[Semi OT] Microtransactions, Lootboxes and in-game pay mechanisms - The Thread.

[Snowflakez]

*citation needed

Companies don't post their costs publicly, so we have to use a mixture of common sense, developer information and other similar games' costs to draw our conclusions.

For the common sense part, let's take a look at some ofthe departments Blizzard might use for a game like Overwatch. Bear in mind that this list is not exhaustive.

• Legal (whether in-house, on retainer, or a firm)
• Technical Support (Which is possibly comprised of many teams that address different aspects of the game)
• Customer support (billing, refunds, "YOUR COMPANY SUCKS", etc.)
• Ongoing marketing
• Server maintenance staff
• Quality assurance
• Community outreach/Community managers
• PR (Possibly some overlap with community outreach)

Let's say they each person on these teams (barring legal and marketing, since they make ridiculous amounts of money) makes between $35k-$70k - a conservative estimate, but lets go with it. Those costs add up.

Additionally, in a forum post some time ago, Jeff Kaplan noted that the OW dev team during its actual development cycle fluctuated between 40 and 75 people strong. Those employees are now experienced, and probably make better salaries. A mid or top-tier game developer salary can easily reach upwards of $200k/year. At the time, he noted that this number did NOT include support staff or other similar teams, which he discussed seperately.

Let me reiterate - those numbers account for developers only. That says nothing about the other teams mentioned above, or some others he mentions in that thread.

Apparently, OW developer numbers are now about 100 strong. He also told us about the MANY other related teams that work on the project - eSports coordinators, licensing group, etc.

As far as server costs go, one WoW private server (Light's Hope) costs $600/month to support about 10,000 players. And they go down constantly. And that's some crappy third-party server in a foreign country, not the high-speed, high-volume servers Blizzard actually uses for their games. $600/month for a few crappy servers to support 10,000 players - and Overwatch has millions and millions of players, as other have already stated many times. Yeah, costs are gonna go up quite a bit, especially since Overwatch is an incredibly fast-paced game that requires the best possible server coverage and lowest player latency possible to succeed.

People underestimate how much goes into making and supporting a game. Again, with a 10-year plan, these costs are going to add up (if they haven't already, which I personally believe they absolutely have) and far exceed that "amazing" $1 billion profit.

Surely not Bethesda. They're dumbing down their main series (TES, *ugh*...Fallout) and selling mods because their PR guy thinks the audience is like him, stupid plebs, tend to fuck developers up and delivering unfinished and buggy games (Dishonored 2, New Vegas, The Evil Within) and pandering to lefties and soundly so in their twitter shitposting marketing campaigns (Wolfenstein II: TNC), fucking up marketing to make excuses for single player games to go down in history. (Wolfensten II: TNC, The Evil Within 2)

Bethesda is poisonous.

Well, you're free to think that. I enjoy their games, and aside from the "paid mods" debacle they don't have microtransactions or loot boxes. They are not a perfect company, but they are a good one, IMO.

Anyway, it doesn't matter. Ignore Bethesda, if you want. My point was, if we REALLY hate microtransactions (Which its clear some of us do), we can simply stop supporting the companies that use them.

 

[Balloers100]

I feel like some of you are maybe misunderstanding my motives here. I'm not a games industry shill, and I'm not an ardent micro transaction defender. If they all disappeared tomorrow, I'd be happy about it. I don't like them anymore than anyone else. I'm just trying to offer perspective on why we're in the situation we're in. I'm not saying it's our fault, or that we should take it lying down. But if we try to make arguments against the state of the industry without understanding both sides, we're going off half-cocked.

Moving on... without actually digging into anything more than a few articles saying "this game cost x to develop" and a quora question, I just don't think we're getting the whole picture. You are drastically underestimating (or ignoring) the costs that go into server maintenance (And other back-end stuff), tech support, customer service (Which is not the same thing as tech support) and more. And yes, there are the marketing costs which are NOT always factored into the public numbers given out by companies regarding "This game cost X amount to make".

These numbers DO reach into the hundreds of millions, like it or not. They have to pay sizable teams dedicated to this stuff, so they aren't just trivial costs.

Should games cost this much? It's debatable, but IMO, no they shouldn't. Companies spend way, way too much on stupid marketing campaigns that shouldn't cost more than ~50m. But the fact is, they do it anyway. And because they do it anyway, and because they put way too much time into art and not enough into other aspects of the game, their costs are skyrocketing - not to mention the push for 4K visuals...

Games like the Witcher 3 don't even figure into the equation here, not sure why that's even a part of this discussion. That's a single playter title without the costs associated with a massive multiplayer title like Overwatch. Single player games never have an excuse for microtransactions, IMO. The worst they should have is paid DLC, which is often a good thing (as was the case with TW3).

This is why I don't think specifically multiplayer games that do not offer paid DLC or other methods of monetization are the actual devil for including not-terrible microtransactions. Emphasis on the "not terrible" part.

Also, for the record, I don't even play Overwatch anymore (haven't for about 6 months) because I despise its loot box system. I hate it, but I understand why they use it, and I understand why the game has microtransactions from the business side. Blizzard isn't a saint, but they are by no means as greedy as the likes of EA or Warner Brothers.

Hopefully this made some amount of sense, even if you don't agree with me. I'm not very good at articulating my thoughts sometimes.

TL;DR

Companies that create multiplayer games with 10-year plans have a lot of other costs to worry about aside from standard development costs (customer support teams, tech support teams, server maintenance teams, etc.) that can reach into the hundreds of millions. Additionally, companies are idiots for dumping so much money into art and marketing, but they do it anyway, so that's why their costs are skyrocketing. Its dumb, but its how it is.

Bottom line? Support the companies that do things mostly the right way. Companies like Bethesda (arguably), CDPR, Devolver Digital and others all deserve our money.

Well me and Sardukhar seem to have a understanding of what it costs to develop video games and what it costs to run the servers for the multiplayer for the video games that have multiplayer.

I still don't buy it that it costs hundreds of millions of dollars (USD) to run a video games multiplayer servers for ten years if you got people who can rent the servers and pay you to rent the servers.

Activision spent $500 million dollars (USD) on marketing alone for Destiny 1 and Activision should of spent only $100 million dollars (USD) on marketing Destiny 1, they hyped Destiny 1 way too much.

Destiny 1 cost I think maybe in the $50+ million dollars (USD) or so range to get developed, maybe close to $100+ million dollars (USD).

The Call of Duty video games are usually in the $80+ million dollars (USD) to develop.

Customer service support teams, tech support teams, sever maintenance does not end up costing you $300+ million dollars (USD) over ten years.

There are some servers that can be run 24/7 for like $95,000 dollars (USD) a year if I remember correctly that is what Blizzard Entertainment has for World of Warcraft.

So again no matter what you tell me I don't buy it developing video games and maintaining their multiplayer for years and years and years does not make a video game cost as much as a movie to develop.

Some movies cost $700+ million dollars to make because on occasion they destroy real life products like cars, houses, etc.

So yeah video games are cheaper than movies to develop.

 

[Snowflakez]

Well me and Sardukhar seem to have a understanding of what it costs to develop video games and what it costs to run the servers for the multiplayer for the video games that have multiplayer.

I still don't buy it that it costs hundreds of millions of dollars (USD) to run a video games multiplayer servers for ten years if you got people who can rent the servers and pay you to rent the servers.

Activision spent $500 million dollars (USD) on marketing alone for Destiny 1 and Activision should of spent only $100 million dollars (USD) on marketing Destiny 1, they hyped Destiny 1 way too much.

Destiny 1 cost I think maybe in the $50+ million dollars (USD) or so range to get developed, maybe close to $100+ million dollars (USD).

The Call of Duty video games are usually in the $80+ million dollars (USD) to develop.

Customer service support teams, tech support teams, sever maintenance does not end up costing you $300+ million dollars (USD) over ten years.

There are some servers that can be run 24/7 for like $95,000 dollars (USD) a year if I remember correctly that is what Blizzard Entertainment has for World of Warcraft.

So again no matter what you tell me I don't buy it developing video games and maintaining their multiplayer for years and years and years does not make a video game cost as much as a movie to develop.

Some movies cost $700+ million dollars to make because on occasion they destroy real life products like cars, houses, etc.

So yeah video games are cheaper than movies to develop.

Okay, well, if you're not going to consider my arguments what's the point of having this discussion? Whatever proof I bring to you, you're just going to ignore it?

Look, game development (the figures you're quoting) is the easy part. That's why singleplayer games are never going to die. You spend a little on marketing, develop the game, and voila - it's done. Aside from bug fixes and a few billing problems here and there, you are pretty much done until you decide to develop more content in the form of DLC (Free or paid).

Also, where's your evidence that it won't cost $300+ million for those teams you mention, especially over a decade? Dude, that money would be gone within a few years supporting a team like Overwatch's. Singleplayer games are again an exception, because they don't have ongoing costs. Call of Duty doesn't factor in because they still charge for DLC and they re-release annually.

Even if my estimate is wrong -- and I'll admit I was being a bit hyperbolic by saying "billions" -- and Overwatch only costs a total of $500m to develop, market and support thus far, they've only doubled their investment, which isn't as significant as it seems from the business side of things.

It's not sustainable, especially not after paying out dividends to investors and leaving enough left over for other Blizzard projects and further content for Overwatch. Do you really think the remainder is going to keep a game like Overwatch afloat for a decade? Seriously?

Take a look at my last post. A ton of money goes to the best-paid developers themselves, and a huge chunk of that is going to be gone in a year.

 

[Balloers100]

Okay, well, if you're not going to consider my arguments what's the point of having this discussion? Whatever proof I bring to you, you're just going to ignore it?

Look, game development (the figures you're quoting) is the easy part. That's why singleplayer games are never going to die. You spend a little on marketing, develop the game, and voila - it's done. Aside from bug fixes and a few billing problems here and there, you are pretty much done until you decide to develop more content in the form of DLC (Free or paid).

Also, where's your evidence that it won't cost $300+ million for those teams you mention?

Even if my estimate is wrong -- and I'll admit I was being a bit hyperbolic by saying "billions" -- and Overwatch only costs a total of $500m to develop, market and support thus far, that's not as massive of a ROI as you think. Again, that's not sustainable, especially not after paying out dividends to investors and leaving enough left over for other Blizzard projects and further content for Overwatch. Do you really think the remainder is going to keep a game like Overwatch afloat for a decade? Seriously?

Take a look at my last post. A ton of money goes to the best-paid developers themselves, and a huge chunk of that is going to be gone in a year.

I just told you for the server maintenance plan Blizzard Entertainment has for all of the servers for World of Warcraft pay only $95,000 dollars (USD) a year to run them 24/7.

You said a private server for World of Warcraft costs $600 dollars (USD) a month, well Blizzard Entertainment can run all one hundred or whatever number of servers they have for World of Warcraft 24/7 for a year for $95,000 dollars (USD).

So ten years to run the World of Warcraft servers 24/7 for $95,000 dollars (USD) a year is $950,000 dollars (USD) in ten years to spend on running servers 24/7 for ten years.

That does not even ad up to one million dollars (USD) it's fifty thousand dollars (USD) short of one million dollars (USD).

 

[Snowflakez]

That does not even ad up to one million dollars (USD) it's fifty thousand dollars (USD) short of one million dollars (USD).

• WoW servers =/ Overwatch servers.
• Are you intentionally ignoring every other cost I mentioned, or no?
• Side question: Why do you keep typing (USD) after every number? Just curious.

 

[Balloers100]

• WoW servers =/ Overwatch servers.
• Are you intentionally ignoring every other cost I mentioned, or no?
• Side question: Why do you keep typing (USD) after every number? Just curious.

I did not ignore ever other cost.

A video game developer who earns $200,000 dollars (USD) a year in ten years is $2 million dollars (USD).

So lets say $4 million dollars (USD) for two of those video game developers in ten years earning $200,000 dollars (USD) a year and other costs lets say it totals up to maybe $7 million dollars (USD) in ten years.

No way will it total to like $50 million dollars (USD) in costs in ten years.

In that ten years Blizzard Entertainment could earn at least $3 million dollars (USD) a year just from selling copies of Overwatch alone.

Bethesda Softworks and Bethesda Game Studios sells about 1+ million copies of the PC version of The Elder Scrolls V: Skyrim on PC on Steam at $40 dollars (USD).

The PC version of Overwatch is selling very well on PC it is the second best selling platform besides the PlayStation 4 (PS4).

Blizzard Entertainment could be selling 2+ million copies a year of the PC version of Overwatch on PC at $60 dollars (USD).

$60 dollars (USD) and 2+ million copies selling in one year is $120 million dollars (USD).

 

[eraser7278]

the numbers are out there if you bothered to look.
http://www.nasdaq.com/aspx/call-tra...atvi-q4-2016-results-earnings-call-transcript
fiscal year 2016 acti-bliz took in $6.6 BILLION in revenue with an operating margin of 35%. IE their net profit, after ALL expenses/costs/salaries/acquisitions/etc are accounted for is only $2.31 BILLION dollars. they further attribute these profits to having over 450 million players that year, equating to less than $15 per player in revenue.

so do please keep explaining how this poor company/industry is struggling to stay afloat... I'll wait.

 

[Snowflakez]

the numbers are out there if you bothered to look.
http://www.nasdaq.com/aspx/call-tran...all-transcript
fiscal year 2016 acti-bliz took in $6.6 BILLION in revenue with an operating margin of 35%. IE their net profit, after ALL expenses/costs/salaries/acquisitions/etc are accounted for is only $2.31 BILLION dollars. they further attribute these profits to having over 450 million players that year, equating to less than $15 per player in revenue.

so do please keep explaining how this poor company/industry is struggling to stay afloat... I'll wait.

There a reason for the sarcasm? You realize I'm not targeting you personally, right? I don't understand why everyone is being so hostile. Just because I'm presenting information you disagree with?

I never said they were a "poor company struggling to stay afloat" (Nice strawman).

Also, Activision Blizzard comprises far more than Just Overwatch. We are specifically talking about Overwatch here. It is impossible to pick apart such general numbers and say how much of that is attributed to Overwatch's success, or how much of their costs are attributed to one specific game.

 

[Balloers100]

the numbers are out there if you bothered to look.
http://www.nasdaq.com/aspx/call-tra...atvi-q4-2016-results-earnings-call-transcript
fiscal year 2016 acti-bliz took in $6.6 BILLION in revenue with an operating margin of 35%. IE their net profit, after ALL expenses/costs/salaries/acquisitions/etc are accounted for is only $2.31 BILLION dollars. they further attribute these profits to having over 450 million players that year, equating to less than $15 per player in revenue.

so do please keep explaining how this poor company/industry is struggling to stay afloat... I'll wait.

Yep, not to mention Activision has about $4 billion dollars (USD) cash on hand at least every year to spend on Research & Development (R&D) and securing video games.

So as it stand Activision-Blizzard usually has $8 billion dollars (USD) a year they like earn from every year from the video games that they sell.

Last I checked Electronic Arts (EA) has like $11 billion dollars (USD) and earns about $4 billion dollars (USD) or so a year.

 

[Sardukhar]

First, be chill, people. It's an argument, not a duel. Also, avoid terms like "strawman" as these are often fight words and generally non-constructive. This isn't a teaching discussion on how to argue, so don't try to tell people how they are arguing.

If you -are- going to argue facts and figures, use facts and figures, with references. Otherwise, it's tough to see it as anything else other than personal bias.

I think we are all agreed on a few things:

Microtransactions are big money.

Big companies, which already have LOTS of money, will want still more money.

Video games, top line video games, are expensive to develop.

Companies will always try to offset those costs as much as possible. And, when those costs are covered, will still try to make as much money as possible.

We're all agreed on that, right? The rest is just details.

I don't think anyone here believes Blizz or EA needs the money - or believes they won't try to get it anyway.

One of my questions is, do you think microtransactions are ever a (morally? Ethically?) viable funding model? Say, for smaller companies without Acti/blizz revenue streams?

 

[Snowflakez]

First, be chill, people. It's an argument, not a duel. Also, avoid terms like "strawman" as these are often fight words and generally non-constructive. This isn't a teaching discussion on how to argue, so don't try to tell people how they are arguing.

If you -are- going to argue facts and figures, use facts and figures, with references. Otherwise, it's tough to see it as anything else other than personal bias.

I think we are all agreed on a few things:

Microtransactions are big money.

Big companies, which already have LOTS of money, will want still more money.

Video games, top line video games, are expensive to develop.

Companies will always try to offset those costs as much as possible. And, when those costs are covered, will still try to make as much money as possible.

We're all agreed on that, right? The rest is just details.

I don't think anyone here believes Blizz or EA needs the money - or believes they won't try to get it anyway.

One of my questions is, do you think microtransactions are ever a (morally? Ethically?) viable funding model? Say, for smaller companies without Acti/blizz revenue streams?

Sorry, you are correct. I shouldn't have used that. I was just frustrated, I don't like having words put in my mouth (Fingers?). But I recognize this is a sensitive subject for people. I apologize to eraser. <3

I did include as much evidence as I possibly could. Video game developer salaries are common knowledge, as are the salaries of support teams and support technicians (just google "video game tech support salaries"). All I was doing is adding more information and context to the issue, because it's not as black and white as "this game cost x to develop". That's literally all I'm trying to do. People can hate microtransactions all day long, I just think it'd be good if they hated them after having all the available information presented to them.

Hate them on moral grounds, hate them on ethical grounds, but if you're gonna hate them on business grounds, at least understand as much of the picture as you can. Just my opinion.

No, I don't think microtransactions are morally or ethically right. Far from it. In fact, I think if companies curbed their marketing budgets and put more emphasis on the actual development of the game (Which is actually the cheapest part of making a game, as you guys have already proven with the numbers you've provided), they could make and release better games more frequently, without MTX.

I think the industry as a whole has lost its way, but its where we are now for better or worse. So we can at least try to make sense of it.

Here's some snow floofs to make everyone feel better.

 

[Sardukhar]

Here's some snow floofs to make everyone feel better.

Awwww. I feel better already. Why are they not armed and cyborged though?

No problem, I've got you, brother.

 

[Suhiira]

the numbers are out there if you bothered to look.
http://www.nasdaq.com/aspx/call-tran...all-transcript
fiscal year 2016 acti-bliz took in $6.6 BILLION in revenue with an operating margin of 35%. IE their net profit, after ALL expenses/costs/salaries/acquisitions/etc are accounted for is only $2.31 BILLION dollars. they further attribute these profits to having over 450 million players that year, equating to less than $15 per player in revenue.

so do please keep explaining how this poor company/industry is struggling to stay afloat... I'll wait.

Touche !

One of my questions is, do you think microtransactions are ever a (morally? Ethically?) viable funding model? Say, for smaller companies without Acti/blizz revenue streams?

Again, I'll state that for free-to-play games that don't incorporate "pay to win" I have zero issues with microtransactions.
I do object to ANYTHING but cosmetic stuff in full price or subscription games.

And no, DLC such as CDPR makes is not in the same league as microtransactions, totally different subject.

 

[Snowflakez]

Touche !


Again, I'll state that for free-to-play games that do't use a "pay to win" I have zero issues with microtransactions.
I do object to ANYTHING but cosmetic stuff in full price or subscription games.

And no, DLC such as CDPR makes is not in the same league as microtransactions, totally different subject.

I agree. While I understand (And did try my best to explain) the business side, and why I do think some games might need it to get by, I certainly don't like them and don't buy games that have them. Overwatch is one exception because I had no idea it was going to have loot boxes prior to buying, but oh well.

I am honestly of the opinion that if you pay $60 for a game, you should be getting everything, even if you have to progress in-game to unlock some of it. At least you eventually get it. And that does go for cosmetics too. It's unfortunate that the reality is different.

And yes, of course, DLC is absolutely its own thing. Dishonored's DLC was quite good for example, as was Skyrim's, and as you said, TW3. Good, substantial DLC that is worth the money is definitely fine.

 

[Guest 4149880]

In Japen, this practice is called gachapon or "Gacha" referring to machine dispensed capsule toys. "Gacha" is to describe the sound the machine makes when the crank is pulled while "Pon" describes the sounds of the prize dropping into the receptacle. Bandai has registered trademark for the term and means Blind box sets. The term has been used in the digital form with video games known as Gacha games which translate simply to the idea of the loot box, randomly generated items.

In other news, many frogs continue to sit in the pot of water slowly reaching a boil, some unaware of the fact they're being cooked to death. Some were in denial as they told the other frogs to stay in the pot, as the water was just fine. The quick witted frogs didn't agree and felt the increase in temperature and immediately jumped out of the pot, understanding the water was getting to hot. But then, there are those intuitive frogs who knew the water would eventually become way to hot to survive and stayed far...far away. Eventually the frogs in the pot, boiled to death. Gacha!!! Lets eat

 

[Suhiira]

In other news, many frogs continue to sit in the pot of water slowly reaching a boil, some unaware of the fact they're being cooked to death. Some were in denial as they told the other frogs to stay in the pot, as the water was just fine. The quick witted frogs didn't agree and felt the increase in temperature and immediately jumped out of the pot, understanding the water was getting to hot. But then, there are those intuitive frogs who knew the water would eventually become way to hot to survive and stayed far...far away. Eventually the frogs in the pot, boiled to death. Gacha!!! Lets eat

Wait ...
Are you implying the average gamer has the mentality of a frog?
You're doing frogs a tremendous disservice.

 

[Guest 4149880]

Wait ...
Are you implying the average gamer has the mentality of a frog?
You're doing frogs a tremendous disservice.

I wouldn't do that, frogs lives matter.

 

[Guest 4149880]

In Japen, this practice is called gachapon or "Gacha" referring to machine dispensed capsule toys. "Gacha" is to describe the sound the machine makes when the crank is pulled while "Pon" describes the sounds of the prize dropping into the receptacle. Bandai has registered trademark for the term and means Blind box sets. The term has been used in the digital form with video games known as Gacha games which translate simply to the idea of the loot box, randomly generated items.

In other news, many frogs continue to sit in the pot of water slowly reaching a boil, some unaware of the fact they're being cooked to death. Some were in denial as they told the other frogs to stay in the pot, as the water was just fine. The quick witted frogs didn't agree and felt the increase in temperature and immediately jumped out of the pot, understanding the water was getting to hot. But then, there are those intuitive frogs who knew the water would eventually become way to hot to survive and stayed far...far away. Eventually the frogs in the pot, boiled to death. Gacha!!! Lets eat

This is a feeling froggy service announcement.

 

[eraser7278]

Wait ...
Are you implying the average gamer has the mentality of a frog?
You're doing frogs a tremendous disservice.

having played on Xbox live back in the original Xbox era, when we didn't have the ability to mute or ignore users... I wholeheartedly endorse your sentiment. more N-words per minute than a Dr. DRE album, spouted in a high pitch because their nuts hadn't dropped yet

 

[Guest 4149880]

having played on Xbox live back in the original Xbox era, when we didn't have the ability to mute or ignore users... I wholeheartedly endorse your sentiment. more N-words per minute than a Dr. DRE album, spouted in a high pitch because their nuts hadn't dropped yet

Ahh memories... I'm just glad to see our gaming culture has matured.