CONSUMERS AND GAMING
Why do People Spend so Much on Games
INTRODUCTION
During this research project, I will be looking at reasons for the excessive financial loss that consumers suffer when they buy a virtual object within a game. I will be exploring the different techniques that companies use in order to give consumers the motivation to buy such items.
HOW IS THIS RELEVANT TO TEENAGERS
Teenagers need to know the reasons behind game spending and how companies design games to get teenagers to spend money on them, even if there is no competitive advantage in some products. Some teenagers think that their friends will see them as a better gamer if they have a better skin or have bought a card that will make them better. However, this is not always the case, as some peoples' friends think that if they buy a skin or character, they are a 'try-hard' and are trying to make themselves seem better when they're not so good. According to a survey conducted by Business Insider, video games has the third-highest rank in expenditures by teens, with only clothes and food ranking higher and the average teenager dedicates 14% of their income to video games (1).
Teenagers should be aware of the strategies that game companies use to entice them into making a purchase, because teens might think that purchases will help them. While these purchases will help them in the short-term, in the long-term they will see no advantage from buying video game items, unless they become professional gamers (only 0.1% of gamers play games for a living, some on very low salaries).
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THE GAMING INDUSTRY
With over 2.5 billion people playing games globally and billions of dollars in profit (2), the gaming industry is a new, ever-changing industry. Although the growth of the industry is rather impressive, the major source of income for the companies that make the games has changed.
The video game industry used to generate most of its revenue through consumers purchasing the game itself. The next step was to sell a game for a reduced price but sell an in-game currency which could be used to gain a competitive advantage over opponents. This idea is dubbed 'pay to win'. In recent times, companies have realised that they can provide a game for free then release in-game cosmetic, or competitive, items that they sell for in-game currency. This currency is usually only acquirable by paying real money. The free-to-play model has proved to be one of the most profitable types of video games ever.
For perspective, out of Fortnite's $3.77 billion of revenue in 2018 alone, over $1.6 billion was generated from cosmetics alone (3). These cosmetics gave no competitive advantage to the player.
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(3) https://www.businessinsider.com.au/how-much-money-does-fortnite-make-2019-1?r=US&IR=T
WHAT MAKES CONSUMERS BUY IN-GAME PRODUCTS
According to Juho Hamari, a scholar from the University of Tampere in Finland, there are five main motivations in video games that make consumers want to purchase in-game items (4). Not all of these motives apply to every video game, but most video games will have at least two that apply to it.
Firstly, users might want to participate in a special event that is only playable by purchase. Game companies release these events to make sure the game doesn't go stale. They also use this concept as an opportunity to boost their revenue. Players perceive these events as unique, which may induce a fear of missing out.
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Special offers are also a way of motivating people to spend money in a game. Companies periodically include special offers that may entice players to buy them. These offers may be perceived as cheap or good value. Consumers especially buy these offers if they are limited-time offers, also due to a fear of missing out.
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Other reason for consumers spending money are speeding up timers and unlocking content. A lot of games set timers as to how long it takes, for example, to build a building in the game, or for a life to reset. Due to instant gratification, people don't want to wait for that long, so they spend money to speed up the timers and continue playing the game. Also, unlockable content is a major form of in-game content. Consumers simply want to unlock new content to play, such as levels or maps.
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Finally, simply supporting a good game motivates players to purchase in-game products. Consumers are enticed to spend money on the game to keep it running and to ensure the game's continuance.
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(4) Hamari, Juho & Alha, Kati & Järvelä, Simo & Kivikangas, J Matias & Koivisto, Jonna & Paavilainen, Janne. (2017). Why do players buy in-game content? An empirical study on concrete purchase motivations. Computers in Human Behavior.
68.538-546. 10.1016/j.chb.2016.11.045.
This image shows some examples of in-game purchases that companies add.
The picture on the left is an example of an artificial timer. Timers restrict the time that people can play the game by taking a life away from them every time they don't complete a level. Due to the growing impatience that humans have acquired, players of these types of games purchase speed-up options to give them lives and allow them to reduce, or discard, the timer.
The second photo is an example of a company giving the players a premium offer that they have the opportunity to buy. If players choose to purchase this offer, they unlock premium content. The company that made the game also entices consumers to spend more money by making longer periods of time cost less. For example, buying one year is cheaper than buying twelve months.
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The bottom photo is an example of a company giving players a special offer. Originally, the items would cost $17.99 in total, but they are offering players the option to purchase the items in a bundle for a cheaper price of $9.99. It is also a limited time offer, which may induce a fear of missing out on the bundle.
Statista 2017, Distribution of video gamers worldwide in 2017, by age group and gender​, statistical graph by Statista, accessed 26 March 2020, <https://www.statista.com/statistics/722259/world-gamers-by-age-and-gender/>
HOW TO BE A WISE CONSUMER
To be a wise consumer when gaming, people should consider the real value that the product comes with, which is usually not much. In most games, there is no real-world value associated with them. Sometimes, there is only cosmetic value and the money that people spend to buy items in a game is wasted. However, some people think that they are not wasting their money, as their character looks a lot better visually than a person who hasn't spent money. On the other hand, other people see this type of spending as a waste, as consumers don't get anything that will benefit them in the real world. Different peoples' opinions differ based on their views about money and how it should be spent. This can be linked to being a wise consumer. Being a wise consumer in the video game world means that people should really think about whether the product that they are considering buying will benefit them. They shouldn't buy an in-game item on the basis of social popularity because, in reality, skins or characters will not gain them friends. As well as that, consumers should think about the particular strategy that a company has used to motivate them to buy the product. They should consider the temptation that the company has brought forward in them. This will help consumers to decide whether they actually want the product, or the company has just tempted them into buying it. This is how people can be wise consumers when gaming.