Video Games and Their Unavoidable Harm

China has been cracking down on video game companies, in the name of “defeating the poisons of video games.” Perhaps Xi and co are actually approaching this mess correctly, because according to the numbers, gaming companies and platforms have no choice but to exploit the most addicted gamers in order to survive.

Let’s look at the numbers from the Apple ecosystem:

in-game purchases (these are money spent on stuff like weapons / outfits / currencies inside games):

  • 53.7% of total gaming revenue came from less than 0.5% of all Apple accounts.
  • Each of these 0.5% of Apple users, the “highest spenders,” spent more than $450/quarter on in-game purchases.
  • 41.5% of total gaming revenue came from “medium spenders ($15-$450/quarter)”- 7.4% of all Apple accounts.
  • 81.4% of all Apple accounts spent nothing at all.

The same phenomena is happening when it comes to the patterns of who is spending money on buying mobile games:

  • 88% of all App Store game revenue came from 6% of App Store gaming customers.
  • The Highest spenders, accounting for 1% of iOS gamers, generated 64% of game billings in the App Store, spending on average $670+ quarterly.

I don’t know how many of these 1% of gamers are pathologically addicted to video games. What we do know is in order for game developers to survive, they must design their games to get these big spenders to continue to spend big money. In other words, these developers are highly motivated to keep these folks as addicted to their games as possible.

It is unrealistic to expect these companies, or anyone for that matter, to go against these results and incentives voluntarily. This would make no business sense at all. In a way, they have to continue to exploit their biggest users. Therefore is it possible to break this cycle without regulations or external interventions?

  • Data from Ben Thomposon’s Stratechery Daily Update on 9-14-2021

Leave a Comment