Darth Vader chokehold fuels fear over US$370b rally
While monetising, the game industry may, unwittingly, be driving users away
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FREE, it turns out, can be a great business. When Shigenori Suzuki played video games in high school, he spent a few hundred dollars a year on titles like Final Fantasy. Now the 42-year-old Tokyoite plays free games including Sony Corp's Fate/Grand Order - but spends more overall: He forks over thousands of dollars a year for in-game extras like rare characters and special outfits.
Players like Suzuki have transformed the video game industry in recent years, giving companies from Sony to Electronic Arts Inc new ways to profit without charging upfront. Companies give away games, then sell digital goods and services through so-called microtransactions. After smartphone game developers demonstrated the technique's profitability, publishers are applying similar approaches to console and PC titles like FIFA and Grand Theft Auto.
Developers earn billions more than the old-fashioned approach of selling a one-time, US$60 CD-in-a-box. Game stocks have rallied US$110 billion this year, as investors eye the prospect of higher and recurring profits. Add in gains from China's Tencent Holdings Ltd, whose main business is games with microtransactions, and the figure climbs to about US$370 billion.
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