July 28, 2019

Virtual Games, History and Economics

R Arun Kumar

VIRTUAL games or all games that are played on computers, consoles, tablets, mobiles and such other devices, are a direct product of the main technology that is at present used in production process. Their origin can be traced to the military driven research and their interconnectedness. Post Second World War global developments, nuclear arms race and the US’ drive to out-pace the Soviet Union played an important role in the technological developments and innovations of this period. The successful launch of the Sputnik by the Soviet Union, alarmed the US and made them substantially increase their defence funding on science and technology research. Ed Halter, a researcher on the subject writes in his book ‘From Sun Tzu to Xbox’: “The technologies that shape our culture have always been pushed forward by war”. Virtual games took their birth in these circumstances and are immensely influenced by not only the technological inventions, but also by the political developments.

The immediate aftermath of the Second World War warranted superior calculating machines to do the complex calculations needed for the ballistic missiles that were being developed and deployed throughout the world. This necessity led to the invention of the computer, which was of course, slowly put to other uses too. Developing complex military needs required coordination between deployment of nuclear arsenals and forces, which led to the invention of a connected network, a prototype of what we today call as the internet. The development of primarily these two technologies contributed immensely to the invention and spread of virtual games.

The first virtual game, a simple tennis game, was created in 1958 by William Higginbotham on an analog computer. In 1961, Steve Russel created a game called Spacewar and in 1966, Ralph Baer built the first TV connected gaming console. All three of them, considered as pioneers in the creation of virtual games, have a common link – all of them were workers for the US military-industrial complex. They were working in academic research centers at Stanford University, Massachusetts Institute of Technology (MIT), and other universities, on projects that were funded by the US Department of Defense through an agency established for this specific purpose – the Advanced Research Projects Agency (ARPA) and through the nuclear laboratories. Funds were also provided by those US corporates who were acting as ‘defence contractors’, and these include companies like IBM, General Electric, Bell Telephone, Raytheon, etc.

Steve Russel who had created the game, Spacewar, was interested in the computer of ‘three-refrigerators size’ that was placed in their laboratory and started meddling with it, along with his friends. Unlike these days, meddling with computers was allowed as it was felt that new and useful innovations arise only through such fiddling with instruments. However, none would have expected the development of virtual games as one of the products of such fiddling. Russel and his friends, hacked (as it is called today) the computer to develop a game to keep themselves entertained from the boring and tedious research work. As they did not think about the commercial value of their invention, they passed the source code of the game to all their eager friends and soon the game was found on almost all the research computers of the day, so much so that boards were hung warning against playing Spacewar during ‘business hours’.

There was another important feature that had influenced the generation of Russel and his friends. This was a period, when students were refusing to listen to the authorities, soldiers refusing to fight the war in Vietnam, women were questioning the household drudgery and workers were angry with the intense exploitation of their labour power. The overall atmosphere of ‘anti-establishment’ led to the creation of many new computer games that were distributed free of cost and the demand was made to make software available free for all. Along with the Soviet Union, the US establishment considered that this new ‘hacking culture’, with its close links to the ‘Left’ as a threat.

Capitalism met this challenge by taking steps to co-opt this counter culture to serve its interests. This appropriation of hacker culture is best reflected in the emergence of a gaming behemoth Atari. Atari attracted many young hackers, by promising them ‘play as work’. Even the founders of Apple, Steve Jobs and Wozniak worked as gamers in Atari, before moving onto personal computing. Similarly, Japanese companies co-opted the ‘manga’ culture, which was considered anti-establishment, to develop games. Nintendo, a gaming company emerged as a major player in ensuring this cultural appropriation.

Hacker culture continued to influence the evolution of games, even to this day. Players of digital games started tweaking the games by hacking the source code and altering the games, in the process, leading to the creation of new games. This amalgamation of play and labour is called ‘playbor’. The process of users tweaking games to create new games is called ‘modding’ and became very popular by the 1990s. Soon companies saw the benefits of appropriating this process of ‘modding’ too. They started supplying editing tools along with games software and started monitoring the versions created by talented players. Such players were later lured into their companies with jobs as game-developers. Some of the companies even went to the extent of conducting modding competitions, with huge cash prizes to attract these ‘mods’ and later employ them as part of their development teams.

The progress made in internet connectivity and its speed, along with the development of consoles and group play of digital games, led to the creation of Massively Multi-Player Online Games (in short called as MMOs). The most popular MMOs started appearing from the second half of the 1990s and they soon became a rage. MMOs are a co-creation of player communities and corporate developers. Corporate game publishers like Microsoft with its X-Box console, Sony with its PSP and Nintendo with its Wii soon began encouraging player networks and giving do-it-yourself (DIY) kits along with their games. Hacking, a subversive threat to corporate control and digital licences, soon was sucked up by the gaming industry to sharpen their products and increase their profits.

Today, virtual games are a huge profit generating industry. The video games market is expected to be worth over 90 billion US dollars by 2020, from nearly 78.61 billion in 2017. As per the latest available figures, Asia-Pacific region earned a revenue of 51.2 billion US dollars, making them the largest gaming market in 2017. China (41 per cent) and US (32 per cent) together account for 73 per cent share of the gaming revenues earned worldwide. Apart from games, there are revenues generated from in-game purchases and activities called ‘farming’.

A player who is playing for profit is called a ‘farmer’ and his activity is called ‘farming’, ie, systematically ‘harvesting’ in house game merchandise like armours, dress for characters etc and selling them for real currency. A recent study points out that this illicit activity of ‘gold farming’ is earning revenues anywhere between 500 million US dollars to one billion US dollars. It is estimated that there roughly exists around 60,000 farming firms in the world, employing around 500,000 people exclusively for this activity. Though gaming corporates take an official position against farming, they tolerate it as any ban of such activity would ‘kill in-game economy’. Sony in fact, went a step further and tried to run its own official farm, selling a character for 2000 dollars, but was forced to shut it down after player outrage. An interesting fact is, Steve Bannon, far right leader in the US, ran a gold farming firm and it is through this business that he had come to realise the potential of games in organising for the far right and Trump.

Another manner in which the virtual games are used as revenue generating source is through streaming the games as videos on various platforms like YouTube and Twitch. 666 million people are watching such videos and they are bulging corporate profits further by 5 billion US dollars annually. Gaming corporates earned more than 20,000 million US dollars by marketing Free-to-Play games (82 per cent of this going to them) and Pay-to-Play games together. 67 per cent of games that one downloads on Google Play Store for free, uses advertisements for their revenue generation, while the rest 23 per cent is earned through in-app purchases. This is because 70.7 per cent of Android gaming apps and 80.38 per cent of iOS gaming apps contain advertisements, though 92 per cent of games can be downloaded for free from Google Play Store.

India sits in the second position for persons downloading and playing games on their mobiles (13 per cent share), only behind the US, and hence is a major contributor to these revenues for the corporates. By 2020, the worth of Indian gaming industry is estimated to touch 1.1 billion dollars.  POKKT, a leading mobile video advertising platform’s revenues have increased 315 per cent in the last three years and it expects it to double in the next fiscal. PUBG, the most widely played game in India, alone is earning an yearly revenue of 920 million dollars and a profit of 311 million dollars!

Virtual games that had their genesis in hacker culture, are co-opted by the corporates for profits. What had started as an assertion of rights, leisure and against rigid working conditions, took a complete U-turn in the new millenium. Now virtual games are being used to train military for effective killing, army recruitment and improving business skills. All these are done through games that are very cost effective, than ‘on-site training’. US military is using games to train its officers and combatants. Corporates like Amazon, Canon, L’ Oreal, Cisco, several insurance and financial firms are using them to train their employees in the art of marketing, repairing, persuasion and quick decision making skills. Some corporate consultants openly claim that it is “increasingly common….to list things such as running World of Warcraft guilds in applications and for employers to recognise the organisational, managerial and inter-personal skills such experience bring(s); devices that tabulate gaming scores, such as the Xbox 360 Gamer Card, widgeted to a personal blog, will give a future employer a great deal of information on how much time someone spends gaming, how skilled they are, how obsessive, how collaborative, how determined”. One corporate had openly announced that its ambition is to “steal sensibilities from games and virtual worlds and embed them into business”.

Even while corporates are doing their best to ‘steal sensibilities from games’ for  their exploitation and profit generation, resistance by hackers, gamers, game developers and workers is continuing in various forms. Some of them are finding an expression as protests organised in the games itself, some in the way games are created and in other instances, through forming organisations. Thus, games remain a site where a battle is being waged.