Are We, The Consumer, Being Tricked Into Parting With Cash

People don’t want to pay for games. Thats the message we, the consumer, are told repeatedly by the creators and distributors of the gaming industry. Indeed many of this year’s high-growth or most controversial games, Clash of Clans, 4 Pics 1 Word, Real Racing 3 amongst others, are ‘free’, or at least up to a point. The truth is if we, the consumer, want to really enjoy a free-to-play (F2P) game and pour hour after hour investing in our gaming experience, then we must go the way of the less than transparent micro-transactions.

Of course anyone that has followed this market have witnessed its explosive growth over the last five years. These same people, though, will know that these games aren’t exactly ‘free’. The gaming publishers and developers make their money via premium subscriptions or micro-transactions. These gamers can obtain extra items or in-game currency for a small fee, usually ranging from the reasonable €0.89 to the ridiculous €89.99. The idea behind marketing and promoting a game as F2P is meant to make it look simple, attractive and appealing. By removing the initial cost barrier, the potential market for a ‘free’ game is infinitely larger. And although the vast majority of gamers, those knowledgeable with F2P games, will never spend a cent, a small percentage remains that will often spend more than just €50 (the regular retail price of a physical, boxed game).

In-App Purchases

Despite its recent popularity, F2P is not a new concept. It existed as early as the mid-90s. The breakthrough game was developed close to home in the UK, the massively-multiplayer online (MMO) RuneScape arrived in 2001. Soon after, the F2P market exploded in Asia and especially South Korea, via games developed from major players such as Nexon, before slowly growing across the world. Although, it took a combination of Facebook and ‘smart’ mobile devices to finally make F2P a hot ticket, for publishers and developers, in Europe.

No one more than Apple, with its App Store and iOS (mobile operating software) powered devices, has benefitted and reaped the financial rewards of the F2P market. All of this at the expense of us, the consumer. The App Store has become dominated by F2P games and it feels like the current direction of iOS gaming needs to change. While some of the F2P games are brilliantly balanced and realised, providing value for both the makers and the players, most are not. It’s both Apple’s and our fault. When the iOS App Store launched in 2008, there were no trials or demos and no easy way to get refunds. There were, however, games like Super Monkey Ball, which cost €10 to buy. For a while that price point held but over time we, the consumer, said we weren’t willing to pay that much for a game.

Developers reacted by racing to the bottom in an effort to rise to the top of the best seller lists, they held launch day sales, or cut their prices at some point after launch. It’s a common retail strategy because, in many cases, it works. It also trains a segment of the, savvy, customer base, us, not to buy apps at full price but to wait for sales.

Over the years, instead of trials or demos or refunds, Apple put forward in-app purchases (IAPs). At first, free apps had to stay free, so if games wanted to use IAPs, they had to charge at least €1 up front. That restriction was later lifted, and free as in IAP was born. The hope seems to have been that advertisements could be removed or additional levels could be purchased, helping game makers make money. Yet once again, we, the consumer, told game makers we wouldn’t pay to remove advertisements or to buy extra levels. We could tolerate advertisements, and limited levels were just fine.

Independent developers need to make money to feed themselves. Large gaming houses need to make money to keep making big budget games for their core markets (console and PC). So, given the rules of the App Store imposed by Apple, and the loud and clear message we’ve given them as customers, game makers have turned to F2P models.

Most of us won’t pay €1 for a great game, but will pay more than, €50 in IAPs to have a better looking hut or farm or business than our friends and fellow gamers. Most of us won’t pay €1 for a great game, but will pay more than, €50 in IAPs to get back to racing or fighting or crushing candy as quickly as possible. Ego and impatience, not advertisements or levels, are what most often monetise games on the App Store.

Developers certainly aren’t blameless either. Enough of them caved in and raced to the bottom to validate the cheapest of our expectations. More egregiously, while some do a great, customer-friendly job, others are as manipulative and exploitive as the worst of bookmakers. They employ behavioral analytics and conduct the equivalent of psychological warfare to try and extract every cent they can, for as long as they can, from us gamers. We and Apple reward them with Top Grossing status and so much business that more and more of them sprout up every week.

They build and tune games to be addictive in the most financially draining sense of the word, like the coin-ops of old. The only difference is, you couldn’t stuff more púnts into an arcade cabinet to get further, faster, and better impress the people looking over your shoulder. But, you can on the App Store. And because F2P is proving so much more lucrative than the simple, one time, up front payment system of the early days of the App Store, even established gaming franchises and studios, unable to make money any other way, are switching to it, and sometimes to the less savory versions of it.

In this regard, Apple is failing in their stewardship of the App Store, and allowing the value of their platform to falter. Not the overall value mind, they’re still making and passing along more money than ever, but the value to well intentioned developers and customers. And therein lies the path to Atari like irrelevance as we the consumer will simply get fed up and take our business elsewhere.

It has already happened to some degree. In February, as reported by The Guardian, Apple agreed to pay up to $100m compensation to parents whose children ran up massive bills by buying IAPs in F2P kids games. Up to 23 million US parents are expected to lay claim to the money, though parents in the UK and elsewhere are excluded. The article, in The Guardian, goes on to cite the example of Doug Crossan, a UK father whose “studios, polite and sensible” teenage son had spent £3,700 on IAPs. Whats worse, Apple refused to cancel the thousands of pounds spent by Doug Crossan’s son Cameron, citing parental responsibly and pointing out the fact that its products all contain password locks to prevent unwanted or accidental purchases.

But are Apple and game developers exploiting children and parents by making the rules of the game unclear? How can Apple, independent game developers and big house game companies make F2P more transparent and understandable whilst maintaining the flow of cash needed for this industry to function?

Perhaps by introducing real trial or demo modes, paid upgrades, and/or easy refunds, things that exist on other platforms, could go a long way towards influencing the App Store gaming economy away from the worst elements of F2P.

For example, here in Ireland, there exists a game developer that has, from the beginning, used the F2P model for the good of the player and for the betterment of their business. Riot GamesLeague of Legends, a PC MMO, has become a shining example of the F2P model. It has amassed over 5 million, concurrent, loyal followers over a short few years. It has helped create a new form of ‘esport’ entertainment hosted via the relatively new, YouTube competitor, Twitch.TV. Yearly tournaments are hosted that bring, with it, entrants from all over the globe competing for real money cash prizes.

Current data, Friday 12th April 2013,  for League of Legends.com via Alexa.com

League of Legends Traffic Stats 12/04/13

With this in mind then perhaps Apple needs to adopt the same approach by banning games with worthless IAPs, games more akin to casinos if the player could never, ever win, would also help. Most of all we, the consumer, need to stop feeding the IAP machine, and stop rewarding that business model with our money. We need to pay a fair price for good games, for premium games, and reward those and that model instead.

We need to stop whining that “it should be free” or “€1 is too much”. We need to stop pretending that a game that provides hours of enjoyment is worth less than a cinema ticket or a fancy cup of coffee. We need to support the the best and the brightest developers with real money, so that they keep making the kind of games we want to buy.

Sadly though, that’s unlikely to happen. Apple created the system. Developers have learned to game it. And we, the consumer, have told them we’re just fine with that. We prefer it. How perverse is that.