
Optimizing Your Industry to the Point of Suicide (2012) - luu
http://www.baekdal.com/opinion/optimizing-your-industry-to-the-point-of-suicide
======
exDM69
I have really mixed feelings about this. On the other hand I dislike this
method of selling games but I also understand that it is rather difficult to
make money selling $1 games. And a $5 price tag in the market doesn't work for
most games (the exceptions seem to be ones that are coming from PC/consoles:
Grand Theft Auto games, Minecraft and Final Fantasy games sell for $5-$15).
But this micro transaction trend has been getting out of hand, this is already
the second article on the subject on HN this week.

I play a lot of simulator games, which have a lot of after market content.
Flight simulators have a lot of 3rd party vendors who create additional
aircraft and scenery (an aircraft may cost around $30 or more). The most
popular train simulator has additional 1st party content, trains and routes
which total up to $2000 even after discounts in Steam x-mas sales. The racing
simulator I play has a subscription model and cars and tracks cost extra ($50
a year + $12 per car + $15 per track). But these pieces of extra content are
very high quality and are accurate visually, historically and performance
wise. I have no problem spending $10 to $30 every now and then on this.

But there's a stark difference between additional content in simulators (which
obviously costs money to create) and a pay-to-win IAP gaming model. In p2w
games, there's a hidden subscription fee because you essentially have to pay
every now and then to stay in the game and not have to wait for ages (e.g.
real racing android game requires you to buy new tires every few races, or
wait for hours) and a price on additional content which is usually nothing but
a piece of artwork (which is cheap to create in contrast to the accurate
simulator content). The biggest problem with this is that these games are
labelled as "free" while in reality you pay subscription + extra for
additional content.

I would actually like to pay for games on my mobile, but I don't want to play
games that where the whole game design is optimized for maximum IAP profit
rather than maximum fun. But when browsing the Android market for games, you
just can't find any interesting games that do not employ this IAP pricing
model.

~~~
panacea
Apple, as gatekeeper had (has?) the opportunity to fix this.

They should not be listed as free games. Free games should be listed as demos.

In-app purchasing should be limited to unlocking discrete chunks of game-
play... not 'coins'.

There should be a way to buy the game outright instead of freemium.

Essentially, we're back to where we were with video arcades, before consoles
at home gave us unlimited play.

Video arcades died... Freemium games need to die too.

Apple has a noose of very bad karma around it's neck because of this.

~~~
exDM69
> Apple, as gatekeeper had (has?) the opportunity to fix this.

Why would it be in Apple's interests to prohibit micro transactions in games?
On the contrary, they do make a 30% cut of the sales, don't they?

Even if Apple did change their policy, there's still Google, Amazon, Russian
Yandex and Chinese app stores that do allow this. If Apple (or anyone else)
disallows this, the game publishers will release their stuff on the markets
that do allow IAPs.

Although it seems like Apple have had some bad PR and having to refund some
(32M$ !) of kids' purchases:
[http://news.cnet.com/8301-13579_3-57617270-37/apple-to-
refun...](http://news.cnet.com/8301-13579_3-57617270-37/apple-to-refund-at-
least-$32.5m-for-kids-in-app-purchases/)

> Apple has a noose of very bad karma around it's neck because of this.

Only some gamers complain, this isn't really hurting Apple's image as a whole
enough to make them take action.

I'm guessing this phenomenon will die by itself given some time. Gamers and
parents are already revolting. When more parents will prevent their kids from
using their credit cards, a (major?) part of the money supply will run dry and
the game publishers will have to come up with other business models.

------
AndrewKemendo
This is a natural outcrop of the everything is free/cheap zeitgeist. The
demands from users for game quality far outstrips what they expect to pay for
them, so if you charge high they will just not buy it or find a loss leader
and play their game - they are all almost perfect replacements for the average
user after all. If a small amount of people want to pony up $100+ per title
then it might work, but there is something to be said for high volume low
cost.

At the risk of being crass, the online porn industry has gone to this model as
well. They give a significant amount of free teaser video leading up to what
would be the climax of the scene, only to cut away to an ad or just outright
end.

I would assume it is working the same as with freemium games.

------
chipsy
The thing that ultimately limits this strategy is people get far more excited
about paying up-front for a "thing" that is play-oriented, whether it's
marketed as a professional tool or a game. When you lead with monetization,
you have to actively cut out regions of play so that feedback loops related to
monetization can dominate.

With F2P microtransactions in the context of a single player game(multiplayer
adds social value effects), the hope is, essentially, that people are too
uninformed to take control of their own play experiences. Everyone who would
consider themselves a games enthusiast essentially lives in a different world
- even if they're addicts, they know how to satisfy their addiction at lower
cost, and often with more ability to customize the experience.

------
detcader
Isn't this kind of a supply and demand thing? There is plenty of demand for
indie games and fantastic indie games get created frequently enough (e.g.
Hyper Light Drifter, Dustforce, FEZ [I know, I know]). If you want to change
the medium for the better, the most permanent solution under Capitalism is to
change what people will pay for.

This article harks on mobile games a lot. Why do you need games on your phone?
More artistic, less crass games appear on systems like the 3DS, and PCs. If I
really wanted an art piece of a game on my hypothetical iPhone, I would try to
make one myself.

I do disagree with micropurchases in children's games. They just don't have
the thinking power yet to realize what they're dealing with. That's a more
pertinent moral question, I think.

------
ChuckMcM
Another rant on IAP in the games market.

Here is the sticking point for me, if its suicide then great these things will
fail and like the original DivX idea it will be some cautionary tale in the
past.

But what is really the rant? Is the rant it costs me more to play this game?
Is that it? Your $5 game is not as entertaining for as long as your $50 game?
I agree that the nickel and diming is annoying but they offer the "big bag of
tokens" for some big price $50 - $70. If you buy that you can whiz right
through things, and they don't "re-lock" so in the case of the racing game the
cars are there forever, except you had to pay $50 for that game instead of the
$1 - $5 you thought it cost.

~~~
grblmrbl
When I think how much money I spent sinking quarters into Galaga at the local
diner as a child, I just can't feel that bad when people complain about Candy
Crush charging $0.99 for another 5 lives to people that are too impatient to
wait a couple hours for the free set. Is that _really_ so exploitative? Meh. I
played past level 100 on Candy Crush without spending a cent, which is
probably dozens of hours of gameplay.

The market _is_ speaking pretty clearly: it is not even close to profitable to
make premium casual games, the group of hardcore people that are willing to
pay up front is way too small to make it worthwhile. IAP lets you get many
more people enjoying your game, and you make a lot more money doing it, which
is IMO a win on both ends. I get that a lot of gamers _hope_ these games will
fail, but as of right now, this is the most profitable and fast growing sector
in the games industry, so I'd be hesitant to predict its downfall yet.

If there was some magical way to get the same number of mass market users to
pay a fair $5 up front for games (hell, even $1 would be great), every one of
us in the game industry would be thrilled to hear it, because it's much easier
to make premium games than freemium. I'm open to ideas, but I haven't heard
many realistic ones.

Disclaimer: I work on F2P games (not for King), so take all of this with a
grain of salt based on self-interest.

~~~
watwut
How many people/kids were willing/allowed to sink that much money into Galaga?
It was not mainstream hobby.

At least, my parents taught me it is not wise investment and I plan to teach
my kids the same about level ups in seemingly free games.

Speaking about exploitation, I recall one especially ugly example. A game with
kiddy graphics and story had crying Bambi 10 minutes into play. You came there
and Bambi told you that he is dying and the only way to save him is to pay
money. If this is not emotional manipulation I do not know what is.

~~~
Paradigma11
Do you have a link for further reference.

------
lucaspiller
Has anyone looked at applying this to the non-gaming market? I'm guessing the
emotional attachment isn't as much but you are still attached from the time
you have invested.

Let's take Word for example. You write a three page document, you want to save
it? That's $1 please. Printing? That's another dollar. Oh you don't like
Cambria? You can unlock Times New Roman for $10, or our Business Serif Pack
for $49!

I guess it's similar to shareware, but more annoying...

------
nnx
As much as I also dislike how some IAP game developers base all their gameplay
mechanisms purely on maximizing the user likeliness to keep spending without
even noticing, I recognize that they get the very basics of video game design
very right.

Because they have to.

The goal for any game developer who treats its creation not only as an
artistic piece but also has a product, is to design software that offers a
positive feedback loop to the user in order to keep her engaged.

Consider how Nintendo, for instance, considers the Mario platformer franchise
as an instrument (see Ask Iwata interviews). During development, designers are
focused on getting the timing (rhythm) right between challenge (say ennemies
or holes) and corresponding rewards (powerups or secret exits). This
ultimately plays/tricks how our brains are wired (effort needs reward) in
order to engage users and ultimately enjoy the game... and pay again (and
again) for the sequels/updates when they need their fix.

Imho IAP is an interesting return to the origins of video gaming (and coin-
based arcades) and refocuses the industry on getting the core ingredient
right, the feedback loop, rather than betting it all on graphics, story,
feature-creep... and marketing.

Marketing is important when you need to convince your game is worth paying
upfront, even in a seemingly minimal amount, as mobile gaming is a very
"dispensable" expense in the general public.

There is no ROI in marketing an IAP game that does not engage enough of its
users (enough). On the other hand, marketing heavily an upfront-cost game can
draw sales, sometimes thanks to the franchise name as well, despite providing
no to little entertainent to most of its users as the feedback loop is just
not good enough to engage them.

For good or bad, I think IAP is accelerating adoption of data-driven practices
for video game design. As an engineer/scientist, this is very interesting.

Last but not least, IAP probably helps expand the (mobile) gaming audience to
people who would have otherwise either not played game(s) at all or would have
downloaded illegally.

In the long term, I believe this can only be good for the industry. The bad
parts of IAP will be regulated by better consumer protections for the worst
"abuses" and more naturally over time by the users themselves as they get more
familiar with the model and more "meaningful" IAP titles become available.

------
narrator
It's not exactly moral but it's basically convincing people to pay for very
extensive entertainment.

People want to believe that people are smart enough to figure out that this is
a bad deal but they're not. Welcome to reality.

------
analog31
Another thing to teach my kids about personal finance.

