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Posted: Thu 17 Mar - 01:44 (2011) Post subject: The impact of psychological addiction on the game industry
Daniel Cook wrote:
The game industry is maturing and some worry that it is stagnating. Every hit game is a sequel and new concepts and titles seem few and far between. What causes this pattern? Is it a good thing or is it a fatal flaw in the structure of the game industry.
It is easy to look at other media and though there are many of the same business trends of consolidation and mass culture product, game stand alone in their blatant recycling of old concepts. Not even the Clear Channel world of Britney Spears relies so heavily on remakes and remixes.
Unlike movies or books, games are unique in that that you can make quite a bit of money by simply repackaging an old successful game with better graphics, slightly tweaked levels and an additional power up. The majority of money in the game industry is made from either direct sequels to successful games or games that are minor improvements on existing game designs.
This is not an accident of history. Exactly why this happens is due to the fundamentally addictive nature of games.
The Basics: Games as Psychological Drugs What is a game?
Let's be blunt. Games are drugs.
A game is a pre-packaged set of stimuli and directed player responses that piggy back on existing human risk / reward systems and create a measurable psychological addiction. “A set of stimuli and directed player responses”
The first step to understanding this definition of games is to strip away everything that games borrow from other media. This includes plot, sound, or even recognizable real world objects. The result is often a set of abstract symbols and games rules that is still has the fundamental qualities of a game. The classic example is Tetris. It contains an arbitrary ruleset, no setting or plot, yet it still causes players to spend immense amounts of time playing one more round.
“Piggy back on existing human risk / reward systems”
Due to the mysterious meandering of human evolution, people can be made to do things if you know what buttons to push. A child will salivate if you show them a picture of a meal. A male will become aroused if you show them a picture of a naked female. These basic physiological responses have spawned entire industries that take advantage of such built-in triggers.
There also exist psychological triggers. Through risk/reward schedules, you can cause a person to do a variety of mundane activities that only have meaning within the context of the overall system. Gambling, Super Mario, Solitaire, B.F. Skinner's experiments on dogs are all examples. It is these pre-existing systems of psychological triggers that all games use to generate ‘fun', the pleasant buzz that encourages us to keep playing.
“Measurable psychological addiction”
The ever helpful Wikipedia defines addiction as “an uncontrollable compulsion to repeat a behavior regardless of its negative consequences.” Psychological addiction is “dependency of the mind, and lead to psychological withdrawal symptoms.” This is strong language and I use it as a foundation for understanding games, not as a medical definition.
The portion of addiction most pertinent to games is the ‘uncontrollable compulsion to repeat a behavior.' Games strongly encourage players to repeat specific behaviors over and over again. Most games structure themselves around core game mechanic, a simple repetitive activity.
Admittedly, games exist in a gray area when it comes to ‘negative consequences'. A player's addiction can be mild, (the need to play ‘one more turn') or serious (the gamer who died from playing for 32 hours straight). What is important is that a game gives players a rush that they desire to repeat.
What is a game genre?
Think of ‘genre' as a common class of drug. In the game industry a genre is a common set of game mechanics and interface standards that a group of titles share. The names of the drugs may be different, but the biochemical impact on the body is the same.
Genre speaks heavily to the addictive systems behind a game and less to setting, plot, or other typical categories. Warcraft and Starcraft are have very different plots and settings, but they still belong to the same genre of RTS.
This is admittedly a horrible overloading of the term ‘genre'. I pity those schooled in movie history trying to wade through this essay. However, historical usage in the game industry leaves us little other choice.
The Birth of the Genre Addict One cocaine dispenser is as good as the next
Imagine that a game is a cocaine dispenser. There's a famous experiment with a rat pressing a button to get a dose of cocaine. To the rat, one cocaine dispenser is just as good as the next.
A similar thing occurs with game players and sequels. When a player purchases Doom 1, they will happily purchase Doom 2 and 3. Repetition with slight improvements still packs the same addictive wallop.
“The first high is always the best.” This is something that both drug addicts and gamers claim. How many times have you heard experienced players dismiss sequels as been less potent then the original?
The body adapts to addictive substances remarkably quickly and though a person may still feel compelled to perform an activity, the initial rush of pleasure diminishes over time.
The goal of a game sequel is typically to purify and concentrate the addictive qualities of a successful game in order to provide a stronger addictive kick. Each successful sequel is an increasingly potent cocktail that not only addicts more first time users, but also continues the pleasurable rush for older jaded players.
The Genre Addict
Players specialize in genres. A hardcore gamer may focus all their efforts on FPS, and disdain anything vaguely associated with RTS games.
Players specialize in each one of these categories primarily due to player conditioning. Players need to acclimate to a game before they get their addiction rush. Throw a user in front of a FPS for the first time and guaranteed they will be clumsy and confused. The psychological rewards are not easily recognizable and the ‘fun' factor is questionable.
Throw them in front of the second or third FPS that they've played and they will immediately start partaking the in the psychological rewards. They'll gleefully look forward to discovering the next weapon or mowing down a cool boss. The pathways of repetitions, reward, and addiction are pre-burned and ready for use.
I just ran across another real world example of this. A now canceled MMORPG named WISH implemented movement with a point and click system instead of the ‘expected' keyboard based system. Dozens of posts on the user forums complained. This one sums up the response quite nicely.
“With so many other choices, it's very easy to pass by Wish and move to another game where I feel I won't have to "learn" the basics all over again. I think all games should have the same basic movement system (each game having their own small tweaks) and have content and game mechanics be the differentiating factor. Maybe when the game is polished and established I'll give it a shot. Or maybe I'll feel the need to ‘try something different' at some point, but right now WISH is not the game for me.”
This process encourages users to seek out games that are like other games that they've enjoyed. Over time, you end up with stratified genres and sizable homogenous populations of genre addicts that punish innovation.
Genre addicts create winner-takes-all markets
An addict of a specific genre desires the single most potent version of that drug that is available. If someone is addicted to cocaine, and you can promise them slightly improved cocaine high for the same price, cocaine addicts will pound a path to your door.
The same thing happens with games. The RTS that is perceived as the best available at any one time sells the most copies. Think of this as the “Blizzard Strategy.” If you can tap into an existing crowd of genre addicts with the top game in that genre, everyone who has that habit will buy your game. Software business, like most media with high upfront development and marketing costs and low distribution costs, love a mega hit since it is usually 90% pure profit.
The result is the familiar rule of thumb that 5% of the games make 95% of the money. All the publishers are fighting to be the best version of a drug to sell to a market of genre addicted players. We can't even be happy with an ‘A' title. Instead, we have to differentiate the top game by calling it a ‘AAA' title.
The games that sell the most are not merely 'lucky'. The fact that a small percentage of game sell provide the majority of revenue is to not going to change soon. This is a fundemental market structure driven by buyers who are only willing to invest in the best of the best.
Game companies are waging a giant battle of king of the hill. The major focus of every publisher and developer is to create the top game in a genre. The major focus of most gamers is to buy the top game in a genre in order to get their next fix. At stake are the sweet mega-hit profits that keep them in the black.
Publishers: How the Drug Lords of the Industry Profit
A great business
Selling addictive substances can be a great business. You tend to have very loyal customers and steady demand.
Unfortunately, publishers are in the early days of the game market and competition is fierce. Those who understand the Business stand to make great profits and those who don't will simply be acquired.
Luckily, most game genres are not yet outlawed. Organized crime would make a killing if they got their hands into illegal game distribution. The rapidly growing industry of online gambling can attest to that.
Economic forces rule
Ultimately, it all comes down to economic risks and rewards for the companies involved in making games. Capitalistic forces have adapted to the fundamental nature of games and helped create the market system that we have today.
First off game making is a risky business. If you randomly put money into developing a game, you will lose your shirt since is has a horrible chance of making back money. Most games don't.
So instead, you play to win using the following strategies. If you look at Game Developer Magazine's “Top 20 Publishers” article each year, you'll see these patterns over and over again.
Strategy #1: Portfolio-based risk reduction
Publishers are the dominant force in our industry because you need someone who has multiple games on the market so that any one failed game won't tank the company. Or more importantly, you need someone who can field 9 games that fail and survive long enough to hit it big with that 10 th block buster game.
Publishers exist because the market bankrupted the alternatives. They are a proven economically viable strategy for making games and aren't going to go anywhere anytime soon.
Strategy #2: Navigating the distribution bottleneck
Our industry is the proud supporter of a monstrous game distribution system. The problem is very simple.
Retail stores have limited shelf space.
Gamers buy 99+% of all games through retail stores.
Stores stock their shelves based on whatever items sell the most at any one time.
The result: most games have extremely short shelf lives and only the best of the best (from a financial perspective) make it onto the shelves in the first place.
An amusing dynamic occurs with end cap promotions and overstocking. You've seen it before…the store displaying 20 copies of a hot game. For every extra copy of the game on that shelf, there is a game that did not get funded by the publisher. There simply wasn't enough space to sell it.
Strategy #3: Portfolios heavy in ‘proven' products
Publishers create a portfolio that is heavy with lower risk products that are guaranteed to sell a minimal amount. This reduces the overall risk of the portfolio.
Strategy #4: Higher per product development costs
The overwhelming profit margins that come from having the top product in a particular genre encourages increased spending. If I only have to spend $10 million more to ensure that I have the top FPS for the Christmas season, I'm going to do it in a heartbeat. If I can release Halo 2 with a first day earnings of $125 million, my investment was well worth it.
The result is that costs escalate dramatically from generation to generation. My competitors will drop $15 million on their next title in the hopes of beating my $10 million development team. Naturally, the only course of action for me is to spend $20 million. And the cycle of spiraling costs continues.
Strategy #5: Minor investment in experimental genres
The press and gamers always moan that there aren't enough experimental games. The reality is that many publishers would go out of business if it weren't for their investments in new genres and franchises.
A new genre is the equivalent of a new drug line for a pharmaceutical company. Sims, GTA, Tony Hawk, Ultima Online, Tomb Raider, and Dune 2, were all genre busters funded by major publishers. These genre busters ended up contributing massively to the economic success of the publishers that created them.
So innovation will never die. It will, however, slow to a trickle. The owners of innovation in this industry are portfolio managers that err on the side of caution. For every 1 game that takes a risk, you need 10 or 20 games that are sure fire money makers in order to balance the portfolio's total risk.
Strategy #6: Culling of genres past their prime
Since shelf space is limited, every title a publisher funds has a very clear cut opportunity cost. Publishers will generally select a potential hit in a hot genre over a potential hit in a genre that is past its prime.
It is often financially better for a publisher to fund an additional FPS then it is to fund a turn-based strategy game. With an additional FPS title, the publisher increases their chance of getting a mega multi-million copy hit in a big market segment. If they get a big win with the turn-based strategy game, they'll at best move a couple hundred thousand units. Why even bother?
Best to stop investing in the genre completely.
Strategy #7: Consolidation
This is probably the timeliest topic considering EA's latest moves. Since game publishing is a high risk business with a reliance on proven product lines, there is very high cost of market entry. Little publishers don't have much chance and it is very rare to see new publishers entering into the market. In light of the continual king-of-the genre battles that occur with each product launch, less competition is always better.
These factors lead towards a strong consolidation trend amongst publishers.
Publishers buy out other weaker companies to gain access to their proven titles, brands, and development teams.
Over time, the market entry barriers become more intense and there are fewer and fewer publishers in the mix.
The Role of Game Developers in the Drug Trade Craftsmen, not Artists
Refining an existing genre into a more addictive mix is a finely honed craft performed by the faceless legions of underpaid, underappreciated, disposable developers. They walk a difficult path. A developer must create something that is better than everyone else, but not too different. If they fail, they are fired.
It is a bit like telling a thoroughbred horse that if it loses, it will be shot. But if horse puts all its heart into the race and beats the other horses by too many strides it will be shot just the same.
This narrowly focused environment favors hard working, yet somewhat generic craftsmen. When the going gets tough, the game developer's philosophical mantra is ‘work harder', not ‘work different.' Unique, revolutionary artists simply don't survive very long when radical innovation is punished by the marketplace.
Creating the ultimate drug cocktail
In order to win the king-of-the-genre battle, developers spend much of their time mixing and matching elements from existing games, cultural styles, and popular settings.
Typical psychological reward systems evoke a limited range of emotions from users. In general, stripped down game mechanics are capable of goal-oriented responses such as pride, pleasure, frustration, anxiety, and anticipation. A pure game usually has limited appeal.
A developer might mix a high intensity shooter mechanic with slower plot-oriented interludes. The speed alone would burn out most gamers. However, when you chase it with barbitchuate, the developers can take swing the player through a grand cycle of emotions that accentuates the addictive qualities of the game. Voila, Half-life is born.
Creating new game genres
The majority of games are set in particular well-defined genres. Still, occasionally, developers build a game that creates a new genre. Think of this as the Ecstasy of the drug world.
This drug has to compete against all the other drugs that came before it. Due to the bottlenecks on distribution, there are a limited number of drugs that can exist in the marketplace at any one time. A drug must be at least as addictive as pre-existing drugs to make carve a place in the user community.
Most ‘new' genres come from a variation of the drug cocktail approach to game design. Mix fighter combos with skateboarding and you have Tony Hawk. Mix racing games with free form environments of Elite and you've got Grand Theft Auto. Add a popular setting into the mix and you've got a potential hit.
A few like Tetris and the Sims come out of left field and are usually the work of fringe individuals, not corporate R&D.
In general, creating new genre is expensive and most importantly to the penny pinchers, horribly risky. Most attempts die during the drug R&D lab's selection process, aka 'getting a title signed'.
How to kill a genre
Killing a genre is fun and profitable. First, create the most addictive, polished example of a well established game genre. Since you are tapping the vein of a well established population of genre addicts, your title will sell millions of copies and make you quite a bit of cash. Retailers will adore your game as a proven, low risk product. Gamers and magazines will rabidly promote your game to all their fellow fiends. The shelf life of your game will last years. Your game will become the standard.
At a certain point you will saturate the market of that particular genre. Here is the fun part. Every game from this point forward will be compared to your game and most will fail to offer much value beyond what you've provided. While your game is on the market, all newcomers will be commercial failures because they couldn't push their way to become the new king-of-the-genre.
Publishers will take note and stop funding games in that genre. Why throw money at failures? Eventually, your game will become old and stop selling as strongly. Retailers may even drop it. There will be sporadic attempts to reignite the genre, but your game's massive legacy will overshadow all that follow. The publishers move on. The developers move on. The gamers are left with their fan sites and chat rooms. Amen, the genre is dead.
My list of genre killers who did their job too well:
Science Fiction RTS
Historical TBS games
Masters of Orion
Science Fiction TBS games
HoMM and Master of Magic
Fantasy TBS games
On the bright side, I've seen far less evidence of genre death on consoles. The well-defined console lifecycles means that there is always an opportunity to re-release an old game with better graphics. I'm curious to see if genre death becomes an issue once wide-spread backwards compatibility is adopted.
First, I'm assuming that if you are already making king-of-the-genre titles, you don't need my help. What saddens me is the multitude of games on the market that don't heed the basic lessons of catering to genre addicts.
Lesson #1: Always claim that you made a king-of-the-genre title
Game magazine readers purchase magazines in order to choose the one best genre champions out of all the contenders. The only way to get coverage is the play along. When the reviewer asks “Is your title better than Halo 2?” the answer is always “You betcha!”
Also, reviewers are almost always jaded genre addicts. They live to catch a glimmer of the joy that playing a particular genre once brought them. Only a king-of-the-genre game is worth their attention and adoration.
Lesson #2: If you have an innovative game, don't tell anyone!
The last thing that the gaming public wants is an innovative game. The vast majority of paying customers are raving hardcore genre addicts that give a wide berth to anything that won't give them a guaranteed fix.
Instead promote your game as the best of the best of a particular popular genre. Casually mention innovative features as support for your argument that this, indeed, is the best game ever.
A master of this marketing strategy is Peter Molyneaux. The titles he is associated with are some of the most innovative games released on the market. Yet he took great pains initially to promote Fable as 'The best RPG ever'. He then listed its supporting innovative features as evidence. Eventually he retracted some of his statement, but I believe his ability to tap into a genre addict feeding frenzy heavily contributed to Fable's success in the market.
Lesson #3: If your amazing game is innovative, plan on poor initial sales
An attempt at creating a new genre requires a large amount of positive press and word of mouth. The nearly insurmountable goal is to convince traditional genre addicts that they can get their fix from something different. A few large publishers can generate this blast of great marketing. (Nintendo with the launch of Pikmin comes to mind.) Most cannot.
Indy developers are particularly in a bind since they are additionally hampered by a very poorly developed channel and marketing apparatus. There are no pre-existing genre addicts to spread the word of mouth about your title. Such titles rarely gain the critical mass necessary to become financially successful.
Wik & The Fable Of Souls has received wide critical acclaim, with rave reviews, warm letters from happy purchasers, and now having made the finals of the Independent Games Festival competition, it is difficult to imagine being happier about the way people have received Wik. And yet to date, the product has underperformed commercially. Indie Postmortem: Reflexive Entertainment's Wik & The Fable Of Souls on Gamasutra.com
The history of gaming is littered with games that are interesting, different and complete commercial flops.
Lesson #4: If you are an indie developer, focus on dead genres if you desire financial success
You can't compete with the big teams in existing genres and there are massive entry barriers for creating new genres. Luckily, there is an untapped market of dead genres that are too small for the big publishers to bother with.
Here is a quote by Spacedock, a great company that makes a cookie cutter 4X turn-based title called Galactic Civilizations. This genre has been ignored by big publishers for years, but the addicts never went away. Even better, under the rallying banner of persecution, the genre addicts have organized and there is a home grown web of fansites and forums that will inform the brethren about new and exciting games in their genre.
“We'd been told for years that the turn-based strategy market was bad, so when we made Galactic Civilizations we budgeted for it to only sell 30,000 units. That's a fairly typical number for indie games that manage to get into retail. The game actually ended up selling something like 120,000 copies at retail world wide, and that's not counting the 10 to 15 thousand we sold electronically off our Web site.”
- Brad Wardell, Stardock CEO
From the perspective of genre addiction, it is hardly surprising that the top performing indie games are Mahjong titles.
Lesson #5: Tap into existing interests to slip your customers an innovation mickey.
Thankfully the world is not composed completely of hardcore gamers. People have other interests that can serve as a hook to get them to play your game. You have a variety of options that, though far less powerful than genre addiction, can draw uninitiated users into your game
Licenses: Lord of the Rings, Spider Man, etc.
Sports: Golf, Football, etc.
Hobbies: Comics, etc.
Major game franchises: Mario, Prince of Persia, etc.
As long as you play lip service to the basic theme, you can often get players to try out wildly innovative game mechanics. Existing genre addicts will inevitably see through your ploy and dismiss your game. Many are reacting as much to the fact that you didn't make a great FPS as they are to the fact that you are using a license as a hook.
Be forewarned though. If you do your job well, you'll inevitably create a new genre and in turn more genre addicts. That is a great thing financially if you can maintain creative leadership of the new game genre. Be sure to get exclusive rights to the license that got you this far.
The business savvy game lords like EA, Sony, and Nintendo control the means of game production and will only benefit from the inevitable consolidation of the next round of consoles. They know how to satisfy genre addicts and will continue to build their core business around cloned titles that serve repeat customers.
Mainstream Hardcore Gamers
If you like FPS or other hot genres, this is the best time in history to be a gamer. There is massive quantity and the quality is the highest at any point in history. All trends point towards this continuing. Someone has to one up Half Life 2.
The losers Gamers addicted to smaller gaming genres
When you are in love with a dead genre, you have two choices:
Move on and learn to love Halo 2.
Support independent game developers who are still mining the possibilities of your preferred genre. The games they create will never live up to your memories of past glory, but it is the only way to get your fix.
Developers who want to try something new
Imagine you are a talented veteran game developer and you have a great idea for a radically new type of game. You have two obstacles that make success extremely unlikely.
Publishers don't want to increase the risk of their portfolio. You pitch your prototype to a publisher and it turns out that they've already allocated their 2% budget for experimental games. So sorry.
You release the game as an indie project. No one buys it because they don't care about games that are not part of established genres.
New genres grow the total market by creating new addictive experiences that appeal to new customers groups. The Sims, for example, added millions of new gamers to the gaming market.
When publishers reduce risk by focusing on proven genres they end up selling to the same people over and over again. The result is slower than expected growth due to a lack of investment in the development and promotion of innovative games.
Look on the bright side though. Even if the industry is growing at a sub-optimal rate, it is still managing to grow at 14.3% CAGR 2003 through 2005. That is a drop from the industry average of 20% CAGR in previous years, but it is still better than the stock market. When you sell a highly addictive substance to a large market, you don't have to have great management to make a decent profit.
Closing thoughts Sequels are here to stay
Sequels and derivative works are natural, even desirable consequence of the nature of games, our distribution system, and basic economic forces.
The corporate drug production facilities like Blizzard and EA Sports have a well deserved place in the gaming economy. They will always be around and they do great good by evolving and refining genres to an addictive peak. I certainly enjoy their games and people who complain about their existence are for the most part hypocrites.
Opportunities for clever people
However, the game industry is moving steadily towards a non-optimal usage of resources. There are thousands of talented developers dying to pour innovation into this great and vibrant media and they have no outlet.
Capitalism abhors non-optimal resource usage. The underserved genre addicts and undiscovered new genres present a wonderful opportunity. Somewhere there is an entrepreneur who will figure out how to make money outside of the current mainstream publishing and distribution system. Others will follow in their footsteps and the industry will self correct.
The path to better games
Most importantly, developers and publishers must come to terms with the reality of genre addiction and how it affects our market. In the past, the industry has been built upon a strong ‘if you build it, they will come' philosophy. We now operate in an environment where 60% of the population regularly plays video games. Because we did our jobs so very well, these players have strong market-shaping preferences.
Innovators must adapt to this new market landscape and figure out ways either thrive within it or subvert it. Game developers need to begin developing a practical and theoretical understanding of the psychological reward systems they are using to make people react to their games. We have too many academics from literary, cinematic, and sociology backgrounds studying games and not enough psychologists and neurobiologists. Given time, in-depth knowledge will lead to more potent games that further accelerate the adoption of our favorite pastime.
For better or worse, games remain drugs
As time passes, the addictive nature of games will be seen in a less positive light. Abuse inevitably follows addiction and this is a storm the industry must weather. When lives are ruined as a direct result of a well executed game, we need to take responsibility.
My hope is that games end up evolving into a widespread beneficial social stimulant, much like caffeine. Virtual worlds can be the new coffee bars of this era. We can provide everyone with a daily fix of gaming goodness, and most will come away both refreshed and inspired.
We make and sell a new form of highly effective psychological drug that is taking the entire world by storm. I remain optimistic about the vast potential of electronic games to entertain and perhaps one day enlighten. The only way we are going to get there is by understanding the nature of our craft through honest and pragmatic dialog.