The economics of videos games with Andrew Nunno

Gaming economy

1 The video game industry is the economic sector involved in the development, marketing, and monetization of video games. It encompasses dozens of job disciplines and its component parts employ thousands of people worldwide.

2 In economics, hyperinflation occurs when a country experiences very high and usually accelerating rates of inflation, rapidly eroding the real value of the local currency, and causing the population to minimize their holdings of the local money.

3 penalising failure is an essential part of any MMO and further incentivises success by making you learn from your mistakes.

4 The average US gamer is 35 years old

2. Gaming technology

Gaming is the running of specialized applications known as electronic games or video games on game consoles like Xbox and Playstation or on personal computers (in which case the activity is known as online gaming). … In its most sophisticated form, a gaming interface can constitute a form of virtual reality.

3. Famous game developers

Gabe Newell – creator of valve and steam

Hideo Kojima – famous for design work on some of the metal gear games

Sid Meier – Famous for the sid meier games for programming

Will Wright – worked in design for the first couple sims 1, 2, spore and simcity.

Satoshi Tajiri – worked on the original pokemon games

John Carmack – CTO of Oculus VR, worked on doom and quake games.

4. Free to play vs. play to win

Free to play (F2P) refers to a business model for online games in which the game designers do not charge the user or player in order to join the game. Instead, they hope to bring in revenue from advertisements or in-game sales, such as payment for upgrades, special abilities, special items, and expansion packs.


“In some multiplayer free-to-play games, players who are willing to pay for special items or downloadable content may be able to gain a significant advantage over those playing for free. Critics of such games call them “pay-to-win” (p2w) games.

5. Pre order bonuses

Pre-order incentive, also known as pre-order bonus, is a marketing tactic in which a retailer or manufacturer/publisher of a product (usually a book or video game) encourages buyers to reserve a copy of the product at the store prior to its release.d

Can offer you incentives that people who wait to buy the game on release date won’t receive.

By pre ordering games there is also a chance that you might have purchased a not fully developed game by release date so you purchase it just to watch the servers crash on release night.

6. Always online drm

Always-on DRM or always-online DRM is a form of DRM that requires a consumer to remain connected to a server, especially through an internet connection, to use a particular product. The practice is also referred to as persistent online authentication.

Forces you to always be connected to the internet to play your game and is designed to prevent internet piracy.

7. Early access games

Early access, also known as early funding, alpha-access, or paid-alpha, is a funding model in the video game industry by which consumers can pay for a game in the various development cycles (pre-alpha, alpha, beta) and obtain access to the pre-full release versions of the game, while the developer is able to use those …

Often used by small developers to get funding for there games and feedback on how to improve the game.

8. Video game players being sponsored by game developers to play the game

9. Microtransactions and DLC

DLC & Microtransactions. DLC (Downloadable Content) is where a patch is added that adds further content to a game which was not available on release. Although, with the evolution of gaming in general, the definition of DLC is starting to fade. DLC could be anything that adds to a game. In a lot of cases,DLC is great.

10. Console vs pc

A console game is a form of interactive multimedia used for entertainment. The game consists of manipulable images (and usually sounds) generated by a videogame console and displayed on a television or similar audio-video system. … Some consoles, however, only have a fixed selection of built-in games.


A personal computer game (PC game) is a video game that is played on a personal computer rather than on a console. The game is controlled using PC input devices such as the keyboard, mouse, joystick, etc.

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