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Loot boxes and Micro-transactions

Kiith

Curious to see what people think about the current trend of having loot boxes in full prices games, as we've seen in some major releases lately (notably Shadow or War and Battlefront). Seems to be a recurring theme now, and any suggestion that they would be kept to only cosmetic has quickly been shown as untrue.

Some examples...

Shadow of War - single player with micro-transactions, with a huge amount of grinding required if you don't buy them, just to get the 'true' ending. Also, gives a clear advantage in the limited multiplayer mode.
Battlefront 2 - Star cards that give a big advantage to people with certain cards (40% damage reduction compared to 100% at top rating), which take a long time to grind if you don't pay.
Borderland 2 - One of the first that i remember was the Golden Crates in Borderlands. One of the earlier examples that i can remember in full priced games. Signle player only though, and absolutely optional though, so not too bad. My bad, these were free. I thought we had to buy them.
Overwatch - purely cosmetic as far as i'm aware?

Are developers/publishers justified in adding micro transactions to full priced games, given the rise in costs of development? Or are they just doing their best to rip people off?

Personally, i don't have an issue with cosmetic loot boxes, though i do miss the days that these were unlockable by playing the game. But i'm against any sort of loot boxes, especially when they are RNG based, that provide gameplay advantages over other people. It's literally the definition of P2W.

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dudeeile

Generic Dreadhead wrote: »

Is that speculation of are there figures? Would have thought loot boxes were brining in more moolah

Of course it's speculation! It is rumoured to cost $20 million just to buy an overwatch team regional franchise though so not all fantasy.

bigphil2

J. Marston wrote: »

It really is puzzling. Witcher 3 made stupid amounts of money and at the same time, untold amounts of goodwill from gamers because CDPR didn't take the piss. 16 free pieces of DLC when the game came out blew my mind. Those Triss, Yenn and Ciri alternative outfits for instance, any other company and those outfits would have been €1.99 each.

Then the excellent expansions which were brilliant value for money.

If Cyberpunk 2077 has lootboxes and microtransactions, it will be the biggest heel turn in gaming.

I think they will continue they way they went with The Witcher,being independent they are beholdend to only themselves,and Cyberpunk will be a massive seller .

Mark Hamill

gizmo wrote: »

What needs to be considered though is that said profit is off the back of nearly four years of work for a team of around 200 people on the development side alone and was based on an existing and highly acclaimed franchise whose previous games had already sold 15m combined since the release of the original game in 2007. It's these kinds of figures which show why funding any of these kinds of big budget games can be incredibly risky.

Destiny 2, Forza 7 (is it 7?), Battlefront 2 (4 really) and Shadow of War are all sequels of popular gaming franchises. The Witcher example shows how word of mouth with reasonable advertising will get you big sales and will make you millions of profit if you actually make good games. Instead of what is happening now, making bad* games with exploitative gambling mechanics in order to catch whales and dolphins.

gizmo wrote: »

There's an important line in that article you linked. "That’s because advertising is critical to getting a game in the top ten rankings." As discussed earlier, these big budget games need to see big sales in order to earn their development costs back and one of the primary means of doing that is to get as many eyes on them as possible. Word of mouth will only get you so far and the percentage of the potential audience who read games magazines, peruse gaming sites and, even moreso nowadays, use Youtube for news is only a fraction of what these big games sell.

That article about EAs budget came from 2009, when Modern Warfare 2 came out. MW2s production budget was ~$50 million. Its marketing budget was $200 million!
That means MW2 needed to sell 5 times as many copies to break even. That means it had a 5-fold increase in risk. It is the marketing that is driving the budget to unreasonable limits and it's the marketing that bring that huge risk.

*Bad in that while the underlying mechanics may be very good, the overall games are invariably broken in some way to drive sales of micro-transactions.

gizmo

Mark Hamill wrote: »

Destiny 2, Forza 7 (is it 7?), Battlefront 2 (4 really) and Shadow of War are all sequels of popular gaming franchises. The Witcher example shows how word of mouth with reasonable advertising will get you big sales and will make you millions of profit if you actually make good games. Instead of what is happening now, making bad* games with exploitative gambling mechanics in order to catch whales and dolphins.

Sorry, I don't think I was entirely clear there, to clarify my point was that the profit made was comparatively low given the factors I listed. As it happens, I actually misread the link I posted, the $64m profit made by the company was from all revenue which includes the rest of the CDPR games as well as from GoG which they also own. I can't seem to get an exact number for the profit so I'll talk a bit more generally below.

So, with respect to The Witcher 3, when we break down the figures more, we see the marketing costs for The Witcher 3 represented $35m of the overall budget, roughly half the budget for the base game. That's about in line with what most publishers spend on larger titles with the exception of EA and Activision. Whether or not that's regarded as reasonable is a bit subjective I guess. As for how much it made, making millions of profit is, in the games industry at least, fairly useless. CPR are a bit of an exception because, as I said above, they also own GoG which brings in its own revenue but during the four years of development of TW3 as well as whatever work was being done on Cyberpunk, those teams weren't bringing in any money. So they ship it, it does well and they make, lets say several tens of millions of dollars. Now, they move onto pre-production for their next title and ramp up production on Cyberpunk. What's going to pay for it? That money they just made from The Witcher 3. I mean don't get me wrong, I'm sure some executives will get a new BMW out of it but generally speaking if you're going to sink ~$80m into a project over that period of time, you're going to need a hell of a return to be able to just start all over again on your next release.

Mark Hamill wrote: »

That article about EAs budget came from 2009, when Modern Warfare 2 came out. MW2s production budget was ~$50 million. Its marketing budget was $200 million!
That means MW2 needed to sell 5 times as many copies to break even. That means it had a 5-fold increase in risk. It is the marketing that is driving the budget to unreasonable limits and it's the marketing that bring that huge risk.

General point: **** this for starters. Activision announced a long time ago they were only interested in billion dollar franchises (where did the vomit smilie go?) and have since made it fairly clear they intend to use marketing, rather than relying on critical acclaim to achieve that. To be fair, I'd wager that no game or even franchises for that matter without a titanic marketing budget or astronomical levels of success can actually do that which is why the list of games which have is rather small, the likes of League of Legends, Overwatch, Halo and Assassin’s Creed being notable members of that club.

But yes, you're correct, there's definitely a fine line between needing a large enough marketing budget to effectively market your game in order to sell enough copies to justify your budget and that marketing budget being so high that it makes it incredibly difficult to hit enough sales to cover your overall budget. But even if you look at The Witcher 3 as a happy medium in this respect, it still represents a massive risk for any publisher. Just because EA and Activision try to go full Minority Report with their ad campaigns and their associated price tags, doesn't really negate this point.

Generic Dreadhead wrote: »

Is that speculation of are there figures? Would have thought loot boxes were brining in more moolah

The figures we do have from the last set of financials show Overwatch breaking the $1b revenue mark even before the latest eSports expansion. With sales hitting over 30m at that point, I think it's safe to say the loot box market played a fairly large part of those figures when you look at revenue generated by other games with those kinds of sales figures.

Generic Dreadhead

Gizmo you need a "Get coffee" notification to pop up here 5 mins before you post :P

Mark Hamill

gizmo wrote: »

That's about in line with what most publishers spend on larger titles with the exception of EA and Activision.

And EA and Activisition are two of the companies we are talking about here because of their business practices. The other 2 are Microsoft and Warner Bros., who I'm betting are also dumping 100s of millions on marketing.

gizmo wrote: »

generally speaking if you're going to sink ~$80m into a project over that period of time, you're going to need a hell of a return to be able to just start all over again on your next release.

How much of a return will you need if you sink €300 or 400 million into a project?
The Witcher shows us that putting $81 million into a game, including marketing, gets you well over that in profit (you need to check your numbers, CD project red made $90 mil profit in 2015 when Witcher 3 came out, and then ~$64 mil profit in 2016 when it's free DLC came out). So maybe game companies should conservatively be expecting a return of 100% profit over the production costs of games of equal quality. Companies like EA and Activision seem to think that increasing the marketing 8 fold (going from 1/2 production cost to 4 times production cost) will get you an equivalent return in profit. That they are now relying on exploitative gambling mechanics in micro-transactions shows that that is not the case.

gizmo wrote: »

Just because EA and Activision try to go full Minority Report with their ad campaigns and their associated price tags, doesn't really negate this point.

The point is that all games carrying massive financial risk. But there is a difference between the risk in a $90 million game and a $300 million one, and if the only reason $300million one isn't costing only $90million is because of the marketing, then it's the marketing that is creating the extra risk which supposedly justifies loot boxes and micro-transactions.

gizmo

Mark Hamill wrote: »

How much of a return will you need if you sink €300 or 400 million into a project?
The Witcher shows us that putting $81 million into a game, including marketing, gets you well over that in profit (you need to check your numbers, CD project red made $90 mil profit in 2015 when Witcher 3 came out, and then ~$64 mil profit in 2016 when it's free DLC came out). So maybe game companies should conservatively be expecting a return of 100% profit over the production costs of games of equal quality.

Depends on whether you want your next game to be bigger than your previous one I guess. If you aim for 100% profit over production costs then unless you have another stream of income your project is only going to have a similarly sized budget at best. If you're a publisher you're also going to have your own operating costs outside of the development studios budgets which need to be covered on an ongoing basis plus enough for capital expenditure for expansion and enough cash reserves should something go horrifically wrong.

That covers "need" anyway. Bearing in mind a lot of these companies are publicly traded and need rapidly becomes want which is a totally different argument. :pac:

Yup, I was a year out with the $64m figure, cheers for that! Again though that's for CD Projekt, the parent company of CDPR, who also owns GoG so not all of that will be profit from The Witcher 3. That being said, based on previous years filings in the link I'd wager TW3 made up the lion's share of the year on year jump.

Mark Hamill wrote: »

Companies like EA and Activision seem to think that increasing the marketing 8 fold (going from 1/2 production cost to 4 times production cost) will get you an equivalent return in profit. That they are now relying on exploitative gambling mechanics in micro-transactions shows that that is not the case.

And historically speaking they'd be correct, the franchises with the biggest marketing budgets are also the ones that tend to sell the biggest numbers. The addition of loot boxes or other systems used to offset spiraling development costs have no justification in cases like this however.

Mark Hamill wrote: »

The point is that all games carrying massive financial risk. But there is a difference between the risk in a $90 million game and a $300 million one, and if the only reason $300million one isn't costing only $90million is because of the marketing, then it's the marketing that is creating the extra risk which supposedly justifies loot boxes and micro-transactions.

Yup, and as above, the publishers of those games don't have a leg to stand on in this instance. That being said, I'd still consider the $100m+ area for a budget to be astronomical, a good example of the rising development costs we've been talking about here and an understandable candidate for the kinds of micro-transactions we're seeing. Conversely if they want to use it to justify ballooning marketing costs which are being applied on top of bigger budget titles in order to reach that billion dollar revenue club then they can get ****ed.

Revoker88

For me i guess it boils down to how MT's/loot boxes are handled.

I actually dont think ive played a game with loot boxes. H1Z1 is the only game i can remember playing with loot boxes but i only put a few hours into it and never went back.

Played games with MT's though. EA doing this is not new in MT's,Battlefield has had shortcut kits in the last few games too.

Currently playing a lot of elite dangerous which has a cosmetics store. Its a little pricey for some stuff but at the same time totally optional and you get what you pay for so no RNG. I dont really find it offensive and bought a pack of skins for a ship i own for €3.50. No regrets.

Ive over 300hrs in the game and id say ive spent about €55 on it including MT's. It owes me nothing. Its a shame these items cant be gotten in game but in elites case im ok with that.

Frontier,who make elite,are a reasonably small dev and the MT's are there to help with the ongoing cost of a live game/developmemt. Also to make money of course.

TL;DR
For me its about context,not all boxes/MT's are "bad",not all are "good".
The context in which their offered in is important.

In the case of SoW and BF2 id say they have gone too far.

J. Marston

A guy in England has managed to get his local MP to at least ask some questions to the Secretary of State for Digital, Culture, Media and Sport about regulating lootboxes. From Reddit...

Daniel Zeichner, Labour MP for Cambridge, has submitted two written questions on my behalf:
To ask the Secretary of State for Digital, Culture, Media and Sport, what steps she plans to take to help protect vulnerable adults and children from illegal gambling, in-game gambling and loot boxes within computer games.

To ask the Secretary of State for Digital, Culture, Media and Sport, what assessment the Government has made of the effectiveness of the Isle of Man's enhanced protections against illegal and in-game gambling and loot boxes; and what discussions she has had with Cabinet colleagues on adopting such protections in the UK.

Unlikely to end in anything but at least shows some people are annoyed enough to start asking questions to the government about this crap.

Grumpypants

I'm starting a protest outside the Dail about how lucky bags are getting kids into gambling if you want to sign up.

I was playing last night and there was a 110 rank guy who was miles better than everyone else with the best gun that could kill you with one shot. No one had a hope against him. It ruined the game for everyone else playing to the point where we had to all leave the server and join another game.

I'd take a new player who "bought" the best gun where it is much more balanced and fun over that every day of the week.

ShadowHearth

I think we all mean good when we want something to be done about loot boxes.
I wonder if this will just backfire in to gamers face. We want some regulation, but instead governments will just slap a gambling tax or some other **** on games and make it a cash cow for themselves too.

Dohnjoe

Grumpypants wrote: »

I'm starting a protest outside the Dail about how lucky bags are getting kids into gambling if you want to sign up.

Don't forget Kinder eggs and Pokemon cards

would be hilarious if the government legislated against loot crates in games and under the same logic banned Magic the Gathering and Hearthstone.. the angry mob would be very confused then

Notorious

Grumpypants wrote: »

Gaming is the only entertainment medium where the price to consumer has come down.

Not having a go, or trying to go off-topic, but I don’t agree with you here. In the last five to seven years the prices of console games have definitely gone up. With the removal of a lot of companies from the Irish market (Game, HMV), and the introduction of the current generation consoles, the price of a new release was bumped by €20.

Back when I worked in Game you’d pick up a new release for €50, or maybe €45 if HMV or Tesco under-cut. Granted I avoid Gamestop and CEX altogether, but you’re looking at €70 for a day-one release. Online tends to be cheaper, but even digital releases are very costly.

Using your SNES example, it could be a case that back in 2010 we were paying too little for our games.

Anyway I’ve no problem with cosmetic loot boxes once they can be earned in game. The cautious gambler in me gets excited when I’m opening a loot box in Overwatch. I’m 100% against the pay-to-win model and I don’t play the free-to-play-but-pay-for-the-good-loot type of games. I’m hoping this trend dies out, like the season pass did. I’d like to think the gaming community will take a stand when a major release introduces a PTW feature, and that might slow down the machine. I think that’s very optimistic of me.

Grumpypants

Notorious wrote: »

Not having a go, or trying to go off-topic, but I don’t agree with you here. In the last five to seven years the prices of console games have definitely gone up. With the removal of a lot of companies from the Irish market (Game, HMV), and the introduction of the current generation consoles, the price of a new release was bumped by €20.
.

The point i was making is if you track for inflation, in the same way all other prices have risen, a game that cost £69.99 in 1990 should now cost €150.

http://www.hargaden.com/enda/inflation/calculator.html

And back then devs made a game shipped it and forgot about it.

Now games not only cost millions more to make but continue to need teams of people working on them for years afterwards. Building new content and keeping servers running. That needs an income stream to pay for all that.

Like it or not loot boxes are it at the moment until something better comes along.

IvoryTower

and we also get to trade the games in when we're done, gaming really is cheap these days its bloody great!

Nody

wes wrote: »

Yeah, the games industry are under the radar, with the in game gambling right now. Only a matter of time, before they attract government attention and end up regulated the same way as any other gambling.

Already been ruled on by the gambling commission in the USA as not being gambling as you're guaranteed to get something from the lootbox; in China also cleared as long as they state the percent chance of getting a specific tier of item (which is why we found out about the percentages for Overwatch for example).

Benzino

As has been mentioned, Loot boxes are the direct result of people unwilling to pay more up front for a game. You see it all the time, "I'll wait for it to come down in price in a sale" etc etc. The cost of game development has gone up, but the up-front price has not, and now more and more people are waiting for sales or buying second hand. Hence loot boxes. Multiplayer games need a source of constant revenue, otherwise what pays for the servers?

Mobile is even worse, as a lot of people have this attitude that apps/games aren't worth a couple of euro (despite them spending 500+ on an iphone), so will only play free games. Just look at what happened with Mario when it came out on app store, people posting negative reviews cause the devs had the cheek to ask for money on the game they spent a 1+ years making.

[Deleted User]

The new humble monthly peaked my interest, particularly Quake Champions, until I saw the description of the game towards the bottom:

Quake Champions

Instant Game Access
50 Shards
100 Platinum
2000 Favor
Ranger Champion
BJ Champion

Wow you get access the game once you buy it? Amazing! Instantly too!

And a bunch of free ****ty in-game currency that indicates its ripe full of micro transactions.

Kindly please fcuk off. They have literally just lost a sale.

gizmo

Er, Quake Champions will be free to play when it comes out of Early Access on Steam. Currently you can pay £20 for the "Champions Pack" which comes with all of the characters unlocked rather than having to start with a limited roster and having to unlock the others through play or additional purchases like when it comes out of EA.

If anything, Humble should have pushed for this pack to be included in the Monthly Bundle since ESO: Tamriel Unlimited is pretty cheap and The Elder Scrolls is Free to Play. Not the best showing for the headline games compared to previous months.

Mark Hamill

gizmo wrote: »

Depends on whether you want your next game to be bigger than your previous one I guess. If you aim for 100% profit over production costs then unless you have another stream of income your project is only going to have a similarly sized budget at best.

Why would it only be similar sized at best? These companies must have gotten investment before making their first games, and they are making 100% profit after paying back those investers. It should be easy then to get at least the same investment for the next game and then add their own investment to significantly bulk up the budget.
e.g. 100m invested for game. Game sales - 100m paid back to investers and 100m in profit for makers. Next game gets 120m invested, plus 50m from makers. So 2nd game has budget of 170m (nearly twice) and makers keep 50m profit from previous game.

gizmo wrote: »

I'd still consider the $100m+ area for a budget to be astronomical, a good example of the rising development costs we've been talking about here and an understandable candidate for the kinds of micro-transactions we're seeing.

Is €100m astronolical though? What were the production costs of games in the 8/16 bit eras? I don't know how accurate this is, but I found this table and while it includes arcade machine production for some games, it still has many old games (Street Fighter 2/Super Mario World etc.) with complete production costs of several €100ms in todays money.
There is also this graphic breaking down where the money went in when you bought a SNES game:

33% to Nintendo, 30% to retailer, 15% to publisher. How much of that is gone nowadays? EA sells it's own games via Origin, so the 33% Nintendo cut and 30% retailer cut are gone for them. Even accounting for Steam taking 30% as retailer, the 33% Nintendo cut is gone. How much cheaper is it to physically make games today? Those big old game cartridges were much more expensive to produce than the blu-rays used today for physical games (the proportion of games that are not sold digitally).
I think the price of classic games are presented in these discussions as if a) those prices actually represented production costs and b) those costs represented the same things now as then.

gizmo

Mark Hamill wrote: »

Why would it only be similar sized at best? These companies must have gotten investment before making their first games, and they are making 100% profit after paying back those investers. It should be easy then to get at least the same investment for the next game and then add their own investment to significantly bulk up the budget.
e.g. 100m invested for game. Game sales - 100m paid back to investers and 100m in profit for makers. Next game gets 120m invested, plus 50m from makers. So 2nd game has budget of 170m (nearly twice) and makers keep 50m profit from previous game.

That's not really how it works. Publishers don't get investment per title, they use their own funds for development. It's not like the movie industry whose funding model more closely represents what you've described. Also bear in mind the financials of the larger publishers are publicly available so you get a good idea of the flow of money in and out.

On the studio side, independent outfits receive funding from publishers on a milestone basis during development with, in certain cases, completion and or bonus payments at the end. Excess profits in this case, should they exist, are generally used to grow the studio, squirrel away for a rainy day and in most cases, run the studio during downtime between projects where they'll be busy prototyping and pitching for their next project.

Somewhere in between, there was an interesting story back in 2015 when Larian announced they were starting a Kickstarter for Divinity: Original Sin 2. A bunch of folk, both here and elsewhere online, wondered why they'd need to do that again given the success of the first iteration. This was my response at the time with links about the numbers involved, it's kind of relevant here too imo.

Mark Hamill wrote: »

Is €100m astronolical though? What were the production costs of games in the 8/16 bit eras? I don't know how accurate this is, but I found <image>

It's an astronomical amount of money from my perspective, as a total video game budget for today including marketing? I'd say it's closer to above average.

That table really doesn't look correct, at least at the upper end, although I don't think I've ever seen any accurate figures from the earliest generation of consoles. Look at it this way though, Super Mario World had a team of about 10 people working on it for a little under two years, I highly doubt its development budget could eclipse the likes of GTA V with its multiple studios and headcount running into the hundreds over an even longer period. I have seen that FF VII around a few times and that at least makes sense given the sheer number of artists employed for both the FMV and extensive backdrops used in the game at the time. Conversely, look at Thief: The Dark Project, which featured a $3m budget with a team of 17 released a year later in 1998.

Mark Hamill wrote: »

I think the price of classic games are presented in these discussions as if a) those prices actually represented production costs and b) those costs represented the same things now as then.

Any time I've seen the cost of SNES games from back then brought up it's generally in response to games being "too expensive" at retail nowadays. Their use in discussing modern development costs and revenue as a whole is useful too although, duplication costs aside, I don't think the break down of costs is as different as you think. EA may sell their PC games through Origin but this exclusivity is only a relatively recent development in the last number of years. It also only applies to PC sales, on the consoles the platform holder cut is still there for MS and Sony and this is the area where we still see the highest sales in the majority of cases. For those publishers without their own distribution service or who also sell on Steam, which I believe covers all of the other major ones bar Blizzard, you still have their cut to take into consideration on the PC as well as the console side of things.

Mark Hamill

gizmo wrote: »

That's not really how it works. Publishers don't get investment per title, they use their own funds for development. It's not like the movie industry whose funding model more closely represents what you've described.

Change investors for publishers and has my point changed? Developers make game with 100m of publishers money and it makes 200m in revenue. 100m pays back publishers and 100m is profit (which, lets face it, goes to the publisher). Next game is then made with 100m of publishers money plus e.g. 50% of that profit. The circle continues, game budgets and profits grow.

gizmo wrote: »

Also bear in mind the financials of the larger publishers are publicly available so you get a good idea of the flow of money in and out.

Well, looking at EAs and Activisions financials and it seems like their gross profits have been on the up for a number of years, all before our current talk of gambling-mechanic loot boxes. Their costs have also been going down each year (the jump for Activision in 2016 might be from them buying King).

gizmo wrote: »

That table really doesn't look correct, at least at the upper end, although I don't think I've ever seen any accurate figures from the earliest generation of consoles. Look at it this way though, Super Mario World had a team of about 10 people working on it for a little under two years, I highly doubt its development budget could eclipse the likes of GTA V with its multiple studios and headcount running into the hundreds over an even longer period.

It has a good few holes and I would like to see other data if people have them but the table tries to take account of the cost of the physical cartridges, which it puts at $15 (I have seen $10 quoted elsewhere too). So even if the software development costs were minimal, the 15 million cartridges for Super Mario World could have cost in the region of $150m to produce (and that's not corrected for inflation). That overhead hasn't existed for a long time in gaming (although, while googling for sources, I saw more than a few articles discussing the Nintendo Switch's reliance on cartridges being the reason multiplatform games are more expensive on it).

gizmo

Mark Hamill wrote: »

Change investors for publishers and has my point changed? Developers make game with 100m of publishers money and it makes 200m in revenue. 100m pays back publishers and 100m is profit (which, lets face it, goes to the publisher). Next game is then made with 100m of publishers money plus e.g. 50% of that profit. The circle continues, game budgets and profits grow.

Nope, but the same flaw is still present in your argument. That initial $100m made on the game isn't just there to be used to cover production costs on the next game, it will have be used, amongst other things, to cover the operating costs for the studio for the previous two years work, the work that cost $100m which was either their own capital or investment which needs to be repaid. Therefore, when you begin development on the next game, you really only have the $100m profit to work from.

Mark Hamill wrote: »

Well, looking at EAs and Activisions financials and it seems like their gross profits have been on the up for a number of years, all before our current talk of gambling-mechanic loot boxes. Their costs have also been going down each year (the jump for Activision in 2016 might be from them buying King).

Yup and if you look at the breakdown of the figures you'll see there's a hell of a lot of money coming from alternative digital revenue sources. In the case of EA, this used to be Season Passes for their various franchises but that's been completely eclipsed by the Ultimate Team system across their sports titles. This actually came up in the Shadow of Mordor thread before and I replied here with respect to their FY16 numbers.

Mark Hamill wrote: »

It has a good few holes and I would like to see other data if people have them but the table tries to take account of the cost of the physical cartridges, which it puts at $15 (I have seen $10 quoted elsewhere too). So even if the software development costs were minimal, the 15 million cartridges for Super Mario World could have cost in the region of $150m to produce (and that's not corrected for inflation). That overhead hasn't existed for a long time in gaming (although, while googling for sources, I saw more than a few articles discussing the Nintendo Switch's reliance on cartridges being the reason multiplatform games are more expensive on it).

Oh for sure, physical costs now are but a fraction of what they used to be. Hell, Nintendo dropped the ball on this big time and arguably opened the door for Sony to steam roll them back in the Playstation days as they took advantage of lower royalties charged as well as the lower cost-per-unit that CDs brought. That being said, with platform holder royalties now around the 11.5% mark that represents a change of a little under 20% on the retail cost of a current physical copy, so what, a tenner extra to the publisher? I don't really think that would do much to make up for the current development budget differences as well as the other ancillary costs required to get a game onto retail shelves.

On a related note, the UK Government have responded to the petition regarding the regulation of in-game gambling. As I kind of expected, it really comes down to the monetary value of the things you're getting and whether they can be sold or traded on afterwards.

Government response to loot box concern is predictably non-committal

[Deleted User]

Not implemented Activision say but I'll leave it here https://charlieintel.com/2017/10/17/patent-reveals-activision-uses-matchmaking-encourage-players-buy-microtransactions/

Revoker88

[Deleted User] wrote: »

Not implemented Activision say but I'll leave it here https://charlieintel.com/2017/10/17/patent-reveals-activision-uses-matchmaking-encourage-players-buy-microtransactions/

My god thats disgusting,every single game they release that has MP needs to be checked to make sure it doesnt have this.

Matchmaking based on microtransactions rather than skill,ive really heard it all now.

[Deleted User]

EoinHef wrote: »

My god thats disgusting,every single game they release that has MP needs to be checked to make sure it doesnt have this.

Matchmaking based on microtransactions rather than skill,ive really heard it all now.

I'm sure gizmo will find a reason for it to be ok :pac:

Mark Hamill

gizmo wrote: »

Nope, but the same flaw is still present in your argument. That initial $100m made on the game isn't just there to be used to cover production costs on the next game, it will have be used, amongst other things, to cover the operating costs for the studio for the previous two years work, the work that cost $100m which was either their own capital or investment which needs to be repaid. Therefore, when you begin development on the next game, you really only have the $100m profit to work from.

I'm not saying the initial $100m made is for the next game, it is specifically to cover all costs for making the first game. The next game is funded from the same source as the first $100m came from (be it loans or publisher cash reserves from profit from other works). If the previous game made a profit, then some of that profit can be used to increase the budget of the 2nd game, to hopefully make an even greater profit.

gizmo wrote: »

Yup and if you look at the breakdown of the figures you'll see there's a hell of a lot of money coming from alternative digital revenue sources. In the case of EA, this used to be Season Passes for their various franchises but that's been completely eclipsed by the Ultimate Team system across their sports titles. This actually came up in the Shadow of Mordor thread before and I replied here with respect to their FY16 numbers.

You are saying "alternative digital revenue sources" as if they are from some separate department to their game development departments. They are revenue directly from and tied into the making and selling of the games that use them. And we can see from their financials that EA were making increasing profits every year, whilst reducing costs at the same time. These companies might want more money, but their financials, at least since season passes were invented, put the lie to their claim that games are costing them more to make and they are loosing profits. It proves that micro-transactions, especially gambling mechanic ones, are pure greed.

gizmo wrote: »

Oh for sure, physical costs now are but a fraction of what they used to be. Hell, Nintendo dropped the ball on this big time and arguably opened the door for Sony to steam roll them back in the Playstation days as they took advantage of lower royalties charged as well as the lower cost-per-unit that CDs brought. That being said, with platform holder royalties now around the 11.5% mark that represents a change of a little under 20% on the retail cost of a current physical copy, so what, a tenner extra to the publisher? I don't really think that would do much to make up for the current development budget differences as well as the other ancillary costs required to get a game onto retail shelves.

20% goes a long way. Then add in the profit from Season passes and DLCs. While they may sell fewer units that original game, modern Season Passes and DLC are almost entirely digitally sold (so no physical costs) and each unit produces more profit relative to the original game. We can see the effects from this in the reduction in development costs over the last years within EA and Activisions financials.

gizmo wrote: »

On a related note, the UK Government have responded to the petition regarding the regulation of in-game gambling. As I kind of expected, it really comes down to the monetary value of the things you're getting and whether they can be sold or traded on afterwards.

Government response to loot box concern is predictably non-committal

It more comes down to the UK government not even understand the question, from the article you provided:

The government response is, unsurprisingly, evasive and appears to be ill-informed on the issue - citing the prosecution of two third-party gambling websites despite questions asking about in-game gambling.

wes

Nody wrote: »

Already been ruled on by the gambling commission in the USA as not being gambling as you're guaranteed to get something from the lootbox; in China also cleared as long as they state the percent chance of getting a specific tier of item (which is why we found out about the percentages for Overwatch for example).

Yeah, I saw that. I think the law needs to change imo. The whole thing is deliberately designed to exploitative for those with addictive personalities. Its no different than the smoking industry exploiting addicts.

The difference is at best marginal, and I still think the gaming industry is in for a bad time, once some goes all "think of the children", and this time around, gamer won't be on there side (the whole thing is going pay to win).

gizmo

M!Ck^ wrote: »

I'm sure gizmo will find a reason for it to be ok :pac:

Or maybe I referred to it as "heinous crap" an hour before it was posted in here?

Then again, in my first reply on this topic, I also said...

Given that emotions tend to run high in this debate I feel the need to preface my reply with saying I'm not defending this stuff, I'm simply pointing out the reasoning behind it and who it generally appeals to rather than grabbing the closest pitchfork.

But I guess that was missed too.

gizmo

Mark Hamill wrote: »

I'm not saying the initial $100m made is for the next game, it is specifically to cover all costs for making the first game. The next game is funded from the same source as the first $100m came from (be it loans or publisher cash reserves from profit from other works). If the previous game made a profit, then some of that profit can be used to increase the budget of the 2nd game, to hopefully make an even greater profit.

No company in their right mind would operate like that though. They'd effectively have €50m left in the bank at that stage and would have no other source of income for over two years. What happens if the next game gets delayed as they so often do? What happens if the budget rises for other reasons? What happens if it's a commercial flop? Publisher goes tits up, developers are scrambling for someone else to step in. We've seen these kinds of problems countless times before, even so far as developers shutting after being left in the lurch to what were previously considered publishing giants fall due to bad decisions and under preforming games. 'member THQ?

Mark Hamill wrote: »

You are saying "alternative digital revenue sources" as if they are from some separate department to their game development departments. They are revenue directly from and tied into the making and selling of the games that use them. And we can see from their financials that EA were making increasing profits every year, whilst reducing costs at the same time. These companies might want more money, but their financials, at least since season passes were invented, put the lie to their claim that games are costing them more to make and they are loosing profits. It proves that micro-transactions, especially gambling mechanic ones, are pure greed.

I refer to them as that because that's how they're refereed to in most financial reports but you're correct, they still fall under the umbrella of development. In the case of EA, those profits can be attributed to a smaller number of high profile titles, periodic layoffs and studio closures across their group and as they said themselves in those financials, the revenue generated from those season passes and other "new" income sources, such as Ultimate Team. To argue that games somehow aren't costing them more to make is just ludicrous, they've simply gotten better at making more money from them.

This is part of the problem though, the margins earned on DLC are huge compared to what is gained from the main game sale. In my case, I really struggle to understand why some folk jump on Season Passes which cost over half the price of the full game for just a couple of hours of extra story content and some new, or even just reskinned, items sometimes. Meanwhile you have something like the Borderlands 2 Season Pass which increases the amount of genuine hours of play and content dramatically for pretty much the same price.

Mark Hamill wrote: »

20% goes a long way. Then add in the profit from Season passes and DLCs. While they may sell fewer units that original game, modern Season Passes and DLC are almost entirely digitally sold (so no physical costs) and each unit produces more profit relative to the original game. We can see the effects from this in the reduction in development costs over the last years within EA and Activisions financials.

Totally agree, as above. But you also need to factor in that development team sizes alone are, variably of course, around ten times the size of what they used to be. Those larger team sizes have their own considerably higher and on-going costs and that's before you even look at the increasing size of the publishers themselves as they expand into different countries to make, manage and their wares.

Mark Hamill wrote: »

It more comes down to the UK government not even understand the question, from the article you provided:

Not really though. To be fair, the author of the piece also said...

The government response is, unsurprisingly, evasive and appears to be ill-informed on the issue - citing the prosecution of two third-party gambling websites despite questions asking about in-game gambling.

But as I mentioned before, the crux of that particular case was the ability to sell the currency back on a marketplace which introduced a monetary value to the winnings. Overwatch and their ilk don't have that which appears to be why the Gambling Commission and by extension the Government, don't consider them gambling yet.