Deceptive manoeuvres: Exposing the shrewd ploys of pay-to-win schemes

In today's world, everyone desires to be unique and own special items. This applies to various aspects of life, including fashion, accessories, and more. Smart marketers and businesses have effectively capitalised on this desire by using tactics like FOMO (fear of missing out), social proofing, and personalisation. These strategies have proven successful in creating a sense of exclusivity and generating interest. Interestingly, these marketing techniques have expanded beyond physical products and are now prevalent in the gaming industry as well.

The gaming industry has experienced significant changes and growth due to the Covid-19 pandemic. Nielsen, a data firm, reports a staggering 45% increase in the total number of hours spent playing video games in the United States during lockdowns. This surge can be attributed to the growing number of players and their increased frequency of play. To combat boredom and social isolation, individuals turned to online gaming platforms like Steam and Twitch, leading to a substantial rise in their user base. Steam set records for concurrent users multiple times, with over 25 million players logged in simultaneously. Taking advantage of this trend, gaming companies introduced micro-transactions, which gave rise to the popularity of "Gacha games."

Gacha is a monetisation scheme commonly found in free-to-play games. It is named after toy-dispensing machines that are popular in East Asia. In games with a gacha system, the base game is available for free and can be played without spending money. However, players have the option to purchase a special in-game currency and use it to "roll" for random items that can impact gameplay. These items typically include weapons, equipment, and playable characters. 

Gacha games employ micro-transactions to exploit players. Micro-transactions involve purchasing virtual items for small amounts of money. These transactions can be cosmetic upgrades, such as new armour, or they can impact gameplay by enhancing your stats. The ones that affect gameplay often generate controversy. As you progress to higher levels, it can feel like you must pay to avoid being at a disadvantage.

A UK study conducted last year discovered that loot boxes are similar to gambling both in structure and psychological impact. The report, commissioned by Gamble Aware, revealed a significant connection between loot boxes and problematic gambling behaviours. This implies that individuals who purchase loot boxes are more prone to engaging in gambling activities. Loot boxes are commonly found in free-to-play games, which are frequently played by children. Consequently, these young players are exposed to a game feature that closely mimics gambling.

Gacha games and loot boxes are highly addictive because players can keep spending money without limits in order to obtain the desired rewards. If they do not succeed at first, players often purchase more boxes repeatedly.

The video game industry achieved a record revenue of $36 billion in 2017, as reported by the Entertainment Software Association (ESA). Genshin Impact emerged as one of the biggest gacha games in the previous year, generating $1.4 billion in 2021, according to the Michigan Journal of Economics. Sensor Tower's ranking of the highest-grossing games of 2021 placed Genshin in third position, while PUBG Mobile and Honor of Kings, both gacha games, secured first and second place, respectively, each earning $2.8 billion. With the top three mobile games of 2021 being gacha games, it is evident that these games' business strategies generate substantial profits.

The game Diablo: Immortal has sparked controversy due to its micro-transactions, where players are required to spend large amounts of real money for a chance to obtain in-game items such as character upgrades or bonus armour. Despite being a free-to-play mobile game, it has already generated over $100 million in just two months since its release in June last year. This backlash has reignited discussions about ethical gaming, particularly the blurred boundary between playing and gambling, and whether games that attract a young audience should promote the latter.

Gacha games are designed to keep players engaged and invested by using psychological triggers. Limited-time events create a sense of urgency and the fear of missing out on exclusive rewards. Countdown timers induce urgency, pushing players to act quickly. The focus on rarity and exclusivity fuels competition for desired items or characters. Social pressure, both competitive and collaborative, drives players to keep up with their peers. In-game notifications remind players of upcoming events, reinforcing the urgency and fear of missing out. These tactics motivate players to participate, stay engaged, and avoid missing rewards or opportunities to compete. Gacha games leverage these triggers to create an addictive experience that keeps players coming back.

Gacha games exploit addictive tendencies for profit, but they come with a dark side. Addiction is a concern, as players may neglect responsibilities and spend excessive time playing. The random rewards system tempts players to spend significant amounts of money, leading to financial burdens. Some games face criticism for exploitative monetisation, causing frustration. Socially, competition and envy can arise, even leading to bullying. Additionally, fraudulent practices and scams undermine players' trust in the game and developers.

Despite the negative attention and controversy surrounding gacha games like Diablo Immortal, they remain highly profitable. It can cost a player $16,000 to obtain an important item and over $500,000 to fully maximise a character. Diablo Immortal, despite being criticised as a money-driven gacha game, still earns around $1 million per day. Various countries have implemented regulations to address the issue. Japan, China, and South Korea require developers to disclose the probability rates of obtaining rare items in gacha games. Belgium and the Netherlands have banned loot boxes, including gacha games, considering them a form of gambling. These decisions have impacted the gaming industry, leading some developers to modify their games or withdraw from affected markets. In Australia, loot boxes are still allowed, given the country's significant presence in poker machines. While the full impact on young children is not yet clear, the risks associated with gacha games and loot boxes should not be ignored.

Gacha games demonstrate how marketing psychology can boost player engagement and revenue in the gaming industry. Creating urgency through limited-time events, timers, exclusivity, social pressure, and notifications drives spending and engagement. However, the negative impacts of these games must be considered. Addiction, financial burden, exploitative practices, social harm, and scams are concerning issues. Consumers should be aware of these tactics and make informed choices, while developers have a responsibility to prioritise players' well-being and adopt ethical and transparent monetisation strategies.

ASM Mashroor Raihan Sakib is a student of the marketing department at Jahangirnagar University

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.