Video Gaming Monetisation – Latest Research

Steve Evans

Access the full report for free here.

Harris Interactive’s latest research report reveals the massive appetite for in-game customisation that is fuelling rapid growth in video game industry revenues. At the same time however, the report highlights how the industry must do more to look after the well-being of its player base, to ensure monetisation is fair and avoid accusations of exploitation, including the promotion of addictive behaviour and gambling.

The gaming industry now generates more revenue than video and music combined. Global revenue predictions for 2019 float around the $150bn+ mark, with some forecasters predicting sustained future growth fuelled by cloud gaming and further innovations in in-game monetisation.

Harris Interactive’s study into the monetisation of PC and Console games shows that 98% of gamers into the shooter genre are interested in customisation, which forms a substantial part of many games’ monetisation models. 2 in 5 (42%) claim to have purchased a customisation item in games, with 1 in 5 (19%) paying to do so at least monthly. This massive appetite for customisation, in what is now a mass market sector, coupled with a strong preparedness to pay, is a significant driver of revenue growth for the industry.

The report reveals that gamers’ perceptions of the fairness of different monetisation models to serve this demand varies markedly. There is growing anger and resentment among gamers, who are, after all, the customer base of the industry, fuelled by a slew of recent negative news stories regarding unfair implementation of microtransactions (the purchase of cosmetic and other in-game items). Such stories are not confined to a small, but vocal tribe on Reddit and YouTube, with the reach of some stories rivalling that of major announcements, such as the release of Google Stadia. Growing concern over industry practices, such as lootboxes and the appearance or presence of gambling in games, has led to Parliamentary Committee scrutiny.

Negative media coverage of unfair monetisation practices should be a concern to all game publishers. The study highlights that nearly 2 in 3 (64%) gamers say that the name and reputation of a game publisher affects the purchase propensity of their titles; and an even higher proportion (68%) say that the fairness in the way that a publisher handles in-game monetisation affects purchase propensity. In short, the study makes it clear that game publishers risk damage to their corporate reputation by not treating gamers fairly with regards to monetisation.

The study reveals that customisation and other in-game items that go beyond the purely cosmetic, i.e. items that can offer an advantage in online competitive play, run the risk of a toxic response from the gaming community. When such items are paid for rather than earned, the toxicity level increases further. This practice is referred to as “pay to win”. Gamers describe other gamers who indulge in pay-to-win activities as cheats, misguided, irritating and dumb. The words used to describe publishers of fully paid games that offer the potential of pay-to-win are equally negative, according to gamers in the study.

However, while the backdrop of pay-to-win is negative, the study reveals a clear sense of cognitive dissonance on the part of gamers. When given a hypothetical budget for a hypothetical game, the most popular items purchased are those that give a competitive edge, despite being priced much more expensively than purely cosmetic items. This highlights that publishers who offer paid items, especially those that offer a competitive advantage, must pay even more care and attention to preserve the good will of gamers. The gaming community shows a clear hunger for behaviour that they also recognise to be somewhat unsavoury.

One of the most controversial aspects of gaming today is the use of lootboxes. Lootbox contents are typically random, but they can contain some of a game’s most sought after items. The notion of paying for lootboxes generates negative sentiment among gamers, according to the study, with a majority (56%) saying that their implementation in games nowadays “is out of control”. Gamers acknowledge that lootboxes “add fun and suspense” (48% agree) and they are “okay if people appreciate the probabilities” of its content (56% agree). The balance of opinion is to be in less favour of lootboxes nowadays (38%) compared to being more in favour of them (25%).

As lootboxes are probability-based, there have been accusations that they constitute gambling or the appearance of gambling in games. The view of gamers in the study is more nuanced and it depends on how lootboxes are implemented. Where lootboxes are acquired using in-game currency (i.e. virtual currency and not real-world money), the balance of gamer opinion is to consider this as not gambling. However, when lootboxes are acquired with real-world money, the balance of opinions shifts markedly to consider this as actual (as opposed to simulated) gambling: 41% of gamers consider lootboxes acquired by real-world money as actual gambling, with a further 30% perceiving it to be simulated gambling.

The scrutiny on lootboxes and accusations of gambling and exploitation has led many of the most popular games in the shooter genre to diminish the reliance on lootboxes and opt for a “battle pass” model. These passes are typically wholly transparent to the gamer as to what customisation and other in-game items are available to acquire and allowing gamers to earn all items through gameplay. This tallies with gamer desires, the report shows, as the core drivers of game loyalty are new items, new ways of playing and new ways to earn experience. However, such a model also allows gamers to bypass the grind of playing by purchasing the progression required to attain sought-after items. As such, it represents as potentially a lucrative revenue stream as any model that came before it.

Despite efforts to shift away from lootboxes, the industry must do more to assuage concern over the presence of or the appearance of gambling in video games. 3 in 4 (74%) gamers in the study claim to be concerned over this issue. Only 11% consider the industry to be well-regulated with regard to gambling or the appearance of gambling in games, in contrast with 43% who perceive it as poorly regulated. When coupled with the clear negative sentiment from the gamer population regarding unfair monetisation practices, the industry must strive to keep the well-being and good will of gamers front of mind, as otherwise the Government or other authorities may impose stricter regulation upon it.

The report and its findings are based on an online panel survey of 2,040 UK active gamers aged 16-55 who play the most popular games in the shooter genre conducted by Harris Interactive. The fieldwork was conducted in December 2019. Selected highlights of this study were presented at the Market Research Society’s inaugural Sports and Gaming Conference in February 2020.


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