Investor Matthew Ball is making (well-deserved) waves once again for distributing another powerhouse slide deck compiling important business intelligence on the video game industry. There’s great information in there—though, because the game industry hasn’t dramatically shifted year-over-year (yet), my main takeaways continue to be that the PC game market is growing, mainly thanks to audience growth in China. But I’ve watched another slide bounce around the professional game development world in a manner that has left me rather leery.
The slide shows video games’ key “competing” markets. The list doesn’t include film and TV or books, but rather includes online sports betting, iGaming (skill-based games), social video, “creator pornography” (think OnlyFans), AI assistants, crypto & memecoins, and prediction markets as the major market threats. This bundle of threats has increasingly been identified as a competitor in “the attention war.”
Ball grouped these sectors together because these markets are where American adults are increasingly spending more and more of their money. Spending on video games has declined from $52.4 billion to $52.3 billion since 2021, while it has increased in three combined categories (for creator porn specifically, it’s risen from $11.3 billion to $32.8 billion). In other words, in the same time period that spending on video games dropped $190 million, spending on those three apps increased $21 billion. Ball argues this spending shift is driven by people who were previously spending that money on video games.
“Video gaming’s post-pandemic problem isn’t that players choose to watch TikTok instead of buy a triple-A video game,” he argues. “it’s that on a Friday evening, players are placing a growing share of their time and spend elsewhere.” They’re nudged to do by a barrage of notifications pouring in from those other sectors.
Industry executives are even more spooked when it comes to TikTok. Microsoft CEO Satya Nadella and former PlayStation boss Shawn Layden regularly say that the game industry is competing with TikTok. We’ve even heard the same about YouTube when it comes to some players.
The phrase “video games are losing the attention war” is both accurate and also a trap. It is a formidable observation to bring out in an era where game studios close on a weekly basis and the still-open ones regularly lay off developers. It carries the weight of savviness, and allows its bearers to point to a specific segment of structural challenges facing the video game marketplace (while ignoring more potent issues).
But it’s time to draw a line in the sand. Throw all the numbers at me that you like. I don’t care if video games win the attention war.
Video games shouldn’t compete to psychologically abuse people
Okay I lied. I care a little. But not in the same way Nadella or Layden do. I care because several of the market segments we’re competing with do real harm.
Video games compete with these other market segments not on the basis of content, but in their ability to attract and retain users through compulsive design. Long ago, we saw fearmongering about what happened to players who become addicted to arcade machines or World of Warcraft. Today, the injection of smartphones into our daily lives has created opportunities for companies of all types to fight for our attention, sometimes using UI/UX techniques tested in the world of game development.
This trend was well explored by journalist Chris Hayes in his book The Siren’s Call. “To live at this moment in the world, both online and off, is to find oneself endlessly wriggling on the mast, fighting for control of our very being against the ceaseless siren calls of the people and devices and corporations and malevolent actors trying to trap it,” he writes. Succeeding in the attention economy is difficult, and all of us must participate in some way.
The headline to this piece alone is one example. Why try to capture nuance when I can only get your attention with something more provocative?
_Page_1.png?width=1280&auto=webp&quality=80&disable=upscale "A graph comparing video game's market prowess against other markets")
Image via Matthew Ball.
But the most aggressive players in this arena have approached the battle with a laser-focused strategy: attention brings money, so the most efficient path to acquiring attention is the only path to pursue.
That means dark patterns. Deceptive monetization. The addictive thrill of gambling. Push notifications. The pleasant sensation of swiping on an app. The animated “…” as a chatbot generates its next message. These are attempts to penetrate the unconscious mind as well as the conscious one.
As previously noted, some of these techniques emerged from the halls of game development. A chill came over me when speaking with Rovio about integrating AI into their customer service pipeline. It wasn’t just done in pursuit of closing tickets at a faster rate. It was done to keep players in their games instead of opening other apps on their phone.
I write this not to damn the game industry but to point out this is what businesspeople are truly driving at when we talk about games competing with these other apps. We are not competing on the basis of content, we are competing in the effectiveness of exploitative retention techniques.
And however ruthless you are, however tight you squeeze blood from the stone—you cannot compete with those who promise what you can never offer.
Games promise an escape. Gambling promises to change your life
Let us briefly set aside the categories of social video and creator pornography. Social video is the most complex competitor, not only because it competes with games on quality of content, but because it sits in the video game marketing ecosystem and can sometimes bring people into games. It is maybe the fairest competition on the track (though maybe guilty of some of the same psychological abuses as games).
And the topic of creator pornography is too complex to approach in one column. Sex work is legitimate work. But the outlawing of sex work in many locations creates exploitative environments that disproportionately harm those from marginalized backgrounds. OnlyFans is as much a boom-or-bust platform as any other “creator network,” but puts many of its creators at risk of abuse.
So we are left with online sports betting, skill-based games, prediction markets, crypto & memecoins, and AI assistants.
Of this group, AI assistants are the only segment not tantalizing users with promises of untold riches. The rest take advantage of people sitting in three categories:
These forces have a far stronger pull than anything in entertainment can muster.
_Page_2.png?width=1280&auto=webp&quality=80&disable=upscale "A slide detailing american's spending on non-gaming ventures.")
Image via Matthew Ball.
Here is where we might be tempted to let AI assistants off scot-free, since they are not promising such life-changing opportunities. But aggressive A/B testing of UI and UX flows has turned these applications into something equally unhinged.
AI chatbots do not mimic real human conversation. Rather, they trigger a stew of psychological effects that we are still learning about in real-time. The emergence of AI psychosis is certainly a warning that whatever it is that makes chatbots so appealing, there is something dangerous lurking under the surface.
“Isn’t this just the same as when players become obsessed with romanceable video game characters?” A fair question! But no.
Video game characters do not speak in the same way as chatbots, and their dialogue is not often drip-fed in a way to dispense dopamine hits. Video game dialogue is as much “educational” (in the sense of teaching people about the game) as it is entertaining. When people develop unhealthy attachments to fictional characters, that is a very different mental health disorder in need of a different form of treatment.
These are not social or psychological needs that games can fulfill. Chasing these audiences may not only harm your users, but also drive your company to collapse from the inside out.
Entertainment is more than attention-sniping
The purveyors of the attention war want you to believe everyone on the planet is shallow, cruel, and only in it for themselves. When you believe your audience is only motivated by the digital equivalent of a shiny object, you cease to see them as people with wants and needs.
In 2011, I asked the CEO of a Hollywood production company for advice on how to break into the entertainment industry. I wanted to write fantasy and science fiction. He suggested I “film myself jumping up and down on the toilet like a monkey” and put it on YouTube.
This was bad advice. No one wants to watch me jumping up and down on the toilet like a monkey. It is not one of my finer skillsets.
But I understand where this person was coming from. In 2011, the age of the YouTuber was just dawning on us, and what he effectively predicted was that attention-grabbing influencers like Logan and Jake Paul would dominate the market.
We were also exiting the era of exploitative shock-and-awe reality television. Tyra Banks had just spent the last decade torturing teenagers for fun and profit on America’s Next Top Model. Simon Cowell’s ritual humiliation of aspiring pop stars helped put American Idol on the map. The Biggest Loser destroyed contestants’ bodies to sell the world on a cruel and unrealistic vision of health and exercise. We were immersed in an environment where the most successful shows were fighting their version of the attention war, and a cynical mind would see shock value as more lucrative than sincere storytelling.
Of course, a cynical mind wouldn’t want to accept what was already happening with these and other exploitative reality shows of the 2000s: the audience was getting bored. The dopamine wore off, and what was once shocking and different was now par for the course.
Nothing was left to sate them.