Mismatched Motivations, Part 2: Publishers

Understanding the motivations of how app publishers design their products.

Last time I wrote about how analyzing my own motivations helped me understand when and why I may want to hand my kid a device. This week I’m going to talk about it from the side of the device, or rather what’s on it, and why it is the way it is.

The landscape of entertainment went through a massive shift with the adoption of smartphones and tablets. Many of us played games as a kid, and we turned out fine (well, some more than others). It may be easy to assume that there isn’t much difference between us playing games growing up, and the games we allow our kids to play today, a game is a game, right?

Games are an easy scapegoat though, and while I’m going to talk most directly about them, the same considerations really extend to all forms of digital media. These companies are using the same medium (the touchscreen) to compete for the attention of their audience (you, or your child). Social Media is going to use the same mechanisms to control and manipulate you that an addictive game might.

Money Over Everything

While trying to avoid being pessimistic, the main obligation (nearly) any publisher has is their commitment to profit. This is obvious to anyone that spends a moment thinking about it, but it’s something that you (and I) can quickly forget, because companies try to tell us that isn’t so! There are companies that make fulfilling educational games, and YouTube channels devoted to enriching content, but at the end of the day, most publishers commitment to making a profit outweighs their commitment to making the kinds of content they market. A humorous example would be MTV, remember when it played music? How about actual science on the Discovery Channel?

Always remembering that the app publisher, content creator, or live streamer, all have the goal to make a profit is important to internalize, and it will helps me to have a healthy skepticism when approaching patterns in design. Even if the product/service is free, there is value in having followers, likes, and views. After all, if you're not paying for the product, you are the product.

Changes in Monetization

If we can accept that a company’s main motivation is to make money, we should probably touch on how that’s done. I think it’s easy to assume that companies make money by selling their games, and if your context of games is from your old Nintendo or Play Station, you’d absolutely be correct! Since our childhood though, where money is made in games has changed almost entirely. Mobile games raked in $101b in 2022, over triple what console games sold in the same year, at $30b. The typical console game is $60, and the typical mobile game is $1 or even free, so where does that $101b come from?

Instead of selling copies of games, companies are monetizing your time. Advertising makes up about $6b of that $101b, and while that’s a lot of money, it’s not the the lion’s share, the real money is in in-app purchases, or micro-transactions. These purchases aren’t time, you might exclaim, but let me tell you that they absolutely are. One metric we often used in the game industry was how long it took to get a new user to monetize for the first time in our “free” game, then how long to get them to monetize a second time, and so on. We then would tweak our monetization systems in ways that shortened the time between monetization. The shorter we could make those intervals, the more money the company made.

Let’s use Blizzard as a case study (coincidentally where I started my career), who are most famous for World of Warcraft, but also have other popular PC games, Diablo and Starcraft. This game publisher got started selling games through the traditional model, but later shifted to subscriptions, and in-app purchases. In 2021 alone, Blizzard made $5.1b in in-app purchases, over 60% of their total revenue. A great example of the power of these in-app purchases. As a guest on a podcast, a former Blizzard developer mentioned that a single in-app purchase in World of Warcraft made more income than the entire sales cycle of one of their flagship games, Starcraft 2.

Solving For Time

If there is so much money in getting people to spend time in apps, how do you as an app publisher solve for that? Here comes the scary word… Addiction. Publishers make money by making their products as addictive as possible.

I’m going to devote an entire article in the future to dig into this deeper, but I think the important bit to know is that yes, video games are addictive, and social media is addictive. How addictive is up for debate, depending on where you get data video games release nearly as much dopamine as hard drugs (similar to gambling addiction), and on the low end, nearly as much as sex. Since monetization is directly linked to time, then games which people don’t get addicted to, won’t be as profitable.

Addiction is manufactured in games by using psychological techniques to release dopamine: spontaneous positive reinforcement, reward mechanisms, social pressure, exciting animations and sounds, and so on. There are many ways to accomplish this, but all have the same outcome, we feel good for playing more and spending more.

It’s Not All Bad

It’s worth noting that there are companies which don’t monetize through engagement time, ads and micro-transactions, but it has become extremely prevelant, and often times the default in game/app design. Some apps, such as YouTube allow you to avoid ad-driven monetization, in exchange for paying a subscription, and can be set up as a great resource for kids, as Brandon illustrates in his article. There are even a few publishers (like Khan Academy and Crash Course) that are non-profits, and use grants to fund their products. Finally, some companies still allow us to buy an app, with a one-time purchase or subscription, without any of the toxic monetization practices I talked about above.

The most important thing has been developing my own awareness of publishers business practices, and using that awareness to make informed decisions for my kids. Understanding how a company makes money, is a great way to understand the way they’re going to interact with me (and my kids) as a consumer.

A good rule I use to avoid problematic apps is simply that, unless I pay for it (one-time or subscription), or can donate to the publisher (as a 501c3), I probably won’t put it in front of my kids. Obviously that means I need to be okay with spending money on apps, but if it’s worth putting in front of my kids, it better be worth a few dollars. This isn’t my only rule, but it’s one that is a surprisingly sufficient filter most of the time!

Competing For Attention

So here we are, when we give our kids a tablet, we are handing them over to a multi-hundred billion dollar industry that monetizes addiction. This industry is content giving our kids large amounts of dopamine for hours on end. Just about all the apps on the device are complicit in some way, and they are all vying for our attention. Even the friendly looking educational games want our attention, and are willing to use any technique they can get away with, to get it.

When I look at an app that I’m going to give my own kids, the first thing I’m looking for are addictive tools used by the game to keep my kids playing. Every game is going to use dopamine rewards to some extent, even the venerable Tetris and Super Mario Bros, but it’s a matter of how much it’s used, and the intended outcome of it’s use. Apps and games that want my kids to continue using them for an indefinite amount of time, constantly rewarding them the more they play, are the quickest to get the chop.

Next time I’ll talk about something a bit more cheerful, the motivations of our kids, before hopefully tying this all together and telling you about my first panic attack.