Sustainability of revenue models and monetization of video games

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School of Business | Bachelor's thesis
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Tieto- ja palvelujohtaminen
The digitalization of the video game industry has facilitated the shift in paradigm in how video games are monetized. While video games in the past have been distributed as physical copies by retailers, the emergence of digital distribution platforms has laid the groundwork for various alternatives to have been introduced. These revenue models have proven to be vastly profitable for major video game publishers and have significantly contributed to the growth of the industry. Despite their financial success, these revenue models have been widely criticized for partaking in ethically questionable and addictive practices and impairing the customer experience of video games. This thesis aims to critically evaluate the sustainability of these revenue models from both a customer and an ethical point of view through a literature review and to analyze whether these revenue models can be expected to prevail in the foreseeable future despite their impressive capability of creating monetary value and for video game companies and their shareholders. While this thesis confirms the financial success of these revenue models, it also finds that many popular ones used by major video game companies are extremely close to the definition of gambling, yet regulatory action is still to be taken in a widespread manner to protect adolescents and people with e.g. addictive tendencies or other traits that could be exploited. Other adversary effects include a noticeable negative effect on working culture within the video game industry, as well as a detrimental effect on employees’ career longevity and mental health. Further action and research is recommended for both academia and video game companies to innovate more ethical revenue models to reduce the negative societal impact and to better cater to employee well-being in the industry.
Thesis advisor
Tiilikainen, Sanna
video games, business model, revenue model, microtransactions, sustainability
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