily basis. The indirect costs can be summarized as follows: Valve may take 30% of sales, but if the problem is severe enough that customers are shown games that do not result in sales over games that would have, everyone loses. These costs can be compounded by discouraging developers to release on steam or even create the game in the first place, though it’s doubtful we’ve reached this point (this will be covered later). Forgone sales are one of the more quantifiable indirect costs, but the main point in considering both costs is to show that some titles will be more costly for Valve to carry than others and that it is likely there is a class of product that can be identified as such.

In light of these added costs we can now consider Visual Novels. Visual Novels are relatively low-cost products with a straightforward production model. So long as the game can sell more than the costs of obtaining art, words, and someone to glue it altogether, it makes lots of sense to put it on Steam, and the tools built to create the first game (say a script that links certain phrases with displayed character emotions or a set of templates to produce characters faster) can be reused, lowering the costs of future games. None of this is to make a quality judgement, as there are clearly people who  enjoy these games, and some of them (Dream Daddy, Hatoful Boyfriend, Doki Doki Literature Club) seem to have appealed to players who do not normally engage with this genre, but this is a recipe for overproduction and the potential crowding out of other titles.

A noticeable number of Visual Novels also follow in the fine tradition of independent and European films trying to sell into the US market. Hollywood has an edge on production value and spectacle, and so rival offerings need to offer something to entice audiences away. While I’m sure there are defensible aesthetic reasons for doing so, it is not a coincidence that these films have a fairly high incidence of the leading lady, sometimes the leading man, and sometimes everyone else taking their clothes off. Sex doesn’t just sell, it’s high margin. As with film there are plenty of Visual Novels that do not fit this description, but there are many that do and by their very nature are the most attention getting. Whether this is because the Visual Novel field is crowded or it is just one of the conventions of the genre, a product in this space is more likely to contain sexual content than a product in another genre.

Returning to our evaluation of costs, it’s pretty clear to see how both the direct and indirect costs can be higher in the case of Visual Novels, specifically adult ones. If discoverability is a problem, the economics of Visual Novels are such that we’d expect them to be a larger contributor. More importantly, the higher incidence of sexual content means that Valve will need to spend more time vetting entries to ensure compliance, and likely committing to additional costs as patches will likely command greater scrutiny than a game like Opus Magnum. Finally, it is likely there will be a higher incidence of reporting/complaints with this kind of game, either due to hostility at the lack of quality or with regards to content. Whether any of this seems fair or not, it is understandable for a company like Valve to turn around and say that these games are more trouble than they are worth and to reevaluate their place on Steam. The focus on games with sexual content suggests that Valve was aiming to curtail simple games whose primary draw was titillation, regardless of their profitability. The subsequent focus on the content of these games (as opposed to their volume) is unavoidable, as it seems to have been the only condition for reevaluation, but the motivation here is not personal dislike on the part of decision makers at Valve but the fact that this content was associated with other costs that Valve no longer wanted to bear. This distinction is important as it explains why The Witcher 3 or GTA V did not face the same scrutiny.

The economics of opening up Steam

Just as games have indirect costs, so do policy decisions. A vocal subset of gamers were upset, but this doesn’t carry very much information nowadays. Likely more concerning to Valve were the expressions of uncertainty on the part of game developers. As Amazon, Netflix, and Google will tell you, content is king, and so Valve has a vested interest in being the first place developers think of when it comes to distributing their game. There are strong network effects at play with Steam, and while they can be difficult to unravel, they can do so swiftly. If the speculation in the preceding section was at least somewhat correct, then the uncertainty of the developers who have already been chosen for removal is no big loss, and it’s debatable if this can be read as “First they came for the adult Visual Novels and I said nothing…”, but the publicity resulting from the reevaluations serve as a reminder for something that has always been true: A ban (de facto or de jure) from Valve can destroy your company. A large number of developers are not just big unhedged bets on the PC gaming market, they are bets on Steam itself. If your business model is built around releasing lots of small, low-cost DLC, Valve is one submission pricing decision away from making it unaffordable, and the announcement can come right in the middle of production. If you made small games that can be completed in under two hours, guess what the refund policy did to your revenues. I’m not sure if Valve has ever done anything quite so heavy handed as what was implied by the reevaluations for sexual content, but introducing this level of uncertainty will leave firms wondering if their next title should maybe be a mobile game instead.

The uncertainty created by Valve’s decisions is something of their own making given that they are so tight lipped, but it also made the announcement of the new plans all the more noteworthy. A statement from Valve is also a useful point for a summary since everything above has only been speculation on news about Valve. We know firms were contacted regarding the reevaluation of their games for content and that this became a fairly prominent news story. From Valve we know they were responding to that public discussion, that they are changing course, they now prefer the laissez-faire approach and will collect their 30% while only intervening in the case of illegality and trolling. We’re left asking if this is a good decision and what the consequences will be. Following our reasoning above, this essentially means that the uncertainty felt by developers after the news about reevaluation was more costly than the decision to leave things on the platform. This seems plausible seeing as developer uncertainty can be an existential threat to Steam in a way discoverability is not, as well as the fact that Valve privately contacted the developers for reevaluation but publically posted when responding to the media coverage of that decision. Valve’s post does also spend a lot of time talking about discoverability which inclines me to think that this has always been the focus.

Had the story not been public then eliminating the biggest problem spots (cheap titillating content) was seemingly the lowest cost way of clearing the channels and helping discoverability. The uncertainty created through the subsequent publicity was more costly than the gains from improved discoverability and so the decision was reversed. However, reversing the decision doesn’t solve the original problem and so the second best option is to invest in technology to help mitigate the discoverability problem. The opening of the platform adds another dimension to the problem, but I suspect in part it lessens the burden on the people handing reports and curation as the only real decision rule will be the Valve defined category of “Trolling” which may not reduce the volume of content complaints but can reduce responses to boilerplate “Valve does not curate…” messages.  The case for Valve’s reversal being caused by developer uncertainty is also strengthened by the fact that Valve merely announced the new policy with later implementation, while their usual pattern has been to implement then announce (even if it’s meant letting a negative story fester for longer than we’re accustomed to from other companies).

What does it mean to have an open Steam? The economist Joel Waldfogel has a good and readable summary on the effects of digitization on music, movies, books and television. At the risk of oversimplifying, Waldfogel’s conclusion is that digitization has created a golden age for these media and this is due to projects that otherwise would not have been realized but for the fact that digitization has lowered costs. Conclusions like this normally inspire a dismissive “Well that’s obvious” (if it helps, you’re very smart and I’ll be sure to ask you next time), but analysis like this is valuable because it helps us understand the mechanisms that brought about the outcome. I’ll take a point from Waldfogel and present it as a puzzle: Should the effect of lowered costs of production translate into marginal gains in niche areas, or will it produce unexpected hits that produce substantial gains? Most readers are likely going to know of some indie successes and so say that it will produce hits, but this does not harmonize with the ‘obvious’ conclusion that digitization produces a golden age. To see why consider that under the old model there would be gatekeepers who evaluate a given project and if the returns exceed the cost of production then they would approve it. Lowering costs allows more projects to get made, but these are projects with returns lower than the previous threshold, meaning we should see a proliferation of niche projects, not hits (which would have been produced under the old system). Where do the hits come from? The hits come from the fact that gatekeepers aren’t that good at predicting future outcomes for present day production and so lowered costs are allowing more hits to be realized outside of traditional channels. This is observed in the data through the growing share of self-published/independent/non-traditional projects in revenues or best seller lists. Since the quality or success of a given product is something of a random draw, the gains from allowing more products on Steam have an outsized return even when some of the ex-ante losers turn out to be ex-post losers.

If we think Waldfogel’s analysis has applications to gaming as well, then distribution platforms need to be better at predicting final quality, or the platform should be open as possible to projects that previously would not have passed gatekeepers such as Greenlight or a large publisher. But Steam already seems to have achieved this through the Steam Direct program. Morgan Jaffit’s (Defiant Studios head, makers of Hand of Fate 2) analysis indicating more winners and more losers seems to be exactly in line with the experience of other creative industries as reported in the Waldfogel article (though the an increased share of ex-ante losers in revenues is something of a matter of speculation given the notorious difficulty of estimating sales on Steam). This is why it is important to recognize the mechanisms through which the gains in other media were made, since these gains rest on the unpredictability of outcomes and the failure of traditional gatekeepers to manage it. The most relevant question stemming from the new lassiez-faire approach is whether or not quality guidelines are analogous to gatekeepers in terms of evaluating the value of products. If you feel that they are an impediment to high value products being realized, then Valve’s decision is a good one, will likely be profitable, and we’ll all benefit. If you feel they are largely irrelevant (possibly even orthogonal) to a project’s value, then the best case scenario from this decision would only be the incremental gains that will come from incorporating niche products.

Another way of examining this question is whether or not there is such a thing as a pornographic masterpiece. That is, is there a work of pornography (realized or unrealized) of genuine artistic merit that we have suppressed through these guidelines that would achieve a level of appeal beyond its traditional audience? Most definitions of pornography deny any aesthetic value, but if this is the only argument then we are simply begging the question. The same might be asked of hate speech (is there a work of bigotry of such sublime beauty that failing to publish it would impoverish our culture?), though this would certainly be illegal in some jurisdictions and so still banned. While there have been independent successes outside of Steam (Minecraft or Dwarf Fortress for instance), none of them seem to be products that would have failed to pass the Steam Direct system. These exceptional cases are always dangerous ground to tread on, and so it is possible that the unavailability of traditional commercial channels really has prevented a pornographic masterpiece from being realized in gaming, but it doesn’t seem like a product has emerged that has achieved universal acclaim within its own niche, let alone as a contender for mainstream success.

The reason we care about whether or not the gains from removing content barriers are incremental (i.e. niches) or the realization of mainstream hits is that it is what we should measure against the cost of lowering these barriers. For this we return to the discoverability problem and see just how far apart Itch and Steam really are.

The costs of discoverability problem

If we believe Waldfogel’s analysis applies to Steam then Steam Direct has produced gains above and beyond the incremental benefits stemming from lower costs for games. However, we started with the speculating that the impetus for reevaluating adult visual novels and similar games was the discoverability problem brought about by implementing the more open system. Waldfogel briefly addresses this in the “more research is needed” section at the end, though the idea of information cascades (the Bikhchandani, Hirshleifer, and Welch 1998 reference) does seem to be in line with the “big open” strategy employed by recent successful releases. Waldfogel’s summary does suggest that the cost of search (which we’ve termed the discoverability problem) may not increase, but I am operating on the assumption that this is not the case for games given that developers (who are better informed than I am) describe it and Valve has dedicated resources into mitigating it (and they see almost the entire market).

All of this may seem a bit abstract, so here’s an illustration of what this means. Suppose everyone had an app like Tinder which contained true information about potential romantic matches, but was optional to use and had some search preferences. Let’s say the search preferences start with the default setting of people who are very similar demographically to you and if the love of your life is present in this group, you will find them within two or three swipes. The next setting will put you in a pool of likely matches which, if it contains the love of your life, will find them in 7 to 12 swipes. Finally you can include literally everyone but you will not find the love of your life until 400 to 328,922 swipes. The growing number of swipes represents the increasing search cost as we grow the pool in search of that special m’lady or m’sir. Our choice of search setting is going to depend a lot on our expectations of how likely it is we’ll find our match in each of the groups. The cost difference between the default and second option is more than double, but is broad enough to be pretty appealing to risk averse people who want to maximize their chances. The literally everyone option is so costly that even if we turn the chance into a certainty, we may prefer to reserve it as a last ditch option (or abandon the app entirely).

Switching to Steam Direct seems a bit like switching to the second option in the example above. It does increase the cost of search, but the reward is worth it, especially if we’re looking to expand beyond what’s familiar. But we are unlikely to want the pool to increase indefinitely since the search costs don’t merit the increased chances of finding the love of our lives (game or person). If the benefits of removing content restrictions are analogous to the ones obtained through the reduced costs of games, then we should be willing to entertain higher search costs, but if the benefits are limited to the incremental gains of niche products then we may not willing to accept any additional inconvenience.

A key difference for Steam is that at the moment we are collectively setting one search preference for everyone, and so we’re deciding if we want to go from the expanded category to the literally everything one. It’s true that some people are not able to find the love of their life from the current choice (maybe this explains the desire for pornography), but the inconvenience to this group is considered the lesser evil compared to the universal inconvenience faced by the entire platform and its attendant frustration and likely abandonment by some users. To return to games specifically we can characterize search costs on Steam as the time it takes a customer to find a game they like, the forgone opportunity of Steam to make a sale by serving up the wrong recommendation, and the equivalent lost sale to the developer.

Valve’s new approach involves investing in technology to help lower search costs, including allowing them to restrict the pool of potential games they are exposed to. I don’t think anyone really knows how successful they will be at it. If Valve succeeds, then we will all benefit through faster matches to games we enjoy the most. If the system doesn’t work as well as they plan, then I suspect we’ll see a few more applications of the “trolling” criterion to keep users from encountering offensive content they wouldn’t buy in the first place. When looking at the Steam Direct guidelines, it becomes apparent that Valve hasn’t really given up a lot since half of the rules are already legal matters, and the remaining can credibly fall under a the trolling criterion. In fact, Valve offered some clarity on the condition and used a banned school shooting game as an example of what would not be permitted.

This brings us to Itch. Itch’s submission guidelines are extremely permissive, a fact that tends to be lost when you see people who have never used the site complaining about censorship in response to its founder’s Tweet. Itch also does not have the resources that Valve does in terms of being able to automate the curation of a given user’s pages and so they are less likely to propose a technological solution to the problem. Itch faces the same issues of discoverability and desire to maximize revenues as Valve but needs to employ solutions that reflect its capabilities. It is difficult to find a more direct solution than saying ‘don’t put this kind of stuff on our site and if you do we’ll ban you.’ If anything this is likely more a timely reminder of Itch’s existing policy rather than any kind of policy shift (so far as I can tell, the rules have not changed substantially since Corcoran issued his tweet or, indeed, years before he did). In fact, based on the clarification Valve offered to the definition of trolling, there seems to be very little difference between Itch and Valve in terms of what they consider (or will consider) unacceptable on their platform.

If it turns out there are substantive differences between Itch and the future Steam, it will be an interesting experiment in terms of whether or not these content guidelines actually do prevent the realization of good games. At the moment Steam is not my go-to source for interesting and unknown games but Itch is. The free speech warriors reacting to Corcoran’s tweet seem not to have been interested in the relative freedom of Itch’s platform to Steam Direct and Greenlight, and Itch has done fine without them. Gaming as we know it has also not collapsed under Valve’s relatively more restrictive policies, and Itch’s ban buttons are not likely to steer the industry into some kind of Hays Code. In truth, most if not all of the percieved difference is likely explained by Corcoran’s directness and Valve’s vagueness.

It’s fun to wrap oneself up in the illusion of a principled stand on free speech or against intolerance, but there really isn’t a lot for either side beyond rhetorical posturing. People who want to see the Valve decision an unmitigated win for free speech need to reconcile that with Valve’s follow up comments which seem to be banning exactly the kind of titles we’d expect a reasonable set of content guidelines to ban. Likewise, Itch’s permissive submission policies do not seem to have reduced the storefront into the dumpster fire predicted for Steam, nor has it seemed to produce the controversial hit that has demonstrated the outsized welfare gains from removing content restrictions. This is why I think the difference is merely technological and if anything Steam is shifting closer to Itch. The small scale experiment of Itch also suggests that the gains from loosening content guidelines are incremental for their respective niches rather than an opportunity for previously censored hits to finally be realized.

Seeing the realization of Valve’s promises will make all the difference, but my own expectation is that this decision will result in much needed curation tools being made available to users and developers, pornographic content will be made available (though the most egregious examples will likely still be banned) but will need to be opted in, and there may be some improvements made to the recommendation engine. Because the new policy will likely mean the entry of niche products, a ‘first do no harm’ approach would mean that most of the changes should be imperceptible to users, since these are products they have no interest in buying in the first place. So long as Valve is able to ensure these niche entries aren’t a nuisance to the rest of us, it’s hard to see this move as a bad one, but it hinges on both the new entries not being as bad as the worst that people assume (the hate speech case) and Valve being able to segment the user base in a way that doesn’t cause games we would have otherwise enjoyed becoming invisible to us. Of course, if Valve finds this problem is much more difficult than they anticipated, they have left the details open enough to make the changes modest and we may find the store isn’t all that different from the way it is now.


Note on affiliate links: I have an affiliate status with GOG.com for which I am given a portion of sales for traffic I drive to the site. The inclusion of a given title is for illustrative purposes first, but when it is available on GOG I will provide such a link. Naturally I encourage you to do your own price comparison or buy on your preferred platform. I include, on occasion, affiliate links from other broadcasters to support people who helped me in a given post or the cast in general. For this article, Humble Links support the streamer JessyQuil.

Games and Movies

Competency disclaimer: I have no background in game development, but I do have a background in film production. I write articles like this with some trepidation, as the world does not need another player of games telling makers of games how to do their job. However, in so far as the perspective of a former film practitioner is useful, I would love to see any conversation this may provoke in the comments.

While I have no authority to appeal to on this subject, it seems evident that games have been heavily influenced by cinema, particularly James Cameron/George Lucas style blockbusters (and many indies carry direct references to art/independent films that have influenced them). This is an intuitive step because movies convey meaning through a combination of images and sounds, and blockbusters in particular create a level of excitement and spectacle that are the standard for modern entertainment products. Furthermore, tapping into the conventions of cinema gives game developers access to a fairly sophisticated grammar that has taken us from understanding a message in 30 seconds to a mere 5 seconds or less in advertising. While borrowing from film seems like an obvious step, it may not be the most appropriate. What follows is an account of some ways I think cinematic techniques may be inappropriate for games, and some examples of alternatives that have been effective in games I’ve enjoyed.

How does a movie work?

Film theory is a big subject, and the knowledge applied on the film set may never find itself in a book, but there are some basics that find consensus among the practitioners who have written down their thoughts. One useful, idea that emerged was the theory of montage.

Just as Fascists saw the utility of the new technology of radio for propaganda purposes, the Soviet Union saw the propaganda benefits of film and dedicated considerable study to it. The theory of montage is best illustrated by an experiment done by a filmmaker named Pudovkin. Pudovkin filmed an actor with a neutral expression looking off camera and then edited this against three separate shots: a girl playing, a casket, and some bread. When viewers saw each clip they would credit the actor with a portrayal of a father’s love for his daughter, or terrible grief at his mother’s death, or unimaginable hunger. The performance gained meaning through the shot that followed it. The filmmaker Eisenstein developed the theory of montage further, but for our purposes it is sufficient to say that montage is the juxtaposition of two separate shots to create a separate meaning (if you took an undergraduate philosophy class, you might see a parallel to a common formulation of Hegelian Dialectic: Thesis + Antithesis = Synthesis).

Montage is a useful framework for thinking about how meaning is created in film, but if we’d prefer to divest ourselves of any intellectual commitment with regards to meaning, we can at least use it to illustrate how editing is important and unique to film. I do not say essential as there are famous exceptions such as Rope and Russian Ark that attempt to be ‘one shot’ films, but, of the films that influence games, a large portion of the experience and meaning come from the juxtaposition of specific shots to provoke a particular response. Editing seems to be the one truly unique feature of cinema that sets it apart from theatre or radio. Consider how constant edits to the ticking clocks of the bottles (being opened or ready to fall) create tension in this clip from Notorious:

We can narrow our focus to the components of montage and consider the shots themselves. Even in a film like Rope, the choice of what to show the audience makes all the difference. This includes technical considerations such as the length of lens, depth of field, and exposure, but more importantly it involves the decision of what to include or exclude in the context of what the audience has seen already. This is cinematographer Bill Fraker discussing a famous shot from Rosemary’s Baby:

Divorced from the context of the film (or even away from the big screen), this shot is not likely to have the same effect as it did on the original audience, but it should serve to illustrate the point. Any camera is perfectly capable of conveying information, but when wielded by someone who understands the audience’s perspective the result is a special experience and one that is unique to motion pictures.

Shots and edits in games

Having considered the essential tools of shots and edits in film, we can consider how these might apply to games. At worst, they don’t fit at all, and at best they work in a very narrow sense for a type of game that has gone out of fashion. Cinematics are present in games, and shots and edits are used quite effectively to bring about certain emotional responses or to convey information, it is very difficult to say that this is the game so much as it is the game part being put on hold to provide context for the next interactive part. Shots and edits are out of place in games, and this makes it difficult to claim that cinema is a good reference point for games.

This is an example of a movie that almost certainly would have been better as a game:

Aside from Cloverfield and The Blair Witch Project, which both presented the first person perspective as found footage to justify edits, there aren’t a lot of well known first person movies, and it’s easy to see why. This perspective gives up the most powerful tools for creating meaning in the filmmaker’s toolbox and really only gains a gimmick in return. Yet anyone who has played Amnesia knows that one of the biggest annoyances present in The Lady in the Lake is one of the most discussed experiences of the game. While moviegoers’ patience wore thin watching Philip Marlowe open yet another door, Amnesia’s players lost their mind fumbling with the game’s doors while monsters chased them.

Games do not directly lend themselves to edits beyond loading screens, which are motivated for technical reasons rather than narrative. This is not a failing of games, as it would be very unusual to be playing a game and suddenly have the perspective change. One case where this worked well was the prologue for Battlefield 1, where dying would move you to another soldier on the battlefield, but even this excellent choice could not be sustained for the rest of the game. Most, if not all, of the interesting choices with regards to shots are also absent from games since the player is in control of the camera. It is not possible to have a Rosemary’s Baby moment in most games because the player controls the framing.

There are exceptions, and it would be much more difficult to make this case in the past as Resident Evil, among others, used fixed camera angles that allowed for pre-rendered backgrounds (Resident Evil also readily reveals its inspiration from Stanley Kubrick and Lucio Fulci). The introduction of Chris Walker in Outlast also relies on a forced perspective and, while it is technically a non-interactive moment of the game, is fairly seamless in its use. Of course, Resident Evil has long since moved from pre-rendered backgrounds, and it may be better to say that if cinema is to be a reference point it is most effective in the horror genre, rather than for games in general.

This is not to argue that cinema is useless for gaming, or that it should not be used as a reference point at all, but rather point out the limitations of this reference. With fewer technological constraints it becomes easier to recreate our favourite movie moments in an interactive format. Yet, as in the case of Resident Evil, the more effective use of cinematic techniques were driven by technological constraints. The Mass Effect series has generated more alien worlds and species than all the Star Wars films, but it is still not clear how this moment from The Empire Strikes back could be realized in a game by anything but a cutscene:

Alternatives to movies

A movie without shots and edits seems a lot closer to a theatrical production or a radio play. As it happens, radio drama contains more parallels to how stories and experiences occur in games than movies. Like film, technology is essential to radio drama, not just for its broadcast, but for its creation (The Hitchhiker’s Guide to the Galaxy, in addition to being hilarious, was the first radio drama to use stereo and it made a huge difference for that particular story). Critically, radio is confronted with the fact that it only has sound to convey its ideas. The absence of a visual component means there is always a space for the audience to create part of the story in their head. The difference may be best illustrated with old story in advertising of a radio and TV advertiser arguing over the merits of their respective media. The radio advertiser wins the argument by proposing a commercial of a 700-foot mountain of whipped cream rolling into a Lake Michigan that has been drained and filled with hot chocolate, after which the Royal Canadian Air Force then flies overhead with a 10 ton maraschino cherry which is dropped on top of the mountain to the applause of 25,000 onlookers.

When I reflect on the stories and moments in gaming that have engaged me the most and seem to be unique to gaming they tend to be cases with enough suggestion to get my imagination going, but not enough to think for me. Sunless Sea is well known for its writing, but I am particularly fond of the decision to give enough time to reflect on and digest what happened between ports (even if this lull was a complaint among some players). While it isn’t out yet, In Other Waters restricts your perspective to an AI assisting the xenobiologist, and has a companion book to provide another glimpse of the world. The demo was visually attractive in its own right, but it also gave me enough to imagine what my in game companion was describing. Cultist Simulator goes even further than the previous two by keeping time running and trimming down the text. While the game is entirely card and token based, there has not only been enough to keep me talking about what’s going on in the world during a stream, but also to make fairly clear mappings to my own life. Finally, Paradox Grand Strategy games like Crusader Kings II are, in essence, maps, stats, and text boxes, and yet the most rewarding way to play is to role-play your ruler and go along for the ride as the events and text provide more momentum for your imagination.

While one might argue that pausing to read text is a poor man’s cinematic, the fact remains that in all of these games the player is given the interesting choices to make, and there is enough information given to keep the imagination going during the real time components. These games play to gaming’s strengths by remaining interactive, while still being able to tell a story (unlike Space Invaders or Offworld Trading Company which are pure interactivity).

What can movies teach?

Movies can be very helpful in specific technical areas. Obviously if a game contains cinematics, the team would be wise to learn the techniques. Movies by good cinematographers will teach valuable lessons in colour and lighting, though these cinematographers are often inspired by great painters (especially the Dutch masters). There is also no accounting for the sources of inspiration, and so at an individual level movies may provide the creative spark that eventually becomes a very good game.

However, cinema’s use as a reference is likely due more to its dominant position rather than its suitability for gaming. Montage allows an audience’s imagination to be engaged as in the case of radio above, but this technique is not available to gaming due to its interactivity. It is more appropriate to seek out other examples of how authors have engaged our imaginations in real time if we are looking for applications to gaming. Seeking inspiration from examples like radio drama allow us to make games that rise above ‘movies but with the essential features removed.’


Note on affiliate links: I have an affiliate status with GOG.com for which I am given a portion of sales for traffic I drive to the site. The inclusion of a given title is for illustrative purposes first, but when it is available on GOG I will provide such a link. Naturally I encourage you to do your own price comparison or buy on your preferred platform. I include, on occasion, affiliate links from other broadcasters to support people who helped me in a given post or the cast in general. In this case, and Humble Links support the streamer JessyQuil. I have also received press keys for Offworld Trading Company and Crusader Kings II DLC.

Loot boxes and addiction

In a few short months gamers — or rather the vocal subset of gamers often mistaken for the whole — have become experts in psychology. Fresh off a righteous crusade against the addictive properties of loot boxes, there was no time to bask in their accomplishments since our fair hobby faced an even greater foe: the dastardly inclusion of gaming addiction (or gaming disorder and hazardous gaming to be precise) in the draft update to the International Classification of Diseases (ICD-11). It is sometimes expedient to forget what we know, and so overnight we began to hear that the science wasn’t in on the relationship between gaming and addiction, that there were far more important problems to deal with, and that the inclusion of such a farcical concept as gaming addiction wasn’t just an insult to the already highly bullied gaming community, but was, in fact, trivializing those with legitimate mental health issues. I have a different view.

This series began with an article describing loot boxes as a microtransaction intended to offset the increasing costs of video game development and produce a steadier stream of revenues than traditional expansions would provide. A companion article addressed the question of gambling and how arguments focusing on it gained traction due to rhetorical convenience rather than their merits for recommending policy. Some time has passed since the original article and so the opportunity I saw for an interesting discussion on addiction in gaming seems to have passed us and instead has been replaced with armchair psychology with regards to the ICD-11. In this article I’d like to address some specifics about the implementation of loot box systems, and attempt to reintegrate the discussion of addiction with regards to gaming.

Optimization

Loot boxes are a system designed to optimize for revenue. The same can be said for games in general, but specifically the design of a loot box is such that it is intended to maximize the revenue coming from a player directly for a given piece of content. This is not unlike designing a layout for a store (putting gum and tabloids at the checkout instead of furniture and appliances) or offering different subscription bundles over a la carte options, and so the practice is less sinister than it sounds. What it means is that if a feature of a loot box reduces expected revenue, it is likely going to be cut, while if it increases revenue it will be adopted.

The existence of ‘coin muncher’ style arcade games tells us that directly optimizing on revenue isn’t something new to gaming, but it is a practice that we’re becoming reacquainted with given the reduced costs of digital distribution. Often games will optimize for time, though this is more commonly described as making it more fun. As commercial products, games will want to maximize for revenues eventually, and optimizing for time is an indirect way to accomplish this. More time spent in a game generally correlates with enjoyment, and enjoyment means word of mouth which increases sales. Generally both optimizations complement each other and work in concert, since making a player want to spend more time in a game will ultimately translate into another coin being put into the machine when the game over screen appears. These two optimizations are most apparent in a subscription MMO where the game optimizes on time in order to justify the fee, but goes back to technologically constrained games that increased the difficulty (and so playtime) in order to justify the price.

Optimizing for time is part of a larger trend beyond gaming. A key performance indicator for many apps is the amount of time spent in the app, and a lot of time and attention is spent on maximizing this. Snapchat is probably one of the most manipulative examples of this through techniques such as sending push notifications when someone is typing, setting timers and reminders that you have a streak going with someone (with the attendant sense of obligation to keep the streak going), and setting various badges based on your activity. YouTube defaults to autoplay, despite the fact that you or I have never met someone who has ever wanted this feature to be enabled, and Facebook and Twitter have now taken to push notifying us about other people’s activity that does not relate to us.

While I try to quarantine my tastes when writing about these things, I can’t help but say that I’m not particularly happy with this current state of affairs. I came to this conclusion when trying to schedule out days. In it I did my absolute best to give fine detail in terms of when I would do certain things and how much time I should dedicate to it. I reflected that time in apps probably should be accounted for. From this there was a natural extension: How much time did I want to spend in those apps vs. how much time did I actually spend in the apps? I know that I spend a lot more time on certain platforms than I would want to, and that you probably do as well. In my own case, I know this extra time spent in the platform comes at the expense of really fulfilling activities: I don’t read as much as I would like to, and I have skipped scheduled writing sessions to play a game or browse through Twitter and YouTube. I’m aware of this and yet I still catch myself not spending the time as I would like. Could this be a difference between my stated preferences and what I actually want? Could it be that political economy just really isn’t as interesting as cute photos of dachshunds and that my choices reflect my true preferences? Is this anything more than a technological update over the lament that people are spending more time reading tabloids and horoscopes over local news? Perhaps, but it seems to me that a proper discussion on the regulation of techniques that optimize for revenue applies just as well to techniques that optimize for time. From this it follows that we should be talking about gaming addiction in general instead of focusing on gambling addiction.

Tricks of the trade

Added value

A player puts a coin into a slot machine. I refresh my notifications on Twitter. We both wait a completely arbitrary period of time, wondering if we’ve hit the jackpot. There is no technological reason for the wait and yet its presence is vital for both activities. What is happening during that wait?

Recall the exercise from the previous section: estimate the amount of time you believe you would like to spend doing certain activities during the day and then measure the time you actually spend doing them. The difference between your stated time and the actual time spent on apps is where the possibility for regulation lies. For money it’s a matter of asking how much you believe you want to spend on gaming vs. how much  you actually spend. In fact, this seems like a straightforward empirical exercise: take a random sample, get them to fill out a survey, dividing them into treatment (expose them to all the tricks) and control (give them versions of the apps without the tricks) groups, and then look at the difference in behaviour. Unfortunately there are some troublesome sources of error that are not easily removed. First, can we take the stated beliefs of the subjects for granted with regards to how they want to spend the time? Presumably few, if any, of the surveys will assign any value to pornography or consuming pirated entertainment, and yet we should expect these to appear in an honest accounting of how some people would spend the day. There is an interesting book by Seth Stephens-Davidowitz that illustrates just how big of a problem this is (you can get an idea by seeing some of his New York Times columns). This is more than an exercise in determining an ideal experiment, since it deals directly with the fact we do a poor job of speaking honestly about our true preferences and so makes it hard to distinguish between manipulative practices and buyer’s remorse. This is more important than enumerating specific practices we might object to, since it deals with our ability to measure the problem.

The wait should be over soon. One by one the hieroglyphics emerge, building anticipation towards a payout. Not a jackpot, but more than the player put in. My notifications display a new like and maybe a retweet. Someone cared about what I had to say! Did you happen to keep reading because I asked that question at the end of the opening paragraph at the start of this section? Anticipation is a diverse and powerful tool. Time is precious and yet so much of our entertainment relies on seemingly inefficient use of it. There are few things as universal as people’s resentment at having their time wasted, and yet when entertainment economizes on time it is derided as a jump scare or melodrama. We choose to waste our time in anticipation because the build up and payoff are pleasurable. What is happening during the wait is the creation of value.

This also factors into our problem with measurement. A new skin for my character in a game is a different product than the same skin with the attendant ritual of anticipation and payoff in opening a randomized box. The complaint that the fanfare that is associated with opening a loot box is addictive isn’t without merit. In so far as we find pleasurable things addictive, we may develop an unhealthy attachment to the elation resulting from opening a loot box. But all this says is that loot boxes create value (an experience) above and beyond their contents. It may be easy to establish that the sights, sounds, and timing of loot boxes are entertaining, but we still need to demonstrate how they are addictive and, furthermore, why these same elements are not addictive in other settings (assuming we are attempting to avoid a designation of gaming addiction).

The potential for becoming overly attached to the elation of opening loot boxes notwithstanding, creating value through appealing sights and sounds seems benign and not substantially different from adding an additional level or another subplot (though, of course, the ritual of opening a loot box doesn’t change and so the return on developing an appealing reveal is much higher than these individual pieces of content). There are, however, conscious efforts to confound the valuation of a given loot box.

Obfuscating value

We are generally not very good with numbers, especially when it comes to prices. It would take longer to determine if goods priced at $3.99, $8.99 and $7.99 cost more than $20 than it would if the goods cost $9.00, $4.00 and $8.00 (they both do). Furthermore, our perception of these numbers is frequently off as people tend to treat the $0.01 difference in the prices above as substantially larger. There is a large and growing list of cognitive biases that could serve as examples of how bad we are at getting the true value of things. Since we are discussing loot boxes, it is not a surprise that one area in which we are particularly bad are situations with probabilistic outcomes.

There is no controversy in saying that consumers are generally bad at probability (it even trips up mathematicians), but I would add that all errors are not equally severe. It will not come as a surprise to find out that most people are risk averse. From a purely mathematical standpoint, if there is only one thing in a loot box that I want (everything else is worthless), that I value at $1 and it has a 70% chance of dropping, then I should be willing to pay up to $0.70 for that loot box. Very few people actually think this way. Since there is only a probabilistic chance of getting the item, people who are risk averse and will pay less than $0.70 for the loot box. Some people are elation seeking and would be willing to spend more than $0.70 for the loot box (in essence they pay up for the fact it’s probabilistic). If you assign some particular importance to the true expected value of the loot box then you’re likely to find these tendencies a problem, but since the majority are risk averse it would mean that there aren’t enough people buying loot boxes.

Reality is more complex. First, the amount being spent and the probabilities themselves may result in different behaviors. Next, people likely do not have some clear conscious measure of the value of a given good, but instead make a decision based an estimate of the potential goods, the fact they’re probabalistic, and unconsciously assign a small premium to the fact there’s a bit of the excitement of unwrapping presents in opening it. What is important in this case is that the consumer is making a decision in terms of what they value with regards to the good and the experience associated with buying it. In this sense, while there are known biases and distortions with probabilities and psychological pricing ($x.99 prices) they are not a special case in and of themselves.

Variations

While each of these aspects of loot boxes are contentious, they do not seem to be especially concerning cases relative to other non-gaming experiences. Store layouts, price labels, coloured packaging, advertising, and good salesmanship all exploit aspects of our psychology that we have learned to live with and navigate. However, probability and anticipation are not an exhaustive list of techniques used in loot boxes. The problem with attempting to create a comprehensive list of loot box techniques is that it will not account for innovations that are being employed but remain undiscovered, meaning there will be fresh new outrages to relitigate the issue in perpetuity. Furthermore, the objections to loot boxes at least attempt to be founded on principle. As such, we would expect a robust objection to be to more than just a simple dispute over implementation. The reason I started with the appeal of the opening experience and confounding the valuation through probability is that these two techniques seem to account for the majority of cases.

For instance, some games now create an incentive to watch another player open a loot box. Given that a number of games now have integration with streaming services it is entirely possible that games may alter the probabilities of certain item drops, making rarer and more desirable items drop more frequently when a large number of potential buyers are watching in order to create the impression that the items drop more frequently. This seems to be another variation on confounding the valuation. While this scheme seems particularly nefarious, a similar effect could be simply achieved through altering the probabilities of free and introductory drops. Purchases using a special currency are another way in which layers of confusion are added between the actual value of the item to a player in dollars and their perception of that value.

Examples of added value are a bit more intuitive. The sights and sounds of opening a loot box are experiences above and beyond the contents itself and so are purely adding something. The first article was essentially about how loot boxes are a means of getting additional content into a game and so the added value should require no further elaboration. Likewise, knowing certain objects are only obtainable through real money transactions may confer some social benefit above and beyond the value of the item itself (i.e. conspicuous consumption).

Another way of considering these two categories is to see them as manipulating what you get (what is it worth to you?) and what you pay for (how much can they get you to pay for it?). Some techniques fit more comfortably in one or the other category than others, but this abstraction is helpful as it moves us beyond arguing about a particular implementation, and instead producing a more coherent set of guidelines that won’t be as fragile to technological advances. For example, the response to loot boxes bears a resemblance to disputes about DLC, which itself had different camps with regards to what was good and bad DLC. I don’t know if there were any calls to regulate, but this question seems mostly settled and, while players may resent DLC, the dispute is relegated to matters of taste (“I liked Burial at Sea” vs. “Bioshock Infinite should be legally required to provide a second single player campaign if an intern even so much as said ‘wouldn’t it be cool if we could do this in Rapture?’ during production”). DLC has not meant the end of fun and it is difficult to establish that we any worse off because of it, meaning that any regulation we might have imposed would have at least taken the resources away from more productive uses and, in all likelihood, have stifled innovation in gaming (likely through higher volatility in terms of gaming jobs).

Addiction

The characterization of loot boxes as a means of optimizing for revenues and a categorization of the techniques employed are intended to give us some insight into the question of whether or not loot boxes are addictive. There is overlap between some of the optimizations employed in loot boxes (for revenue) and the games themselves (for time/fun), and so we need to address whatever difference allows us to claim one is addictive while the other is not, or admit that the case has been overstated.

The techniques that obfuscate value receive a lot of attention, and yet these appear to be the least likely to be addictive. Addiction is compulsively seeking a rewarding stimulus no matter the consequences. If this obfuscation is as bad as claimed, then it stands to reason that there isn’t much of a stimulus since the items are worthless. These techniques are almost certainly effective at getting customers to pay more for a given piece of content, but they are not a stimulus themselves. What about the anticipation created by the uncertainty of an outcome? This is a stimulus (and one that has an easy parallel in gambling), but, while it is enabled by probability, it is better characterized by added value. The thrill of getting a rare item is value added to the item above and beyond its utility in the game.

If loot boxes are addictive, they are addictive due to the stimulus or reward aspects such as sights, sounds, and emotional payoffs. These elements are not absent from the discussion, but they do tend to have a smaller share. What is more interesting to me is that these are characteristics that have a greater similarity to features that are found inside games themselves. Games want to take you on a ride, either through spinning a good yarn, or presenting you with exciting action sequences, or any number of features that keep us at the computer or console. The missed opportunity of the debate surrounding loot boxes is to ask whether or not games themselves are addictive and what kinds of demands they make on our time.

If we are willing to accept anecdotes about people who spent staggering amounts on loot boxes, then it seems unusually callous to ignore anecdotes about time spent in games. I have personally encountered two cases of long standing relationships heavily strained by too much time in World of Warcraft, one of them ultimately breaking permanently. I have personally experienced being passed over for WoW time (separate from the cases mentioned before), and even though I should understand the context, I really do feel worthless and having empathy for the psychology of being in a raid does not tranquilize this feeling. There is a cost borne by the people who are neglected in these cases, and it is always in the name of just one more quest. Of course, we know that there isn’t just one more quest, but an endless treadmill of more things to do. This is not limited to MMOs, they just happened to be the most innovative due to their subscription model.

Does it count as an addiction? My personal inclination is to defer to the experts in terms of clinical definitions, but the conversation can at least be reduced to the demands games make on our time. I know I’d have done better in school, and I know what projects I’ve been putting aside due to the time spent in games. I have enough control to recognize this and step away, but I have also developed a preference for games that don’t constantly nag me to play. I’m not particularly fond of many of the online survival games because they seem to be structured around daily play for extended periods of time. I do, however, enjoy single player versions of these games such as Terraria and Subnautica which can be picked up and left off at any time. One feature I realized I liked about Sunless Sea was that a play session would usually involve completing a circuit to all the ports I was interested and back to London.

I am obviously reluctant to employ the analogy of gambling, but let us employ it as a worst case, be it loot boxes or gaming itself. The most common experience of gambling is someone having a good time in a controlled, responsible way. The same can be said of gaming itself (my selecting into Sunless Sea and out of, say, Rust) or loot boxes. The majority of people I know who have played F2P games have never spent a dime, and those who did were perfectly happy with what they purchased. However, we also know that there is a segment of the population who will go into a casino and even if the odds are posted or the warning signs are written on the machines themselves, they will go in and risk increasing sums in the pursuit of a rush they get from gambling.

Dealing with it

Earlier on we imagined a list of the amount of time we’d like to spend on activities throughout our day and a parallel list of the actual time spent on activities. The difference between these two lists was the place in which we could put regulation. Of course, regulation is not the only option. Should we regulate video games and not address similar demands for our time on other platforms? What kind of regulation can we implement that will allow good faith implementations of loot boxes and similar systems without allowing bad actors to circumvent the regulation? Regulators and the App Store now require probabilities to be posted (and I generally like this practice), but even beyond the necessary distortions involved in a particular drop, these aren’t likely to address addiction.

There is a certain point where we need to support what we like, maturely discuss what we don’t, and take care of the people around us. It would be nice to imagine that there’s a technological magic bullet to identify all the harmful cases and will solve them but there isn’t. Fast food franchisees will not say “Are you sure you should get the extra large? That’s the third this week…” Car dealerships will not ask “Are you sure you can afford this?” We would be insulted if they did. We step back from the ledge of a stupid decision through either reflection or the prodding of loved ones. It’s convenient to think that being in a game is some kind of special case in which we lose all reason, but we are nowhere close to establishing this is the case.

The reason why a mature discussion is especially important here because player feedback is helpful in shaping products that are both financially viable and present good value. The problem is that the dialogue has been so clogged with invective that direct feedback from players is a very noisy signal. Loot boxes optimize on revenue and seeing as the dialogue is too noisy to be useful, they simply reflect the actions instead of the statements from players, and those actions say that players like and buy a lot of loot boxes. Rage may be appealing because one can cast oneself in the light of an ethical partisan standing up to the insurmountable evil of game publishers whether or not anything actually changes. An honest dialogue entails the risk that you might hear “no” or find out that your case simply isn’t as good as you thought it was.

So far as I can tell, for all the talk of addiction, the catalysts for the current debate (Battlefront 2 and Shadow of War) weren’t especially bad implementations in this regard. Judging by the most frequently repeated complaints, the dispute was that they were too expensive, not that they were somehow more addictive than prior offerings. I suspect the people responsible for implementing the loot box system knew full well that the loot boxes cost more than what an optimal value would be, but set the pricing higher in the beta in hopes that anchoring would make the true price seem better by comparison. What I don’t think anyone expected was that it would be a flashpoint and produce a reaction such that any price would be too high. Assuming some version of this were true, I am quite sympathetic to the chain of reasoning behind it. We seem to be utterly incapable of having a serious discussion about the actual value of a game and there is an entire segment of gamers who simply will not buy a game at any price unless it’s discounted by some arbitrary amount. One need only look to the reaction to EA’s decision to discount Battlefront 2 loot boxes: Smug posts like ‘EA just removed 75% my sense of pride and accomplishment’ to see the absolute futility in attempting to form any policy around an internet mob. Either EA did the right thing by decreasing the price or they did not, and there is no information conveyed by dancing on the corpse of the publisher’s previous position to determine whether it was the right move.

What this means is that the voices being heard online are sending a clear message: They want to be lied to. The words mean nothing because the prior that says the publisher is always wrong is so strong that it is simply not worth trying to shift it. Instead, prices are shifted in advance of sales to reflect the desired revenues, turning a nominal 50% off into a real 25% off or less. This seems to be working because the practice is growing. Because any dialogue has been reduced to cheap talk, developers will have to rely on what they can observe about players, meaning that techniques that result in more revenues will dominate and players have effectively selected out of the conversation. Of course nobody will want to face the kind of backlash EA got and so quite a bit of design will focus on how to boil the frog (an especially apt cliché when judging by forum avatars). If loot boxes become more deceptive it will be because players reduced their voice to a constant whine and success will be determined by how effectively sales grow while trying to minimize or at least tune out the noise.

A more productive line of thinking would be to honestly ask exactly what kind of influence gaming has over our lives and whether there are some practices we want to discourage, either through avoidance or clearly articulating why this practice should stop. I gave Sunless Sea as an example of a game that does not put me on a treadmill and tries to extract another hour of play out of me. Ticket to Ride is arguably more successful as an app than a board game, but its origins as a board game informs a design that has a definitive end and does not nudge you to opening up a new session. These are successful games, but they also face substantially different realities in terms of costs. And if I’ve given the impression that I think fun necessarily connects to addiction, I can only say that a lot of people seem to be playing and replaying these not-fun games.

It is easy to default to dichotomies when writing a series of articles inspired by internet rhetoric, but this really is a matter of degrees. Loot boxes can be addictive and games can be addictive. Furthermore, there are strong incentives for businesses to adopt practices that appeal to short term thinking that is inconsistent with what we might want for ourselves in a more reflective moment. But we are usually unhappy with solutions that have us looking down at a tub devoid of water and infant and so it is helpful to apply this reflection to cases where the benefit is not as clear. Even if you do not feel obligated to take the economic realities of developers and publishers into account (and this is completely fine provided one relinquishes the claim that this is about the good of gaming/the hobby/the industry which necessarily includes the supply side), one voice that isn’t taken into account that of a common player who is too busy enjoying a game to be bothered getting into a fight on the internet and seems perfectly content paying for loot boxes (either as one offs, season passes, or by the gross). Data science is not mind control, and it is astonishing to see the implicit argument that major publishers have effectively brainwashed gamers into repeatedly buying a product they don’t want and don’t value.

It is most likely that there are addictive qualities in games that we haven’t really properly addressed since the discussions motivated by World of Warcraft, and there are clearly developers who implement loot box style systems in overly manipulative ways (and I am not referring to major PC publishers). Some of these cases are solved by interventions by platforms like the App Store. The impulse to regulate also seems driven by undervaluing the role we take in caring for our friends and family, even if some of those friendships are online and in the game that has become a problem for someone. While suggestions like this will generate no shortage of sophisticated eye rolling, is it really all that worse than assuming shouting at developers will make the problem go away or that legislation is somehow better at identifying people susceptible to addiction?

If heavily regulating loot boxes seems like a good idea, consider the implementation of a Cinderella Law which is basically a curfew for online gaming. Nobody under a certain age can play between 12-6AM. How would you feel about this? Beyond a certain indifference if you’re above the age where this will affect you, I’m willing to guess most readers will say that this goes too far. Without any age limitation I suspect there’d be an even greater objection along the lines of “Who are you to tell me what proper use of the internet is and at what times?” But this law has been implemented in other countries. The difference between this and the loot box case largely seems to be one of taste, and the player who doesn’t have a problem with loot boxes that has heavy handed regulation imposed is without the feature and likely without the game.

Ultimately this takes me back to why I started this series of articles in the first place. We need to talk. If the response to any pricing decision is to shout it down, then players are effectively removing themselves from the conversation, and providing incentives to be deceived. While there are clearly more benefits, games can take an undue amount of time and we should be willing to talk about it, both in terms of how we’d like our experiences to be tailored to respect our time as well as talk to each other when it seems like other important parts of our lives are being neglected. If there has to be a pro-regulatory reason to keep a civil tongue, then it’s because the case for regulation will be much more credible when there is a clear alternative and the bad actors can be identified as operating outside of best practices. The alternative is to let the algorithms speak for you.


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