How The Video Gaming Industry Is Evolving To Be Like The Casino Industry

Photo: Oliver Berg/dpa

The video gaming industry has transitioned from a group of backyard innovators to an industry of multi-billion dollar companies, hiring psychologists, neuroscientists and marketing experts to turn customers into addicts. The latest trend is the creation of “whales,” people so addicted to games that they spend their entire life savings to keep playing.

But the video gaming industry, today one of the fastest growing industries in the US, has more humble origins.

In the 1980s and 1990s, the early video gaming industry was dominated by backyard hobbyists. Sierra Entertainment - creators of the famous King’s Quest series - was founded by a husband and wife team. Gabe Newell, founder of Valve Software, was already rich from his days at Microsoft when he launched his hobby project Half-Life.

Collectively, the hobbyist companies of the early industry produced some of the most innovative genres of video game history – the adventure game, the real-time strategy, the city-builder, the role-playing game – all through experimentation and garage-style company development.

But in the last ten years something changed.

The rise of mobile gaming and sequels

The rise of casual gaming on mobile platforms has allowed a massive expansion of the industry, creating giant companies like King, Halfbrick, Zynga and Kabam.

Much larger than their predecessors, modern video gaming companies have adopted a more traditional company structure, hiring public relations and marketing departments and even neuroscientists to sell as many games as possible.

Today, big companies monopolise the industry with long-running sequels of old, successful titles: Assassin’s Creed, Call of Duty and Halo, to name a few. Of the ten highest selling video games in 2017 so far, eight are sequels.

With high development budgets in top companies (some games costing upward of US$250 million to produce), sequels are seen as a go to formula for success, based on name recognition alone.

Image: Assassin's Creed

The creation of ‘Free to Play’ addictive games

Video games in the 1990s were generally “premium,” meaning that you paid once to gain access to the game for life, in the same way you would buy a pair of shoes and own them forever.

Today, video game companies have moved to a more profitable model known as “Free to Play”. Research shows these Free to Play (FTP) games rely on the fact that a majority of players will play for free, while a few key players will become addicted to the game and spend a vast fortune for bonus content.

The goal of an FTP game is to get as many players as possible addicted, so that they keep buying in-game content. In-game content can include things like “visual enhancements,” digital trophies and “virtual goods”.

The use of casino techniques by games companies

Video game companies today use the same techniques as casinos to ensure customers become addicted to their games.

Commonly, they use fake currency. By using poker chips, cards or “gems,” companies can create a disassociation effect in the buyer, who does not realise how much real money they are spending. In a recent study, it was shown that people tend to spend more money when using debit cards than with cash due to this same “disassociation” effect.

FTP games have adapted another technique from casinos called “progress gates”. The typical slot machine charges you to keep playing as soon as you lose – this is known as a “hard progress gate”. In contrast to this, a “soft progress gate” prevents a player from playing for a period of time (say an hour), which can be bypassed by paying to keep playing immediately.

Modern games use both hard and soft gates to charge the gamer for a product that they ostensibly already own.

Modern video game companies also use shops and in-game ATMs to entice players to keep spending without having time to cool off outside of the game. Casinos use the same technique by placing ATMs and shops in-house. Gambling researcher Mark Griffiths suggests that this technique is used “to entice those who are gambling not to stop or go home”.

By using the same techniques as casinos, the modern video gaming industry has gone down a dark and morally dubious path.

The ConversationNew ethical questions exist about the effect of addictive gaming and whether or not it is fair or ethical to keep charging addicts for a product they already own.

This article was originally published on The Conversation.


    This didnt even seem to touch on the current trend of loot boxes, which is literally gambling on getting something you want/can use.

    I work in the gambling industry, and I get concerned about how easy it is to waste money on free to play crap, it is easier to waste hundreds of bucks on a free to play game than it is on the pokies these days

      Yeah, loot boxes are literally the worst and most horrible of the free to play mechanics spilling over into 'normal' games. That mechanic is terrible in free to play, even worse for a game you shelled out $70+ to play.

        If the sale of these loot boxes allow for other free meaningful content to come out and are cosmetic in nature then I think it's fine. Perfect example is Overwatch, they could be charging for new heroes and modes but instead it's all free.

        Last edited 14/09/17 11:36 am

          But it doesn't have to be lootboxes. If you could outright buy the skins I would be significantly inclined to spend some money to get them, rather than buying a chance to get what I want.

          Last edited 14/09/17 6:35 pm

          Is it free though? You've already payed for the game so there's $60 - $100 out of your pocket straight away. With 30 players at a conservative $40USD a pop, even without paying for cosmetics you've given the devs the money they need to make new free DLC.

      When I saw the start of the article I figured it was going to be pretty heavily focussed on loot boxes and the insidious methods used to get us to pay for them.

      That is, loot boxes drop for "free" giving you a strong feeling of already owning something, although in fact you have been awarded nothing at all other than a link to a shop front.

      Then, even after coughing up real cash for "gems", disassociating you from the expenditure of real money, and then paying for the keys themselves, you're still not actually paying for the specific item that you're after. Instead, you are mostly buying worthless "common" duplicates leaving the really desirable items buried behind a tiny statistical drop chance. In fact, to get that one golden flair on your sword you may, on average, need spend 30, 50, 100 or more times the cost of one loot box “key”.

      The whole system is an exploitative scam and governments need to do a hell of a lot more to crack down on these manipulative practices.

      I can say very little positive about the Chinese government, but at least they are grappling with the problem a hell of a lot better than we are in the west by forcing companies to publish the actual odds of something specific dropping from your loot box.

      Last edited 14/09/17 12:11 pm

    Not as worried about loot boxes.

    Disgusting in single player games. But not a big deal in online competitive games (as long as its only aesthetic loot).

    But mobile gaming is dead. It's literally an entirely different market from real gaming.

      I've lost count the number of times I've been excited by a new mobile IP only to find that it's a dumpster fire of gatcha pulls, daily log in bonuses, premium currency, multiple currencies, energy timers...

      I feel like its a big deal in any game due to it being so similar to gambling.

      It should be regulated to protect people who have addiction problems.

    I'll freely admit I've got an addictive personality so I avoid loot boxes in games like the plague, they prey on people pure and simple

    I play free games, then when they get too hard, I drop it and play another free game. What grinds my gears is the gaming industries movement to making multiplayer online only and moving away from co-op. I would be happy to throw good money at a premium co-op game that me and mates could play with a few brews, but instead, gaming companies are hungry to push for profits rather than user satisfaction.

    The bit about sequels seems like an unnecessary diversion from the core topic. I would happily buy sequels to games with a great story, like I love watching seasons of a favourite TV show year after year.

    I don't think GTA will see a sequel for a loooong time because the current version is so highly monetised.

    I do hate this current trend of loot boxes though. I'm glad people are researching its effect on consumers. Hopefully governments will crack down on them sooner rather than later.

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