How Is This Even Legal?!
Activision Blizzard just made history with a new mobile game, and investors are making money off it. The game is free, so what’s its secret? Very controversial micro-transactions!
As smartphones become more powerful gaming devices, records for first-week mobile downloads keep getting broken. In 2016, Nintendo’s ‘Pokémon Go’ managed to lure 85 million adults into oncoming traffic to hunt 90s TV show monsters. That’s impressive. But it’s not as impressive as the later ‘Mario Kart Tour,’ which managed 90 million downloads in its first week of launch. Californian developer Activision Blizzard (ATVI), however, just raised the bar yet again. ‘Call of Duty: Mobile’ enjoyed 100 million downloads this week!
Not only is the volume there, but so are the margins. Activision Blizzard is tipped to earn the lion’s share of a $65-billion-dollar estimate this year for mobile gaming. Incredible, especially considering ‘Call of Duty: Mobile’ is free! What’s its secret?
Gamers, regardless of age, can pay-to-win. Using mom or dad’s credit card to buy 20,000 credits, “V-bucks,” or “keys,” they can exchange that in-game currency for in-game advantages. Game studios are also starting their users off young with gambling, too. In almost every free online game today, kids’ parents are paying to roll the dice for a 0.010% chance of winning something entirely cosmetic. Wow, what a sense of accomplishment. How is this even legal?!
Investors in the industry have known for some time how iffy these micro-transactions and loot box business models can be. However, they’re crucial to keeping stocks up, and companies refuse to self-regulate. While the UK and Australia have turned a blind eye to the practice, Belgium now classifies this as gambling, and US regulators are looking into the issue as well. North America is a cornerstone market for Activision, and its stock will be tied closely to how that American inquest plays out. Game on!