The video game industry has gone through many changes in the past few years that have been a boon for investors, but not so great for people who play the games themselves.
One major one that’s driven up revenue for companies like Microsoft (MSFT) – Get Microsoft Corporation Report and Sony (SNE) – Get Sony Corp. Report has been the era of microtransactions, also known as downloadable content or DLC, in video games.
These digital items range from costumes to new sections of a game, which are usually priced under $10.
These are also popular in the mobile gaming world, where heavily downloaded free-to-play games like King’s (KING) “Candy Crush Saga” make their big money from getting the user to try the game, and then conveniently selling in-game currency and power-ups that make it easier to progress.
Gamers complained about the nickel and dime nature of DLC when it started to get big under Microsoft’s promotion of it during the Xbox 360 era, but the numbers told a different story.
NPD Group’s Q4 Market Dynamics report found that close to 60% of the money spent in the gaming sector in 2021 went to DLC–and those numbers are on track to keep climbing.
But now Sony is considering a new move that Microsoft has officially announced it’s exploring, and if gamers hated the idea of DLC, they’re really going to hate this.
What Move is Sony Following Microsoft’s Lead On?
Microsoft’s plan is to put ads in video games.
You won’t get them in big budget releases you pay full price for, such as the recent massively successful adventure “Elden Ring.” At least not yet.
But they could appear in Microsoft’s stable of free to play gamessuch as the tremendously popular titles “Fortnite“and”Roblox.”
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Business Insider reports that Microsoft does not plan to take a cut of the revenue the ads would bring in, allowing game developers and ad-tech companies to reap the benefits instead.
And now, a new report says that Sony is considering taking the same route.
The software giant is reportedly testing the ad program and is undecided on whether or not it will take a cut of revenue if the plan proceeds.
Microsoft Has Tread on This Path Before
Microsoft has been trying to figure out a way to get in-game ads into games for a long time. It acquired advertising business Massive Inc. in 2006 with the goal of serving third-party ads to Xbox users.
But by 2010 it decided to shutter the brandshifting all operations in-house at then-Xbox Live.
Microsoft is treading carefully and considering less intrusive methods to insert ads into games, such as showing them on billboards along the side of the road in a racing game.
It also may create a private marketplace for advertisers that would keep the ads out of games themselves while allowing them to play before or during a break. No decisions have been formally announced yet.
People who enjoy free-to-play games on mobile are used to this formula on that platform. Many games ask users to watch an ad in order to gain a bonus that will be useful in-game, like extra coins or special items. It’s one of the ways the developers earn revenue from products rather than charging for the game up front.
Introducing ads into free-to-play games ensures that even players that don’t spend money on microtransactions bring in some revenue while playing, as they’ll have no choice if the ad appears in game other than avoiding playing altogether.
People have exploded over the idea on social media, going as far as to say they would stop buying games from both companies if the in-game ads become a reality.
Others tagged PlayStation Studios head Hermen Hulst on Twitter to make their feelings on the matter clear.