SYLVIE DOUGLIS, BYLINE: NPR.
(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")
DARIAN WOODS, HOST:
In 2012, Rebecca Ford was part of a team that had spent years making a video game. Problem was they couldn't sell it to a games publisher.
REBECCA FORD: We were desperate. We had to make a paycheck for our team that month. And if we didn't have a way to support ourselves, it was all going to collapse.
WAILIN WONG, HOST:
Rebecca is a creative director at the games developer Digital Extremes. And the company was kind of like a band that had spent years toiling away on a beautifully orchestrated album. And now no labels wanted to have them. So Digital Extremes went indie. They self-published this game called Warframe.
WOODS: And with this newfound freedom, they released it in a type of way that was gaining steam in the games industry. Instead of selling a one-off game to purchase, this game would be free to download.
FORD: And if you like it, you can buy some in-game currency. And, you know, we'll update the game as often as we can to make it worth your investment.
WONG: This sort of thing is known as a live service model - a game that's like a living creature. You play online - often for free - and the game gets constantly updated, funded by in-game purchases - that in-game currency.
(SOUNDBITE OF MUSIC)
WONG: Fortnite is one particularly successful example. Now almost every major game maker is doing it. This is THE INDICATOR FROM PLANET MONEY. I'm Wailin Wong.
WOODS: And I'm Darian Woods. This week at THE INDICATOR, we have a whole series decoding the economics that fuel the video game industry. And to kick it off, this gigantic shift in how games are played - the live service model. We learned why the approach Rebecca took to games has been popping up everywhere and how this has fueled a backlash from players. That's after the break.
(SOUNDBITE OF MUSIC)
WOODS: To understand what the game Warframe is, we asked Rebecca Ford to explain.
FORD: You're standing at the front of a spaceship. In front of you is Venus - a planet you know, but it looks a little wrong, like maybe you're in the far future. Your character - you can't see his face. They're helmets. They're muscular.
(SOUNDBITE OF KATANA SLICING)
FORD: And then you pull out a katana that is glowing, and you start slicing through robots. And that's Warframe.
WONG: Just like a regular Friday night for me.
WOODS: You and your katana blade.
WONG: (Laughter).
WOODS: I'm slightly scared now, Wailin.
WONG: (Laughter) Oh, you should be. In 2012, when Rebecca's company decided to release Warframe through this relatively new live service model, she was scrambling.
FORD: Someone had to learn really quickly how to self-publish a game with web infrastructure, community infrastructure, support infrastructure. And that was my role at the time.
WONG: That meant servers, round-the-clock chat and ways to accept payments inside the game.
WOODS: Almost like building the plane as it's running, like...
FORD: That is...
WOODS: ...To keep people - yeah.
FORD: ...Exactly what happened. None of us knew what we were doing, but we didn't know what we were doing together. So we all would compensate for someone else's lack of expertise, I'll say.
WONG: And she sought help from players of the game. Rebecca thought that there needed to be a feature for players to give ideas for updates. And this kind of player feedback was critical, especially when dealing with the sensitive issue of money.
WOODS: So in the game, maybe you could pay real dollars for a new sword that gives strange new powers. Or you could buy a special character who controls fire. Rebecca thinks back to this one particular purchase option that backfired.
FORD: A player could spend a dollar, let's say, to double the strength of their character. And then players got really mad.
WOODS: Players didn't like that there was only one way to unlock this better perk. It felt unequal, unsportsmanlike. And so they gave players a way to do the same thing but for free.
WONG: And this ability to change paths is the advantage of a live service model game. You don't need to spend years working on an update and hoping players will like it. You can be constantly tweaking and iterating. This means that Rebecca is in constant dialogue with players.
FORD: For 11 years, once a month, at least, we've sat on the couch doing developer live streams.
(SOUNDBITE OF ARCHIVED RECORDING)
FORD: Hello, hello, hello, and welcome to dev stream 152, or home...
We kind of cracked open a beer and been like, hey, we know we screwed up with this decision, but we're going to change it in the next update. See you next month for more news.
WONG: And while adding features, the company noticed one paid category was taking off - changing your appearance. They added more ways to pay for this. And this is in a way that doesn't affect gameplay at all. It's just what players think looks cool. The term for this is cosmetics.
FORD: We didn't have a lot of cosmetics initially. But when we started adding things like scarves or alternate helmets or a total reskin - so your character that looks like a fire wizard now looks like a phoenix - Those are the types of things that really do impact our ability to be a stable, stable, stable place that can have a payroll department.
WOODS: Pretty scarves or helmets might seem kind of trivial. But for a lot of games, cosmetics are one of the biggest sources of revenue.
WONG: And that revenue comes from just a few players. In Warframe's case, only about 10% of Warframe's players pay anything at all. In the gaming community, the top spenders are called whales. They sustain this large ongoing production team, which can be expensive. Jason Schreier is a reporter on gaming at Bloomberg News.
JASON SCHREIER: We're talking hundreds of millions of dollars to make these games.
WOODS: This is like a blockbuster movie.
SCHREIER: I mean, way, way more expensive than a blockbuster movie when you account for marketing and such. I mean, we're seeing some games that are really taking, I mean, half a billion to make.
WOODS: So that's on the expenses side. And on the revenue side, there is this advantage. Money comes in more consistently, or at least in theory. Warner Bros. Discovery publishes games like Hogwarts Legacy and Mortal Kombat. And this year, its boss said that they want to lean more into live service games because it reduces volatility for the company. That said, they have one title that is doing particularly poorly at the moment. That is Suicide Squad: Kill The Justice League.
WONG: And that might speak to a growing fatigue with live service games from gamers, maybe because there's only so many hours in the day to play these ever-evolving games.
SCHREIER: The problem is that each time a game comes out and it's kind of existing on the market forever, it's just more competition that never goes away. And so you get to this point that we're at now where the market is totally oversaturated with these live-service games.
WONG: In fact, Jason sees signs of a consolidation in the industry, with the recent layoffs from companies like Epic Games and Riot Games.
WOODS: Rebecca says criticisms of the live service model are fair, especially when these games haven't been done well by companies simply trying to make money. And she explains it like this. Think about other types of games. You might pay $80, and that's all the company will ever get from you.
FORD: But for a free-to-play game, there is no limit. Like, if I look at my lifetime spend in Warframe, the game I make, I have spent over $1,000 in my own game. (Laughter) So...
WOODS: You don't get, like, a staff discount code?
FORD: No, I really try and deal with it raw. So if you're a business person and if you only care about the bottom line, you're going to try and figure out a way to raise the ceiling on how much a single person can spend on your game. And I believe a lot of gamers can smell when that is happening.
WONG: And the Federal Trade Commission is sniffing out when that monetization becomes outright predatory. In 2022, the FTC accused Epic Games, the maker of Fortnite, of tricking users into paying money inside the game. Epic Games agreed to pay $245 million in refunds.
WOODS: So while it can be tempting for a game maker to look at that 90% or so of gamers who might be playing for free and wonder, how could we get them to pay? - you know, this is tough. The lesson seems to be that too much obsession with money can backfire.
(SOUNDBITE OF MUSIC)
WOODS: We would love to hear your thoughts. Email us at [email protected]. This episode was produced by Corey Bridges, with engineering by Cena Loffredo. It was fact-checked by Sierra Juarez. Kate Concannon edits the show, and THE INDICATOR is a production of NPR.
Tomorrow, as we continue our week-long series on the gaming industry, we'll take a look at accessibility. What for decades was somewhat of an afterthought for major game developers is now an expectation. Tomorrow, our exploration into video game accessibility.
(SOUNDBITE OF MUSIC)
Copyright © 2024 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.