Tuesday, July 31, 2012

When money meets videogames: Alternative monetization systems in Japan and the West


Some weeks before the release of Peter Molyneux’s highly awaited experimental game called Curiosity,[1]destined to evaluate gamer’s limits regarding the price they are ready to pay for a gaming experience[2], I wanted to figure out whether the different cultural conceptions of videogamesinfluence monetization. In Japan as in the West, the videogame industry has considerably changed during the last ten years. Naturally due to the technological progress, this recent evolution can be characterized by a diversification of game platforms and supports. For videogames makers, this means new fields, new possibilities and new methods. Videogames monetization is a particularly interesting example and presents a multitude of options: the simultaneous developments of digital distribution, games on mobile devices and online games have opened new horizons for monetization solutions.



Pay-Per-Play and Free-To-Play

When it comes to traditional gaming, up to now Western markets have been focusing on the formula requiring consumers to pay for a physical product, the game copy, and thus, the right to play it whenever they want and as long as they want. This system is not very different from Japan, since the monetization approach for console or other non-online games has been similar anywhere so far. However, Japan has another system that is more successful here than in the West: the Pay-Per-Play system, which up to now only applied to arcade games. This monetization system basically requires the player to buy credits for each single play.  While the Western market has neglected this sector since the videogame crisis of the early eighties,[3]this system is largely used in arcades in the country of the rising sun, and it’s not a surprise that game makers now attempt to adapt this system for consoles in Japan as well in an environment where more and more different multiple monetization systems appear frequently[4], seen in Mobile Suit Gundam: Battle Operation (起動戦士ガンダムバトルオペレーション), exclusively published by Namco Bandai Games in Japan in June 2012.

Most of these recent systems however converge on a free-to-play pattern, which is actually only partially free, in order to further involve the player into the game, and make him a potential customer. Mobile Suit Gundam is following this model: the game is available for free download on Sony’s Playstation Network, and allows the player to play freely a restrained numbers of times. However, to progress in the game, they would have to break their piggy bank to buy levels for special credits, just like they would have to do for an arcade game.

Storage renting

Since arcade games are public, they include a system of monetization that is not wide-spread in the West: the purchase/rental of storage space. Indeed, arcade devices are not only destined to occasional players, and the ones who want to save their progression or customized characters in the game have to own storage space, or pay the access to the game maker’s space. In a certain way, it’s comparable to the memory cards system, which tends to disappear with the 7thgeneration consoles (Xbox360, Wii, PS3), at the only difference that even if you receive a physical card necessary to load your saves, these ones are not stocked in the card, but on an inner server. 

Simply put players in arcade halls can choose between two systems:
1.      Save the arcade progress on a server and access it through an ID/memory card owned
2.      Save the  arcade progress on the ID/memory card owned
In both cases the player is required to purchase an ID/memory card, the “storage”.
An example for a popular game is Tekken 6,
which recently also found its way to the West.
This system is actually also used in the West, but mainly on online PC games: the player can for example purchase/rent a property in Second life. That basically means that he has to pay a monthly fee for a certain space on the server in order to store his data. The parallel with the real-life property renting system makes this monetization easily acceptable for the player, who doesn’t have the impression to “pay to play” and represent a regular income for the game maker. Unfortunately Second Life is lately facing a consequent loss of popularity but remains a very interesting game and a pioneer in term of monetization.

In-game purchase, farming and real money exchange

The game Mobile Suit Gundam: Battle Operation includes another inherent aspect of the recent monetization systems, that is to say incorporating a character personalization system with online purchasable items or contents. This point is pretty well accepted in the Western hemisphere as in Japan. Downloadable items are most of the time created and managed by game makers, who sell them to players against virtual currency, earnable by completing missions, working, etc... This system is highly contested due to the drift it triggered, for instance in the famous Massive Multi Online Role-Playing Game, World Of Warcraft, a parallel market axed on the business of continuous extracting of virtual gold to exchange it against real money appeared and blew up in China and other developing countries. Some extensive players even found a full-time job in “gold farming”. As a result to this phenomenon, Blizzard introduced a system based on real money exchanges in Diablo III, without any intermediary. Worldwide players complained about the fact that with the real money auction house, rich players automatically become the strongest in the game. However, this system largely remains used only in the West. In Asia, the outcome is more mitigate: in South Korea for example the game was released without the real money auction, while in Japan, it alimented the controversy about money and videogames, induced by mobile hazard games using the method called “complete gacha”, encouraging the player to spend always more money to increase his chance to earn a “rare” virtual card. The addictive character of these games made some Japanese players to spend huge amounts of money on those rare items. Some players even borrowed money to be able to pay their addiction. And when kids got involved, the Japanese Consumer Commission decided to react by forbidding this mechanics. Free-to-play is recently highly-represented on mobile devices, and I believe this case should make Western audience reconsider the real price of “free-to-pay” games.

Another booming items-based system consists in allowing players to generate their own content and to sell it inside the game for real money, and managing Player To Player exchanges through a virtual commercial platform, which allows taking a percentage of each transaction. It’s also a way to avoid parallel market, and as long as the commission is not too outrageous, the player can find an advantage in the process. This system is for instance used in the 3D chat imvu, in which users can buy clothes, furniture and more, using credits purchasable on the official website’s catalog, or earnable by taking part in marketing activities like giving feedbacks or answering surveys.

In-game advertising

 The mobile gaming industry had a value of eight billion dollars in 2011, while 81% of all downloads on mobile devices are free. The reason of these astonishing data is that most of the producers bet on in-game contents to monetize their game. Hence, while Angry Birdsis freely downloadable on main mobile games download platforms, it earns about one million dollar per month, only from ads. As every smartphone owner probably noticed, the in-game (and around-game) advertising is omnipresent in mobile games. This system is not really new, since it was used for the first time in 1978, but the popularity of smartphone’s and free-to-play system’s made the process of this method seems smoother to the player. Indeed, since the game is free, the player is more inclined to accept this intensive advertising than he would be for a game hewould actually have paid for.

Hence, while mobile games can include pop-up advertises, and intrusive messages these can’t be skipped, in-games advertises for console and PC should be more tactful and sober. In-game advertising is however developing on these platforms.The easiest way to find advertises in a game is playing a sport simulation game; in Japan as in the West, the stadiums or playgrounds are usually designed with banners, just like the real-life ones, and jerseys show the name/logo of sponsors. Two cases are especially famous: the first one is Super Monkey Ball 1 for Nintendo Gamecube, in which every single banana has a DOLE sticker over it. The second one is the 2008 BarrackObama’s campaign viewable in ten states from the online mode of Electronic Arts games like Madden, NASCAR, Burnout Paradise… The motto “EA SPORT, it’s in the game!” finally makes sense.[5] EA usually inserts ads in their games, but the politic character of this advertisement has been criticized by the gamer community in the first place, but accepted. The Key for in-game advertising is to keep in mind that players look for realism, thus if the action of the game takes place for example in Time Square, players will be expecting ads, however if they are not in a realistic frame, it would be considered as intrusive and the outcome would be damageable for the game.

Summary

In short, many monetization systems have appeared during last decade, in concord with the constant evolution and renewal of video games. Overall, systems are pretty similar in Japan and in the West. However, only certain monetization systems work in certain cultures due to previously mentioned differences in the gaming culture as seen with the “complete gacha” or the arcades.  I wonder how long the “traditional” monetization systems will survive, namely physical retail, and more recently the monthly subscription for online games. If we for example assume the death of the console generation in the favor of a cloud gaming oriented system regarding the 8th generation of video games as rumors among industry professionals predict, some of the monetization systems mentioned above may gain more and more importance. Plus, if the new open-source console called Ouya, recently announced and developed thanks to gamer investments and aspiring to revolutionize the video gaming world with a free-to-play oriented strategy reaches its goal, the giant players of the industry may have to rethink their strategies and the free-to-play system may take a predominant place in the market. But this perhaps should be discussed in another article.


[1] Curiosity is a new experimental game of Lionhead founder Peter Molyneux, where a “secret” is hidden inside a black cube and players try to reveal the secret by tapping on and cracking the cube. However only one player – the player who taps the final time and mines through to the center – will be able to see the secret. All other players will be left out in the cold. The game basically only drives on the “curiosity” of players to reveal the secret. This game is only one of a series of simple and elegantly presented experiments on various platforms, from iOS to the browser, probably numbering 22 in total over the next 34 months.
[2] Media reports that the some DLC will start at a price of around $1 up to roughly $78,000 for a special version of its implements.
[3] Since then Arcade gaming appears to be more popular in Japan, then abroad. One reason may be that arcade games are more sophisticated and hence more “enjoyable” in Japan. Another reason probably lies in the different gaming culture. While Japanese player rather socialize in arcade stores, Western player either meet up for common console or online playing.
[4] Especially with regards to the mobile gaming sector.
[5] The advertising was political motivated and the democratic party paid a great deal of money to target this message to the rather young constituency.