Video Games, Gambling and Addiction: Converging Business Models, Converging Problems

1. Video Games, Gambling and Addiction: Converging Business Models, Converging Problems

2. James Driver • Completing Master’s dissertation into experiences of treatment for gaming addiction • Founder of NetAddiction NZ • Psychotherapist in private practice and working at an AoD service

3. Benway Monochrome • Level 60 Bard • Had epic weapon, killed many internet dragons • Member of one of the most accomplished guilds on the server • Over 2000 hours played (plus many more on other characters – around 16 hours per day for two years) • Eventually sold on ebay for ~ $300 USD (about 15c per hour)

4. What I Spent 16 Hours Per Day Staring At

5. Overview of Today’s Talk • Hypothesis and Examples • Problem Video Gaming statistics • High Engagement, Problematic, and Addictive gaming • Coercive Monetization and the Link to Gambling • Conclusion

6. The Hypothesis • Increased availability of video gaming devices combined with increased advertising and social acceptance of gaming has lead to growing rates of video gaming addiction • The economic model of games, particularly mobile games, has moved towards “In-App Purchases” and coercive monetization • These two facts combined will lead to an increase in video game addicts exhibiting symptoms and behaviours similar to problem gamblers, and more players will transition to online gambling

7. “Given the pressure on media enterprises to ‘monetize’ their business and look for different revenue streams, there is likely to be even greater media convergence between gaming and other more profit-making activities such as gambling. Given the well established addictive potential of gambling, this may also have implications for the incidence of video game addiction.” – Mark Griffiths, Professor of Gambling Studies, Nottingham Trent University

8. Chinese Official Embezzles 2.6 Million Yuan to Spend on Online Game - Chinese official embezzles $424,247 USD to spend on online game - Spent up to $1,633 in a single purchase on virtual equipment in the game - Spent $16, 327 to create two “high level” accounts instead of just one regular account http://www.theepochtimes.com/n3/115807-chinese-official-blows-millions-on-online-game-addiction/

9. Whales Whale (in gaming) – someone who spends exorbitantly or recklessly in Free To Play (F2P) games. “The top 10 percent of players can account for as much as 50 percent of all in-app purchase revenue,” says Andy Yang, CEO of the mobile monetization research firm PlayHaven.”

10. Whales – High Spenders or Problem Gamers? “Chris found himself draining his bank account until he didn't have a spare dollar to his name.. ..Chris even had a few health scares along the way, and found that he couldn't afford to pay the medical bills because his savings account had been stripped for TF2 (Team Fortress 2) money.” “Kyle describes PlanetSide 2 as his "danger game," thanks to the financial situations his obsession with the game put him in. "I'm in a position where I'm living paycheck to paycheck for the moment as the result of that spending - beyond incurring overdraft for my rent”” http://www.gamasutra.com/view/feature/195806/chasing_the_whale_examining_the_.php

11. Whales – High Spenders or Problem Gamers? “One player told me that he has spent around $3,000 on MapleStory, including dropping a whole $500 in an attempt to create a single weapon in the game. "Both buying the points, and gambling those points on random drops would give me a rush," he says.” ““You want to be the top guy,” Vince says. “Once you convince yourself to spend two hundred dollars on it, another two hundred dollars isn’t that much more.”” - http://www.wired.com/gamelife/2012/11/meet-the-whales/all/

12. Interesting Facts • One of the best performing mobile games, Puzzle and Dragons, makes over $5 million USD per day. • The most expensive hat in the first person shooter “Team Fortress 2” currently costs around $500. It does nothing. • In the Zynga game “Frontierville”, the player is confronted with a wounded crying baby deer that has been attacked by coyotes. The player is then told that if they don’t pay $5 to cure the deer, it will die. • The worldwide market for virtual goods was $15 billion in 2012 and is growing rapidly

13. Problem Gaming Statistics • Studies conducted in Germany, USA, South Korea and Australia amongst others • Addiction rates range anywhere from 3% to 25% depending on criteria used. Most findings indicate problematic gaming rates of around 10% of the general population aged 13-25 • Difficult to research due to no established criteria

14. The Problem of Diagnosis • No clear consensus regarding behavioural addictions • “Internet Gaming Disorder” added to DSM-V as requiring further research • Diagnostic tools may need to be conservative, yet the rate of technological change subsequently limits their effectiveness • Different forms of gaming meet different needs

15. Problem Gaming as a Continuum Casual Gaming Highly Engaged Gaming Problematic Gaming Gaming Addiction

16. Symptoms • Think obsessively about gaming even when not playing • Lose track of time while gaming • Become agitated or depressed when their gaming is interrupted • Develop tolerance – needing to play for longer to feel satisfied • Use gaming as a coping strategy • Experience reduced behavioural control – continue to game even though they no longer enjoy it, and neglect other aspects of their life to a critical degree, including disrupted eating and sleeping patterns

17. Gaming vs Gambling – What’s the Same? • The “rush”, sense of “flow” while playing • Sense of potency, satisfaction when winning • Compulsive desire to continue – “just one more turn/game” • Real life dull and uninteresting compared to the immediate feedback and rewards of the game

18. Gaming vs Gambling – What’s Different? • Social environment – players often feel a sense of being admired, important or needed in game • Games not seen as socially harmful, sometimes encouraged by parents as a coping mechanism • Persistence – gamers’ progress carries over from one session to the next, leading to a reluctance to quit and “lose” what they have achieved • Games not designed to offer players any chance of recouping their money

19. Development of economic game models • Games as a good – one-off purchases • Games as a service – “pay to play”, subscription models • Games as a modular good – “downloadable content/DLC”, episodic releases • Games as gateway to a service – “free to play/F2P” games, In-App Purchases (IAP), coercive monetization, “prestige goods” and “supremacy goods”

20. Which mobile games earn the most?

21. So how does that work? • Games are free to play, rely on skill up to a certain point • At a certain point, it is difficult to progress further without spending real money. It becomes a “money game” rather than a “skill game” • Players are persuaded to spend money in a variety of ways that exploit player psychology

22. Coercive Monetization “A coercive monetization model depends on the ability to “trick” a person into making a purchase with incomplete information, or by hiding that information such that while it is technically available, the brain of the consumer does not access that information” – Ramin Shokrizade, gamasutra.com

23. Coercive Monetization – Premium Currencies “Research has shown that putting even one intermediate currency between the consumer and real money makes the consumer much less adept at assessing the value of the transaction” – Ramin Shokrizade, Game Economist

24. Coercive Monetization –Creating a Sense of Urgency “A user that is capable of doing basic math (handled in a different part of the brain that develops earlier) can feel the urge to “save money” by buying more. The younger the consumer, the more effective this technique is, assuming they are able to do the math.”

25. Coercive Monetization – Rewarding Frequent Players “The end result of having your players return time and time again to your app is greater confidence in your products, which leads people to spend more on in-app purchases.”

26. Coercive Monetization – Progress Gates and Loss Avoidance +1000 +2000 +500 1500 3500 500 1500 3500

27. Coercive monetization – randomised rewards and non-monetary gambling

28. From Gaming to Gambling • Familiarise and make players comfortable with the concept of in-game spending • Use variable reward ratios and non-monetary gambling to incentivise risk taking • Utilise a range of psychological “tricks” to lead players to spend impulsively and irrationally

29. Working With Problem Gamers • Respect their experience • Learn from the client • Understand their patterns in detail – when, why, how – what do they feel/think/do? • Address the underlying thoughts/feelings • Build new coping strategies and alternatives

30. Conclusions • No clear diagnostic criteria for gaming addiction • Problematic and addictive gaming primarily seems to arise when gaming is meeting psychological needs that are not otherwise being met • The change in business models of video games is leading to the use of psychological tactics more akin to those found in gambling games • The exploitation of a minority of addicted players is leading to significant detrimental effects for those players

31. Reading List • Acier, D., & Kern, L. (2011). Problematic internet use: Perceptions of addiction counsellors. Computers & Education, 56, 983-989. • Allison, S. E., von Wahlde, L., Shockley, T., & Gabbard, G. O. (2006). The development of the self in the era of the Internet and role-playing fantasy games. The American Journal of Psychiatry, 163(3), 381-385. • Blaszczynski, A. (2008). Commentary: A response to “Problems with the concept of video game “addiction”: Some case study examples”. International Journal of Mental Health and Addiction, 6, 179-181. • Chan, P. A. & Rabinowitz, T. (2006). A cross-sectional analysis of video games and attention deficit hyperactivity disorder symptoms in adolescents. Annals of General Psychiatry, 5(1), 16-26. • Chia-Yi, L., & Feng-Yang, K. (2007). A study of internet addiction through the lens of the interpersonal theory. Cyberpsychology & Behaviour, 10, 6, 799-804. • Chin-Sheng, W., & Wen-Bin, C. (2006). Why are adolescents addicted to online gaming? An interview study in Taiwan. Cyberpsychology & Behaviour, 9(6), 762-766. • Gentile, D. A., Choo, H., Liau, A., Sim, T., Li, D., Fung, D., & Khoo, A. (2009). Pathological video game use among youths: A two-year longitudinal study. Pediatrics, 127, 319-329. • Griffiths, M. D. (2000). Does Internet and computer “addiction” exist? Some case study evidence. CyberPsychology & Behaviour, 3, 211-218. • Griffiths, M. D. (2013). Screen play thoughts: A speculative look at trends in video game addiction. Retrieved from http://www.gamasutra.com/blogs/MarkGriffiths/20131119/205044/Screen_play_thoughts_A_speculative_look_at_trends_in_video_game_addiction.php

32. Reading List Continued • Griffiths, M. D. (2013). Bitter sweet? A brief look at ‘addiction’ to Candy Crush. Retrieved from http://gamasutra.com/blogs/MarkGriffiths/20131029/203442/Bitter_sweet_A_brief_look_at_addiction_to_Candy_Crush.php • Grüsser, S. M., Thalemann, R., & Griffiths, M. D. (2007). Excessive computer gaming playing: evidence for addiction and aggression? Cyberpsychology & Behaviour, 10(2), 290-292. • IGEA (2012). Digital New Zealand 2012 (DNZ12). Retrieved from http://www.igea.net/2011/10/digital-new-zealand-2012-dnz12/ • King, D. L., Delfabbro, P. H., & Griffiths, M. D. (2010). Cognitive behavioural therapy for problematic video game players: Conceptual considerations and practice issues. Journal of CyberTherapy and Rehabilitation, 3(3), 261-273. • Kuss, D. J. & Griffiths, M.D. (2012). Online gaming addiction in children and adolescents: A review of empirical research • Kuss, D. J. & Griffiths, M. D. (2011). Internet gaming addiction: A systematic review of empirical research. International Journal of Mental Health Addiction, 10, 278-296. • Ng, B. D., & Wiemer-Hastings, P. (2005). Addiction to the Internet and online gaming. Cyberpsychology & Behaviour, 8, 110-113. • Porter, G., Starcevic, V., Berle, D., & Fenech, P. (2010). Recognizing problem video game use. The Australian and New Zealand Journal of Psychiatry, 44(2), 120-128. • Rigney, R. (2012). These guys $5k spending sprees keep your games free to play. Retrieved from http://www.wired.com/gamelife/2012/11/meet-the-whales/ • Rose, M. (2013). Chasing the whale: Examining the ethics of free to play games. Retrieved from http://www.gamasutra.com/view/feature/195806/

33. Reading List Continued • Shokrizade, R. (2013). Mastering F2P: The Titanic effect. Retrieved from http://www.gamasutra.com/blogs/RaminShokrizade/20131016/202489/Mastering_F2P_The_Titanic_Effect.php • Shokrizade, R. (2013). Systems of control in F2P. Retrieved from http://www.gamasutra.com/blogs/RaminShokrizade/20130516/192386/Systems_of_Control_in_F2P.php • Shokrizade, R. (2013). The top F2P monetization tricks. Retrieved from http://www.gamasutra.com/blogs/RaminShokrizade/20130626/194933/The_Top_F2P_Monetization_Tricks.php • Shorrock, M. (2012). Why people become internet addicted: A qualitative meta-synthesis of studies that explore aetiology, predisposing factors and other antecedents to Internet addiction (1996-2012). Retrieved from http://www.oaktreetherapy.co.uk/#/resource-centre/4570807326. • Suler, J. (2001). Internet addiction. Retrieved from http://www.rider.edu/users/suler/psycyber/ausinterview.html. • Wood, R. T. A. (2007). The problem with the concept of video game “addiction”: Some case study examples. International Journal of Mental Health and Addiction, 6, 169-178. • Yee, N. (2006). The psychology of MMORPGs: Emotional investment, motivations, relationship formation, and problematic usage. In R. Schroeder & A. Axelsson (Eds.), Avatars at work and play: Collaboration and interaction in shared virtual environments (pp, 187-207). London, United Kingdom: Springer. • Young, K. S. (1998). Caught in the net. New York, NY: John Wiley & Sons. • Young, K. S. (2007). Cognitive-behavioural therapy with Internet addicts: Treatment outcomes and implications. Cyberpsychology & Behaviour, 10(5), 671-679.