Monday, January 21, 2008

A new business model for videogames?

From today's New York Times:
Ever since John Riccitiello took over last year as chief executive of Electronic Arts, the video game industry bellwether, he has promised to revitalize the company with new games and new ways of reaching consumers. Now, that may be happening.

In a major departure from its traditional business model, E.A. plans to announce Monday that it is developing a new installment in its hit Battlefield series that will be distributed on the Internet as a free download. Rather than being sold at retail, the game is meant to generate revenue through advertising and small in-game transactions that allow players to spend a few dollars on new outfits, weapons and other virtual gear.

I know this sounds a lot like the business model for Second Life and other such games, yet in some ways, it seems to me something of a departure as well. For those of you who may know more about gaming than I, is this "buy to get ahead" ethic something common? To me it's always a sad day when more skills-oriented competition is complicated by economics. Invariably these situations produce what economists call a "race to the bottom," in which those who think they want to succeed must spend and spend and spend simply to keep up.

You can read the full article here.


Rory said...

EA previously toted micro-transactions in single player games like "The Godfather" where you could spend somewhere around five US dollars to buy $200,000 for your in-game character. I'm sure people paid for this just like they will undoubtedly pay for the extra gear in this new Battlefield game. The problem I have with this type of marketing strategy is that it often feels faked. At no point did EA sit down and say, "the gamers would love this!" It's disguised to make players think that they are getting a great deal -- but they are deceived. If EA creates these additional items so that they are valuable in-game, there will eventually be a point when the free-loaders and cheapskates will be shunned by those willing to buy $60-70 worth of virtual machine guns. I wouldn't be surprised if frugal players were excluded from games. This is like showing up to Magic: the Gathering night at the local comic book store with nothing more than some allowance money and the willingness to buy a few cards so you can sit at the "nerd" table at lunch the next day.

Ted Striphas said...

Hi Rory,

Thanks very much for your comment, as well as for the discussion of the economic component of The Godfather. I wasn't aware of that aspect of the game. I wonder if that was something of a test-case for the new Battlefield release.

Anyway, it seems to me that what we're seeing here is a new class divide emerging in the world of digital gaming. I suppose I shouldn't be surprised, since this is often how things happen, but nevertheless, I am....