in the late 1990s the internet was gaining popularity at a rapid rate and tech enthusiasts
were starting to download video game content straight off this new communications platform
in the early days these pieces of downloadable content or dlc were primarily things like fan
made extensions to popular video games and doom mods lots and lots of doom mods it was mostly
harmless fun amongst a small group of technically proficient gamers and developers this would change
with the introduction of online gaming platforms like mmos and microsoft's xbox live which allowed
players to make purchases directly over the internet for the first few years this was
mostly game companies selling subscriptions to play in their virtual worlds or selling small
expansion packs online which wouldn't justify a new game release in their own right the pushback
was minimal and most players were actually excited to be able to pay four or five dollars to get an
extra few hours worth of gameplay without having to go to gamestop to buy an entirely new game
this was until 2006 when bethesda the developer of the elder scrolls series released dlc which
added nothing to the game other than armor for your in-game horse this 2.50 optional download
in a single player game was the first time that players actively pushed back at the idea of paying
money for pixels that otherwise added nothing to the game despite the negativity the horse armor
became the 9th best selling dlc for the elder scrolls game beating out entire expansion packs
which took thousands of hours in development time to produce by contrast the horse armor was just
a 3d model which took a 3d artist an afternoon to put together other gaming studios saw this success
and 18 years later most of the money made by the 180 billion gaming industry comes from sales made
after the customer has already purchased the game this might seem harmless to most of you watching
you might even think it's a good way to subsidize the cost of development making video games cheaper
for people who are not interested in these in-game purchases but these seemingly harmless
pixels are being knowingly exploited to prey on some of the most vulnerable people in our society
to find out why it's time to learn how money works which was made possible today by morning brew
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in board apes after falling for a run-of-the-mill fishing scam this story was actually very useful
to me as i was writing this video you'll find out why shortly morning brew is the best way to start
a productive day and the best part of it is it's completely free so there's absolutely no risk in
finding out how much better informed you can be when you pair your morning coffee with a scroll
of morning brew check out the link below to easily sign up video game developers are companies with a
profit motive and in many instances shareholders who they need to keep happy selling a game once
is great but it means there is a set amount of money that can be made from a set amount of games
exceptions do exist somehow i have managed to buy skyrim for the ps3 ps4 and pc but i don't
like to talk about it the problem here is that some people are only willing to spend 20 a month
on video games where other people are happy to spend thousands you could try to charge thousands
of dollars for your game but unfortunately not many people would be willing to pay that price
the only way to truly maximize profit is to get every possible gamer to pay the maximum possible
amount that they are individually willing to pay for the game that's impossible to achieve with a
direct sale a gamestop employee can't be expected to look over someone's financial records before
setting an asking price for a copy of super smash brothers brawl so you need to be smarter what
you need to do is offer a game that gets slightly better the more you pay for it if you want to get
really crafty you can make the game itself free to download and play but lock big advantages behind
in-game transactions your free version of clash of clans is probably a perfectly fine game but you
will be destroyed by another dude that drops 2 000 a month upgrading his base it might be annoying
for you but it's great for the game company most people only play their game because it's free some
might throw in a few bucks to pay for a premium subscription and then there are a few hundred so
called whales that drop a thousand dollars a month to make sure they are the most powerful players
possible this game extracted the maximum possible amount of money out of everybody that plays it the
game developers aren't even worried about all the players who aren't even paying them a cent they
might cost them a small marginal amount for server hosting but they are offering back something far
more valuable they are the entertainment for the whales who are paying thousands of dollars a month
someone isn't going to keep paying more money to upgrade their weapons if they can't use them to
absolutely dominate some poor kid who thought they would just try out a free mobile game
business students call this price skimming where businesses will alter their prices for the same
product for different people in order to maximize profits gamers call this pay to win monetization
in games takes on a few different forms the best type of game in the gamer's eye is a game that is
free with no outlets for monetization at all the problem is of course that this doesn't generate
any revenue for whoever put the time and effort into developing the game that doesn't mean that
these games don't exist though and i salute the dedicated souls behind them the next step down
from there are games that are free to play that sell game items that make cosmetic changes only
a new hat for your character or a dapper new outfit it doesn't improve your stats in the game
but it's cool to look at and some people are happy to pay some money for the outfits which keeps the
game financed pretty good trade if you ask me one worse than that is games that you need to
pay for up front but also offer cosmetic items again these items don't give you any special
advantage over other players in the game but if you've already paid 60 dollars for a video game
you might not like having more [ __ ] marketed to you in the game itself worse again are free
games that have in-game advantages for sale mobile games are notorious for this
you can download rise of warship legends for free but if you want to be competitive against other
players you are almost forced into paying money to skip arbitrary timers and unlock powerful items
the absolute worst are games that you need to pay for but still offer in-game advantages for
money when ea released star wars battlefront they were met with um moderate resistance for locking
characters like darth vader behind real cash paywalls or obscenely difficult in-game challenges
but what's the actual harm here it might make some games a little bit less fun but it's not like
anybody is forcing you to play them well the harm comes to the people that unfortunately already do
a 2018 report by daniel king of the society for the study of addiction
has reported that video game addiction is very real and that addiction is being preyed upon
by game companies to extract a lot of money out of a surprisingly small group of people
wheels is a term typically used by casinos to describe patrons that gamble significant
amounts of money the casinos will cater to these high rollers in any way that they can so they
keep coming back and losing more money at the tables whales and video games are just the same
and video game companies cater to them in the same way you want to feel like an absolute badass drop
200 on in-game gems that will let you crush any opponent except for maybe the guy that spent 500
on gems the report explains that this rewards your brain by tricking it into believing that
purchasing in-game items is just part of skillful gameplay this becomes all the more sinister when
the game companies spend years refining their systems to maximize this effect on your brain
perhaps nowhere is this clear to see than in the loot box for those of you who don't
know a loot box is a collective term given to in-game purchases that offer out random items
this means that a player could spend money on an in-game purchase and not get the item that they
really wanted they may not get any item of value at all loot boxes add this element of chance into
this toxic cocktail of predatory monetization which can lock even the most pragmatic players
into a loop of trying just one more spin to try and get that super rare character the next tool
that these companies will use to their advantage is the player base themselves online games are
meant to be social for many serious gamers they spend more time with their online friends than
they do interacting with the people in the real world especially during the pandemic there are
three types of people that gamers will meet in these games players that are better than them
because they spend a lot of money players that are worse than them but will offer an ego boost to the
gamer who did spend a lot of money and peers who have been conditioned by the game to not think too
critically about dropping a few hundred bucks for a slight in-game advantage humans are both social
and competitive beings gamers are on average more isolated than non-gamers so when they get
the chance to spend a little cash to flex in the social setting that they spend the most time in
most of them will take it all of these people without even realizing it will be pushing each
other to spend more money in game which is a big reason why some of the most profitable games in
the world are free the final tool is big data since most of these games are played online the
developers have one final advantage in the battle to extract cash from their customers pockets it's
impossible for a gamer to know more about the game than the game company knows about them anybody who
has played these types of games will be able to attest to the very confusing currency systems in
the game some games will have multiple different currencies to collect gems coins pearls and they
will all be used to unlock different things in the game a coin might be used to pay for armor but you
will need pearls to unlock special spells and cosmetic outfits can only be paid for with gems
many people have compared this to casinos giving players poker chips instead of letting them play
with actual money because people don't experience the same emotional response handing over a hundred
dollar poker chip as they would with a hundred dollar bill this is no doubt part of the strategy
but i think in-game tokens are worse because while poker chips have a clear face value these games
make it really hard to work out how much value you are actually getting out of an in-game purchase
because it introduces an exchange rate the last thing you want to be doing while enjoying a game
is exchange rate math because of this game companies can present tailored offers to gamers
to maximize the chances that they go and pull out their credit card activision and ea both have
patents on their microtransaction systems and they keep them so closely guarded because they are the
primary revenue generator for these two ginormous public companies these companies want to form
habits a player who spends a hundred dollars every week is worth far more than a player who spends a
thousand dollars just once this also slowly allows players to fall into the biggest trap of all time
the sunk cost a game company is likely to make a very modest offer with a big reward first
if the gamer decides to purchase that offer all subsequent offers will become gradually more
expensive with declining true in-game value remember this is made intentionally hard to
keep track of because of the different in-game currencies the developers use by the time the
gamer realizes what has happened they might have spent thousands of dollars on a video game that
they thought they would be playing for free at that point there is no point in putting the game
down because they have already sunk so much time and effort into playing this game that it would be
silly to stop now a lot of these video game whales are not wealthy either on the contrary the report
found that a lot of these purchases were paid for with debt that the gamer had no way of paying back
so what are you to do when you have mounting debt and a partner that is angry at you for spending
your grocery money on a virtual battleship you look for an escape of course and what better
escape exists than an online universe filled with your enthusiastic friends who all think that
you're a hero because you unlocked the ultra mega sword which you could upgrade right now to the
giga ultra mega sword for just 29.99 preying on habitual addictive behavior from socially isolated
people who just want a platform to socialize on is extremely unethical every bit as unethical as a
casino without even offering the chance for these players to make any of their money back now if you
want to learn about more ways that companies are intentionally hijacking internet culture
for their own profit go and watch my video on the companies intentionally fueling the mean bubble to
profit off people investing into securities like gamestop amc and cryptocurrencies since this video
was obviously not sponsored by raid shadow legends i want to say another thank you to morningbrew my
patrons and channel members for making it possible for everybody to keep on learning how money works