Gaming industry representatives have discussed the approaching recession and its possible impact on gaming in recent months. Almost every statistical source confirms that gamers have started saving, including many key demographics for the industry. Gamesindustry.biz portal speak about the infamous strategy that will surely interest many studios.
There is no perfect way to combat a global market downturn. Some companies are more at risk than others, either because their audiences are cutbacks or because the business is struggling. One of the main effects of a recession is that it increases the cost of failure and increases the risk of every decision – a mistake that is viable in good times but can destroy a company in a crisis.
There are also companies that are more protected from these negative effects. For example, those who receive a steady stream of profits from a loyal player base or those who target industry niches. Therefore, a strategy for surviving a recession must be developed on an individual basis, starting with the company, its products and its audience.
However, there are popular opinions that are remembered every time the gaming industry goes through a downturn. One of them is the theory that free-to-play games are more recession-proof than paid games. This idea arose from data analysis: market statistics show that younger audiences continue to engage with free releases but are turning away from paid versions that attract older players. The logic is simple: if people tighten their belts, then they need the best entertainment in terms of price and quality.
Based on this line of reasoning, then yes, free-to-play games with rich amounts of content seem like a bargain. They look appealing even in non-crisis times, because the psychological barriers that prevent people from spending large amounts of money on games are gradually becoming stronger.
In this context, a game with a broad free-to-play approach that allows everyone to have reasonable fun for free, but offers the option to pay for additional options or content, becomes a more attractive option than an expensive AAA release. The problem is that if such projects are monetized too aggressively or too little, they risk being strongly rejected by a public looking for something economic.
Free-to-play gaming also has another aspect that is relevant to the challenges of the current economy, even though it has become taboo in some circles. A few years ago, many media outlets published documents and interviews in which developers honestly discussed the importance of “whaling” – players spending a lot of money on free projects. Many releases build entire economic models around them. Typically, companies are willing to be satisfied with the majority of users spending every penny as long as a small portion of the player base converts into whales.
But now such discussions are much less common. People realized that frank conversations about users spending too much money on supposedly free games damaged the public image of such projects. However, in the near future, whaling may once again become one of the dominant strategies in the gaming market. At first glance, this seems counterintuitive because spending thousands of dollars on gacha games during a recession is crazy. However, it is important to understand that changes in the economy are distributed unevenly: they mainly affect the lower segments of the market, while the upper segments still do not negate anything.
Of course, this isn't just true for games. Luxury goods companies forecast solid growth in the coming years, even as similar retailers' forecasts decline. Attracting wealthy consumers requires strategic thinking, and the most popular tools for the game are items that demonstrate the high status of paying players.
In fact, since most users pay nothing for free games, whales have a large audience to show off their purchases to. And the more low-income users are attracted to such games, the more bragging rights there are for the wealthy.
Meanwhile, premium versions cannot perform the same trick. Some people try, but for most it's a terrible idea because psychology doesn't work that way. People who pay for the game don't spend their money to feed other people's egos, while free players essentially take this point for granted.
From an ethical perspective, the whaling model has always raised many questions, and under stressful economic conditions there will be even more questions. There are many scientific studies looking at people's consumption habits regarding status symbols and brands, and most tend to believe that they are more likely to be used by people who cannot afford such costs. This is partly why discussion of this business strategy has become taboo: it is impossible to ignore the stories of people being easily taken advantage of to make money and driving themselves into debt.
But the potential of this strategy in protecting companies from the effects of economic downturns cannot be overlooked, and so it will certainly be discussed by many studios and publishers. One can only hope that the senior management of major gaming companies does not draw the wrong lessons from it.
