Your kids are going to spend thousands of dollars on things that don’t even exist in reality. What can you do about it? Apparently, nothing. You can argue that spending money on digital in-game items that don’t give you any advantage is irresponsible, but you can’t stop the progress. The gaming market has turned into a mighty monster consuming millions of dollars every year by selling things that don’t even exist, and it doesn’t show any signs of stopping.

CS:GO case with skins

The global revenue reached astounding $108.9 billion in 2017, and it is predicted a $6.9 billion growth in 2018. Of course, a big part of the sum is still made up by digital copies and various DLCs sold via Steam, but with the introduction of in-game items, people are spending more and more money to get something they can’t even use in the playing process. When did this madness begin, and where will this lead us?

First MMOs and Their Contribution to the Industry

Game developers of the past century (sounds so remote, right?) rarely thought about hooking users to their games and making them come back for more. Once the game was released, it was either popular or not, and there were little ways to amend it. Of course, early games also had items, but they were mainly obtained during the gameplay and served only utilitarian functions.

The social factor has changed it all. When gamers were first introduced to an opportunity to fight against each other, the everlasting competition we can see in any aspect of human life ignited. We all need to have the biggest house, the newest smartphone, and the fastest car.

The first MMOs didn’t feature any purchasable items for a variety of reasons. First of all, the gamers were so amazed by the fact they could fight against each other, that they didn’t care about showing off. Secondly, technical limitations were still present both in online shopping and gaming. For example, Avalon: The Legend Lives featured an extensive set of items and granted players an ability to craft them, but the items didn’t have any other function than their primary purpose.

Avalon: The Legend Lives

One Game to Change It All

The release of Warcraft was a remarkable milestone that changed the entire gaming community forever. Wow, that is quite an impressive announcement for a mere computer game! So, what was so special about this particular project that won gamers’ hearts all over the world? Gaming enthusiasts are still fighting over the theories, but one fact is certain — WoW has already carved its place in the gaming history, and there’s no way one can overlook the franchise.

Probably, the release just happened in the right place at the right time — young people had more access to computers, though still not so many families owned one, and a game where you could finally play not only with your buddies but against them quickly became famous. By 2000, overall computerization amounted to 51% of all households in the USA, and Internet access was slightly behind — 41.5% families had access to the global network. The popularity of MOBAs spread like wildfire, and the community was ready when the hit was born.

One of the most played games, an eSports discipline and a game that brought so much joy and pain — Dota started as a simple mod to the Warcraft III: Reign of Chaos. Unlike the original game, the modified map didn’t require completing quests to advance your hero skills. The main focus was moved to heroes — powerful entities that fought against each other trying to gain control of a core building of the enemy — an “Ancient” (hence the name Defense of the Ancients or simply Dota). Keeping in mind the history of this wildly famous game, let’s take a quick look at how the phenomenon of VR items evolved.

Would You Like to Change Your Skin: Virtual Items Industry Overview

Who Is the Fanciest Guy on the Server?

Since no one could predict people would be willing to pay real money for items that only exist in virtual realities, most of the MMOs didn’t offer a market with ready-made things, and some games still stick to this policy. All in all, it was part of the fun. To gain an epic sword with +10 attack or a beautiful shield that made you nearly invincible, you had to put in some effort and time. In some games you had to complete quests and fight bosses, other MOBAs gave you an opportunity to craft a unique item.

Both ways were quite risky and challenging, so, though being technically unreal, in-game items quickly obtained a real value, at least in the eyes of dedicated gamers. For example, a crafted item took a lot of time to create it, and there was an ingrained possibility that the process could go wrong, and all your efforts were in vain.

Would You Like to Change Your Skin: Virtual Items Industry Overview

We, humans, love shortcuts. That is why there will always be people who want to be good at an activity — or at least appear good — without putting much effort in it. A part of the community didn’t want to spend days farming an exquisite item or checking on the game every couple of hours to see whether the first stage of creation has been finished, but they had the means to pay other players to do so. And the black gaming markets was born.

Some of the games didn’t allow any items transfer, such as WoW, for example, and they still stick to the policy. Others enabled this type of deals, making a trade for both real and in-game money technically possible. As the market grew bigger, game developers realized they are missing out a big chunk of possible income, so they started incorporating item markets where all the fancy armor and scrolls with spells could be bought for real money.

 

Two Types of In-Game Items

The trend was set, and similar games started appearing nearly every month. Many adopted the in-game market idea, hoping for a quick capitalization of their project. However, only a few managed to create a successful MMO. When the dust settled, only two main mechanics used by most games were left. The extensive amount of all in-game items can be squeezed into these two categories:

  1. Cosmetic items
  2. Items that give you in-game advantage

We’ve already analyzed the appearance of paid items that gave you an advantage, but who thought it was a good idea to pay for something that doesn’t even help you in your rivalry against other players? The trend emerged naturally when the community grew weary of wealthy people with unique items that gave an insurmountable advantage. Suddenly buying in-game items became a sign of bad taste and, what was even worse, lack of skill, which is a substantial insult to a gamer.

Would You Like to Change Your Skin: Virtual Items Industry Overview

People wanted to see fair games with contestants dominating due to their superior skill, not their credit card savings. As the time passed, items that increase your stats became less popular and nearly disappeared. Surely, there are still MMOs where you can buy a shield that will make you invincible, but gamers themselves tend to avoid such games, as they give you no pleasure of competition (or frustration because of an unfair one).

And the unique trend we are witnessing now was born. People started paying for pure cosmetics — skins that only alter the appearance of your weapon or hero without giving you any tactical advantage.

To the Infinity and Beyond: Forecasts for the Future

Is humanity going crazy? Theory of conspicuous consumption is what can partly explain the phenomenon. This theory, developed by Thorstein Veblen, states that after reaching a certain state of financial stability, people start to spend money to showcase their wealth rather than meet their needs. This trend has become more prominent than ever in the era of Instagram and “my life is better than yours” narrative.

Would You Like to Change Your Skin: Virtual Items Industry Overview

The same psychological mechanisms push gamers to spend their money on skins, which can cost from several hundred dollars to $38,000 (Souvenir AWP Dragon Lore from CS:GO, if you are interested). The market is predicted to generate $20 more million than it did in 2017, and a lot of people are putting their investments in gaming-related fields expecting a huge profit.

Maybe, they have a point — we all are already spending more time and money on maintaining our Internet personalities and online presentation rather than the real one. Who knows, maybe humanity will indeed end up in VR capsules, living infinitely in nonexistent reality, dressed up in fancy gaming skins. Should we prepare our sets of rare in-game collectibles now?

 

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