Older gamers recall a time when games were sold as complete products in themselves. You would pay a fixed amount of money, and you would know what you were getting. With the arrival of modern connectivity and online gaming, however, developers have begun moving away from the traditional one-time purchase model in favor of more “lucrative” practices. Last week, publisher Ubisoft released a presentation for potential investors, outlining their business model. In it, they explained how the company is moving away from games to what we call “live service.”
Games and Live Services
It isn’t hard to see why many AAA game publishers prefer live services to traditional sales? One of the two is equivalent to selling chewing gum, and the other is like selling chewing gum and offering the buyer the option to periodically recharge the flavor for a fee. From a business standpoint, it makes sense to “update” existing products. It takes less time and resources than to build something from scratch. But if it sounds disgusting to update gum and place it back in the consumer’s mouth, it’s because it is. Done right, live services can be a win-win for both the company and the consumer.
Look at Warframe and its free-to-play business model that delivers value without holding the core storyline hostage behind a paywall. Compare that to Star Wars Battlefront 2, where you would pay premium price for the base game only to find that microtransactions are necessary to skip the unreasonable grind. Even worse, compare it to Asura’s Wrath, where the ending of the main storyline was only available through paid DLC. Publishers argue that the costs of development are now so high that such practices are necessary to make a profit, and yet companies like EA and Ubisoft report higher profit margins and lower development expenses than ever before. And even if the claim was true, then if a company that makes money off of selling games can’t cover expenses by selling games… should they really be in that business?
The Lie of Lifetime Value
Note that live services in themselves are not wrong. Every company has the right to make money off of its own intellectual property. The problem is, despite live services promising “lifetime value” for a product, publishers seemed geared closer to “lifetime,” and not “value.” If EA wanted to engage people on FIFA for a lifetime, why release a sequel every year? If Activision truly wanted to give lifetime value when implementing microtransactions for Advanced Warfare, why come up with CoD: WWII?
The simple answer is that despite what they say, publishers actually don’t want to release a game with lifetime value. Why would you buy Destiny 2 when you can dust off your original copy of Destiny: The Taken King? In fact, why pay for either of them, when you can play Warframe for free? Games with lifetime value remove the need for other games. We can observe this with DotA 2 and LoL. Why browse the oversaturated MOBA genre when you already have your favorites? The AAA games industry wants the sky high profits of live services, but does not want to let go of the profits from actual sales. This brings to mind Bethesda, and the neverending re-releases of Skyrim. Yes, it’s a great game, but it’s just another example of publishers succumbing to the human tendency of maximizing profit for minimum effort.
Games to Last a Lifetime
Of course, not all publishers follow this trend. Nintendo continues to be the exception, rather than the norm, but at least as a company, they still place importance in good relations with the consumer base. Take a moment to reflect on the old Pokemon cartridges from the early days of handheld gaming. Those had lifetime value. In fact, I still pick up my Ruby and Sapphire simply because they’re good games with actual replay value. And that value continues to make Nintendo money long after the GBA phased out.
The point is that despite the stigma surrounding the AAA games industry, live services are a tool, much like any other. There is nothing evil in the hopes of prolonging the lifespan of IP. But when delivering lifetime value, companies have to realize that the “lifetime” aspect follows value, and not the other way around. People are more than willing to spend if they get something out of it.