To what extent are gamers addicted to playing hypercasual mobile games as a result of IAPS

Key Words

Lit Review (?)

James Sauer --> Loot Boxes

Bernadeta Lelonek-Kuleta --> Pay to win

Yifan Jiao

policy recommendations to AUS (200w)

References

Lelonek-Kuleta, B., Bartczuk, R. P., & Wiechetek, M. (2021). Pay for play – Behavioural patterns of pay-to-win gaming. Computers in Human Behavior, 115, Article 106592. https://doi.org/10.1016/j.chb.2020.106592

"Pay for Play..."

Focused on Pay to Win(P2W) game(r)s because of their payment element

Their definition of P2W: "P2W games were defined as free video games via a site or an application,..., in which it is possible to pay to advance in the game."

Their research was to find out (estimate) the usage of P2W games in Poland and investigate the gamers' characteristics

looks at personal traits and connection to game play and payments

Issue around playing P2W games: frequency of micro-transactions made to win <-- behavioural pattern

results found

"frequency of payments in games is accompanied by an increase in other gaming characteristics (i.e. amounts paid and duration of a single session"

Very focused on personal characteristic rather than addiction behaviour, but provides insight on age and gender behaviour

Women were more often making payments

" payments in games are often made by gamers who do no have time to play, but who want to speed up the game"

they came up with this from this reference: Falcão, T.; Marques, D. Paying To Win: Culture, Agency and Virtual Goods in Video Games Contracampo – Brazilian Journal of Communication, 36 (2),

Demand

Underlying economic issue (500words)

Negative Externality (250w)

evaluation of market regulation overseas (200w)

Demand (100w)

Supply(100w)

Daniel King

King, D. L., & Delfabbro, P. H. (2019). Video Game Monetization (e.g., ‘Loot Boxes’): a Blueprint for Practical Social Responsibility Measures. International Journal of Mental Health and Addiction, 17, 166–179. https://doi.org/10.1007/s11469-018-0009-3

Two-Step Purchasing Process

Half of the Global games market is accounted for Mobile Games (USD$92.2Bn)

Daniel King --> Game Monetization

Hypercasual

IAP

Mobile games

Links

Over consumption

Addiction

Asymmetric Info(250w)

mircotransactions

Freemium

free to downloadand play and earn revenue through advertising orselling game enhancements to dedicated players

Sheng, L., Ryan, C. T., Nagarajan, M., Cheng, Y., & Tong, C. (2022). Incen- tivized actions in freemium games. Manufacturing & Service Operations Management, 24(1), 275–284.

Main Publishers: SuperSonic, Zynga, Azur Games, Crazy Labs, Say Games

What is their main source of income?

Selling games for a price, season passes, freemium, iaps, advertising, merch

Live Ops

2.66 bn gamer users world wide

China

Definition (textbook; pg645): situation in which a buyer and a seller possess difference information about a transaction

Definition (textbook pg676): Action by either a producer or a consumer which negatively affects other producers or consumers but is not accounted for in the market price

AUS Gov

the game system knows more about the player than the player can know about the game) to adjust the prices of virtual items for players depending on their playing and spending habits in the game --> Daniel King

players may not be aware or informed of the odds of receiving desired items from microtransactions, and the game may use pressuring tactics to incentivize purchases (e.g. so-called ‘limited time’ offers)--> D. King

King, D. L., & Delfabbro, P. H. (2018). Predatory monetization schemes in video games (e.g. ‘loot boxes’) and internet gaming disorder. Addiction, 113(11), 1967–1969. https://doi.org/10.1111/add.14286

Attention Economics

people’s attention is generally considered a scarce and valuable resource (i.e., the “attention economy”; Davenport & Beck, Citation2001)

push notifications

Decoy sales option, which can influence player to buy a more expensive package than they would have without the decoy --> buying in-game currency

daily calendar gifts / rewarding loyalty

monetization

Attention Economics is the negative externality that causes overconsumption and addiction

progress gifts

small gifts and to achieve the higher value gifts it is alot harder as you need to progress through a challenge which is designed to make a player spend real money to aquire resources

requiring players to log in a certain number of cumulative days to reach a highly desired reward

seasonal rewards

influencing player to engage with the game very regularly if they want a chance to earn enough points every time they play to afford the reward before its gone forever

Hodent, C. (2020). The psychology of video games. Taylor & Francis Group.

Hodent, C. (2020). The psychology of video games. Taylor & Francis Group.

Hodent, C. (2020). The psychology of video games. Taylor & Francis Group.

encourages players to engage or stay engaged with the game even if we didn't have intention to do so initially

Hodent, C. (2020). The psychology of video games. Taylor & Francis Group.

Prominently displaying the odds of obtaining chance-based rewards

warnings of potential gambling risk

Age restrictions

removing/reducing game features that encourage excessive expenditure and gameplay (i.e. pay-to-win features, rare items, item selling and trading)

education and public awareness campaigns

remove 'time exclusive' loot box and ensure these items can be aquired through normal play

reduces the feeling of missing on the opportunity that is immediately present

Refund Entitlements

knowledge of player behaviour

some games' mystery boxes (loot boxes) are influenced by player statistics (i.e. how much money and time a player has spent on the game)

King, D. L., & Delfabbro, P. H. (2018). Predatory monetization schemes in video games (e.g. ‘loot boxes’) and internet gaming disorder. Addiction, 113(11), 1967–1969. https://doi.org/10.1111/add.14286

How much is being spent on IAPS

How much are users spending

Genre Revenues

Country Revenue

in 2025, the market value of in-game purchases is projected to surpass 74.4 billion U.S. dollars.

In 2020, global gaming audiences spent an approximate 54 billion U.S. dollars on additional in-game content.

casino app:12.28 U.S. dollars per in-app purchase transaction

ranking highest among all measured gaming genres worldwide

Arcade gaming: 5.14 U.S. dollars

Casino Gaming (2021)

Arcade Gaming (2021)

67.1% revenues were generated through advertising

In-app purchases only accounted for 32.9%

Ad revenue 23.81%

IAP 76.19%

China (2021)

Europe (2021)

59.3% revenue from advertising

40.7% revenue from IAPs

32.86% revenue from advertising

67.14% revenue from IAPs

RPG: US$8.95

strategy games: US$8.95 on

Card: US$8.86

Top 3 Downloaded Games

  1. Subway Surfers
  1. PUBG Moblie
  1. Garena Free Fire

Top 3 game based on Revenue

  1. Honor of Kings
  1. PUBG Mobile

Genshin Impact

Top 3 Game Genre

  1. Strategy: US$17.3 bn
  1. Puzzle: US$9.8 bn
  1. RPG: US$24bn

Use Graph for graph 1

click to edit

For adult users, of course you can make some suggestions related to payment method, corrective tax, etc; for underaged users (those who don't have a credit card), maybe it is more about command-and-control policies and education (for both children and parents).

You show the share of mkt by types of games (RPG, puzzle, etc

show global market share by giant companies

discussions on socioeconomic and demographic characteristics of IAP users (Links to Policy recommendations

who are 'at-risk populations'?

Gaming disorder

Competition

Casual Game

Low barriers of entry due to simplistiy of making the game

Looking at statista data Mobile game market is a monopolistic competition (google play only)

China's Mobile Game Market is a "Highly Concentrated"Oligopoly

Monopoly or Competition: Market Concentration of China’s Online
Games and Policies --> D.Chen

long and loud

tencent --> biggest market share

Belgium

A preliminary examination of the top-grossing iPhone games list in Belgium revealed that a number of games occupying prominent positions on the top-grossing list were found to contain loot boxes in the UK and in the People’s Republic of China and whose revenue likely mostly derived from loot box sales.

Ban has not effectively reduced loot boxes

82% of top 100 games have loot boxes

more present of illegal loot boxes in games by less established publishers

well known global publishers removed their games or simply removed access to loot boxes

encourage players to move to the less estabilished games where they are less concenred about consumer protection than established companies

The market has shifted towards higher risk illegal providers

2017, the PRC has been the only country to legally require video game companies to disclose the probabilities of obtaining randomized rewards from loot boxes

allow significant discretion to game companies as to how to implement these disclosures: probabilities can be disclosed either in-game on the loot box purchase page or on the game’s official website, and there are no requirements as to the size or type of symbol or wording used to signify loot box disclosures in-game; the placement of website disclosures; or how probabilities should be numerically or graphically communicated to consumers

From a policy perspective, the results of this study suggest that neither the PRC’s regulations nor the Apple Store’s self-regulatory policies (by which these games were also governed) were sufficient to encourage all of these games to display loot box probability information prominently and uniformly, which would seem to be the most beneficial for consumers