The Money of the Gaming Industry

by HSG on Aug 04, 2012 in Articles from Software Fans

I remember the day like it was yesterday. Pac Man had finally arrived on the Atari 2600.  It was a clear and sunny day, but it was slightly brisk. My dad drove us down to the video store about three miles from our Michigan house. If I remember correctly, the price for the game was $24.99.  It was quite expensive for the day, probably equaling a $70 game in today’s market, but it was mine. There *was* no question about it. If you purchase a game, it’s your game… right?

You couldn’t be more wrong.  With all the licensing agreements in games today, you only purchase the right to play it. You don’t actually “own” the game. 

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Today, game designers want total control over the money that comes in for a game. They add in clauses that keep the game from being resold, rented, borrowed, copied, etc. All of the content in the game, including the items you find that are specifically for you, are owned by the software developer. Why, you ask, do they do this? It’s all about the money.

This need for greed started years ago, when people started modifying current games on the market. One of the first games like this was Doom. There were so many third part mods made, but because of licensing agreement, none of these versions were available for resale. The end user, or you, had to purchase Doom before they could even install the mod.  None of these “modders” were allowed to make any money off their creation.

Game designers quickly realized that they could make tons of money selling their game engine to others, allowing them to make new games without the need of an in-house developer to design a new game engine. This led to newer licensing agreements that took these “mods” into new directions. These “Total Conversion” mods took existing games, and completely re-launched these as new games. The original code/base design would stay the same but the graphics and sound would be 100% original. 

Today, the gaming model is completely different.  Companies are giving games away in hopes that you will pay monthly subscriptions, or that you will actually pay for content in the game. This does two things for the industry. It allows consumers to try more games without the risk of wasting their money, and it gives the consumer more available cash in their pocket to spend on the game.  Many games have monthly subscription fees. These fees are there to sustain servers, pay for bandwidth, and keep the game updated. Then there are other games where the game is totally free.  In these games, the user has the option to pay for items, upgrade features, and special items that are not available to the standard user.

When MMORPG’s came out, the online black market emerged.  Due to EULA’s, items found or purchased in game were still the property of the software company. This didn’t stop players from buying and selling items on the black market.  eBay was their home for a while, until software companies made it aware that players did not actually own their virtual goods, but were leasing/renting them as they were with the game.

From Asheron’s Call to Star Wars … items were selling online for hundreds of dollars. Cease and desist letters were sent to eBay’s lawyers, and sellers alike. People selling their virtual goods were now seen as pirates… reselling software that wasn’t theirs. Rogue websites popped up all over the internet. Some were legit, some were not.

Blizzard stepped into the picture after Diablo 2.  Items were selling for hundreds of dollars on the black market. Blizzard quickly realized that the black market was going to continue to exist until it was made obsolete.  When Diablo 3 was announced, they promised to make a safe place for game transations to take place. An auction house where players could buy and sell items for in-game currency, or real money.

Although they were not the first to create an Auction house, they *were* the first to create a sustainable gaming economy where both Blizzard and the players could be happy.  The amount that items sell for hasn’t changed much, but now the software designers are starting to get a piece of the action.  Anyone can make money playing games, and many do.

With gaming changing directions to this type of play, more and more companies are adding the ability buy in game. Where will the future of gaming lead us next? Where ever it leads, it’s heading in the right direction.

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