One of the most popular things to do on the internet is play games and games and gamers spend more money than movie goers going to the movies. Video games are played by many people and they spend long hours doing it. In the “old” days gamers either downloaded the game or bought the game and played to try to reach different levels. Eventually, they would play other people on the internet which meant there was friendly competition and some of the people you were playing against became friends.

For the companies from Sony to Electronic Arts as reported by Yuji Nakamura from Bloomberg News in an article called Gamers gripe over micro transactions, putting rally at risk. The companies are adding the ability to add digital goods and services. The game maybe free or almost free but people are spending thousands of dollars on extras such as changing the colors of the team to your favorite team; adding rare characters and special outfits. The model allows the players to spend as much as they want and keep spending as long as they like. The model adds higher and recurring profits. One of the biggest beneficiary is Tencent Holdings whose business is games with microtransactions.

There is always a danger in the model, how much can someone pay and if they do not pay is the game still enjoyable to participate? Sometimes the companies get it wrong and people move to different games.  The general rule seems to be micro transactions can enhance the game to the gamer but not give an unfair advantage to someone not paying the fees. In one game from Star Wars the micro transaction was the power of Darth Vader’s choke hold. Gamers hate the pay to win strategy and when they feel wrong the gamers know how to complain loudly.

Linking to dividend paying stocks, for profitable companies their outlook tends to the long-term and the customer being a repeat customer for life or a good part of it. Being shortsighted to drive up profits in any industry is possible, but will the company be in the same position next year?

There are more questions than answers, till the next time – to raising questions.