While the gaming industry brought in $30.4 billion in revenue last year, the cost of actually making video games has increased significantly since 2000, as The Economist has explained. But while the cost of making games has swollen, the cost of video games to consumers hasn’t: A shopper looking to buy the latest release in 2017 will pay almost exactly what he or she did in 2004 — that is, $60.
According to Epic Games CEO, Tim Sweeney, Gears of War was produced on a $12 million production budget in 2006 and was extremely profitable, generating $100 million in revenue. By comparison, Grand Theft Auto V was released in 2013 with a production budget of roughly $265 million. In 2017, semi-annual tentpole titles like Call of Duty, Assassin’s Creed, and Destiny all have production budgets that aren’t far behind the Grand Theft Auto figure, and all these titles are for sale at the same $60 price point.
With production costs swelling and unit prices staying roughly the same, most games industry businesses are adopting practices that increase revenue from single titles as much and as long as possible. Typically, this involves microtransactions: in-game items or advantages that a player can purchase after buying the $60 title itself.
In July, major games publisher Ubisoft announced that PRI — Player Recurring Investment, which includes microtransactions — accounted for 41.1 percent of total sales in Q1 2017, compared to 34.4 percent during the same quarter last year. Total sales during the quarter increased by 45 percent, to $237 million, despite the company not releasing a single major title during the period.
“We are transforming our games from standalone offline products into service-based platforms where we can continually interact with and entertain our players,” said Yves Guillemot, CEO of Ubisoft, during a financial call in May.
In what is rapidly becoming an industry standard, companies are making more money off of fewer titles with a microtransactions-based, games-as-service model of development — increasing revenue while preserving the $60 price point. And, as the microtransactions model permeates the industry, some companies are looking for ways to induce more players to spend more on their services.
Activision Blizzard, the company responsible for games like Overwatch, Call of Duty, and World of Warcraft, was granted a patent earlier this month, reported Rolling Stone’s Glixel. The patent is for a system that could be used to alter a title’s online matchmaking algorithm to influence user spend on in-game microtransactions.
The patent addresses how multiplayer matches are arranged, reports Glixel.
One of the implementations of the patent would be to arrange online matches in such a way as to influence the purchase of in-game items. A new player might be matched with an expert player who already has in-game advantages unlocked, for example, incentivizing the newer consumer to make purchases that would allow him or her to beat the more seasoned player.
The patent, Glixel reports, also indicates that the algorithm could be used to determine which microtransactions should be promoted to a given player, and that it might be used to drop the player into matches where micro-purchases would be most useful. Some players feel that the implementation of such a system would disturb the competitive integrity of online play.
Activision Blizzard recorded $3.5 billion in sales from in-game items in 2016, Glixel reports. This is up from 2015’s $1.6 billion.
“This was an exploratory patent filed in 2015 by an R&D team working independently from our game studios,” an Activision spokesperson told Glixel after article was published. “It has not been implemented in-game.”
With the systems that may result from the Activision patent and other gaming apps that boast improved matchmaking — like OverDog, which raised nearly $2 million to bring big data and machine learning to matchmaking on the Xbox One — this may be a new era for how matchmaking is handled in online games.
As algorithms get smarter and machine learning comes into wider use across the industry, matchmaking restricted to easily measureable, simpler variables — like win rate or player skill — may give way to more tailored experiences, with games grouping players together by shared interest or personality type, or even microtransaction history.