With controversy over loot boxes and microtransactions reigniting in the past few weeks, it seems a whole lot of gamers are eager to return to the days of a single purchase of a single game. Yet while modern business practices are failing in the court of public opinion, they are profitable. Extremely, obscenely profitable.
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That’s according to a new report from Digital River called Defend Your Kingdom: What Game Publishers Need to Know About Monetization & Fraud. The report, which comes to us via GamesIndustry.biz, suggests that the industry has tripled in value since the games as a service concept has become popular.
The profitability “does not just apply to free-to-play titles,” according to the report. “In 2016, a quarter of all digital revenue from PC games with an upfront cost came from additional content.” With that much money on the table I’d wager it’s unlikely that DLC and microtransactions will be going anywhere anytime soon.
Players’ perception of value has changed over time, both because of the rise of free-to-play games and the increased prominence of heavy sales and discounts. Publishers are responding by releasing fewer games at a traditional price point, but extending the lives of those games with streams of extra content, add-ons, and additional revenue streams.
You might’ve noticed another half to the story with the “fraud” mentioned in the title, and that’s proven to be a significant problem for publishers and developers. The changing perception of value thanks to sales and price drops has left players constantly seeking out deals. Grey market key resellers like G2A have proven to be an extra thorn in the side of publishers since game sales are being made that they see no profit from.
There’s always the option of deactivating fraudulent keys, but that risks backlash from players who feel that by paying money for a game they’ve been part of a legitimate transaction. Meanwhile, many grey market resellers are going so far as to use fraudulent credit cards to purchase keys, leaving game makers stuck with the chargebacks. “Previously, publishers simply lost revenue from a pirated boxed game,” the report argues. “Now, many developers prefer piracy over credit card fraud so they don’t end up with negative revenue.”
This leaves publishers in an awkward position. People want to pay less for games and are turning to non-legitimate sources to seek out those deals. This leaves publishers scrambling to make up those profits in other areas, and while this has proven financially successful it’s also been decidedly unpopular, as the past week’s nonstop loot box controversy has illustrated.
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