CSR for entertainment companies

CSR, or corporate social responsibility, is a process by which firms adhere, of their own volition, to practices generally considered of high moral and ethical rectitude. Generally corporations will publicly communicate their CSR initiatives to showcase their ethics and maintain a good public image with their client base.

This has become particularly important in an age when communication is instantaneous, issues arise and scandals emerge at light speed, and the powder kegs of militancy and online activism have become highly volatile. Over the last couple of decades, corporations have tended to promote their efforts to engage with subjects that strike a chord with the public such as greener and renewable initiatives, fair workplace and offshoring practices, gender equality, minority rights, privacy and security advocacy and so forth.

A heavy or polluting industry, for instance, might try to demonstrate a commitment to offset its impacts on the natural world with measures intended to have a positive effect for the environment. While a firm that makes sneakers in third world countries might insist on minimal work standards for workers employed by their contractors in these countries.

Given the attention being given to AI, machine learning and the commercial practices derived from those, the next battleground for CSR might be how firms interact with their users and use the massive amounts of data they collect from them; data hoards whose exploitation generates huge profits for their owners. Furthermore, one issue that began to raise concerns over the past couple of years is the intentional design of features that keep users locked in to applications or platforms through the development and exploitation of addictive features.

Recent developments in video gaming demonstrate how designers think about their relationship with their players and an external observer might question if the road they go down in their path to success and profitability is sustainable in regard to the relationship with players. The following text deals with these issues and the approach industry leaders might take in regard to the relationship their corporations maintain with the consumer.

Sometime in the last two decades, beginning as early as 2002 with Google, the business of tech and media became the business of AI and machine learning; or rather engineers and data scientists understood how the human psyche works and can be subjugated, resulting in media companies such as Facebook, Twitter and Instagram being accused of intentionally exploiting psychological weaknesses and constantly improving design features to keep users continuously engaged in their platforms where they can be monetized. This idea of a user as a object that can be monetized is the subtext of Harvard economics professor Shoshana Zuboff’s brilliant book The Age of Surveillance Capitalism, where the relationship between these large tech companies and the product they sell is deconstructed; and by product we mean the users of their software products, users which are peddled to advertisers for a high price. In her book Zuboff explains how residual data resulting from our online behaviours is exploited by companies such as Google and Facebook – more openly in the last decade and surreptitiously in the one before – to target users with highly profitable and tailored advertising, through arcane systems that mark individuals at opportune moments with highly effective, or “high quality” advertisements in Google-speak. This “data exhaust”, as Google engineers used to refer to it, has also been used over and over by tech companies to design experiences that keep users connected, engaged and addicted.

In a context where the multiplying media platforms are engaged in open warfare for the time and attention of users, it has become increasingly important for platform operators to keep them in the platform. When users pay a monthly subscription for a service (Netflix, Disney+, HBO) it is in the interest of the operator to keep users engaged long enough for them to feel satisfied with the exchange of capital for entertainment and not cancel their subscription. However when access to platforms is given away without compensation (such as with Facebook, Twitter or Instagram), keeping users connected longer raises the odds of operators successfully monetizing their presence. Keeping users in the platform is not part of the service offering but rather the business model itself.

It is in this context that free-to-play video games, the most famous being the somewhat infamous Fortnite, ride a strategy that borrows freely from the design of addictive features as spelled out in Nir Eyal’s book Hooked: How to Build Habit-Forming Products. Whether it’s Candy Crush, Fortnite, Hearthstone or any other F2P game, the bottom line is the odds of monetizing are increasingly higher the longer a user stays engaged in the game.

Monetization = Engagement x Time

Last spring the WHO (World Health Organisation) classified gaming disorder[1] as a form of addiction to playing video games. Meanwhile in the UK companies are being taken to task for monetization schemes that opponents claim encourage gambling behaviour[2] in underage individuals. In the context of these pressures on the video game industry, one would expect CSR campaigns to manifest themselves with the intent on smoothing the relationship between the industry and its players, but surprisingly there is very little communication of CSR practices from studios and publishers; this even as the industry adjusts its business models in reaction to regulatory oversight on both sides of the Atlantic.

This interest in regulation comes particularly from people showing concern for so-called “predatory” monetizing practices[3] within Fortnite, which has led to lawsuits in the US and Canada[4] against Fortnite’s publisher, Epic Games. For those who have either been living on Mars or do not have a pre-teen in their household, Fortnite attracted upwards of 80 million players monthly at its peak. The publisher makes money by selling these players skins (colourful suits for their characters), emotes (dance moves) and battle passes (a pass… that lets you do battle and get special prizes).

Fortnite, as many other games, for a while also sold something called loot boxes. The company stopped the practice[5] when regulators in the United States and the UK began investigating the monetization technique as allegedly it encouraged gambling behaviours in children. Late last summer the UK parliament weighed in (between brexit debacles, parliament spectacles and general elections) in favour of treating loot boxes as a form of gambling[6].

Wherever the money is coming from, Fortnite has become a gold mine for Epic. Though speculation varies wildly for the private company who isn’t obligated to disclose financial reports, it is estimated Epic rakes in between 200-300M USD[7] monthly, depending on the activity. Epic’s valuation meanwhile doubled in one year to 16B USD in 2018, with its founder and main shareholder Tim Sweeney being worth an estimated half of that.

Zuboff, in The Age of Surveillance Capitalism, describes the practices of tech companies as extractive economics; whence in the same way mines extract raw materials from the ground, tech firms extract raw data from people’s minds and exploit it using AI tools to understand how we think, behave and react. Looking at how Fortnite makes money, an observer could guess that the business model of contemporary F2P gaming is a similar form of extractive economics, with game designers being incentivized to analyze data and exploit psychological faults in people’s minds, to in turn create highly addictive features[8] – as is alleged in the aforementioned class action lawsuit against Epic Games initiated in Montreal last October – since users spend money when they are present online and engaged in the game. When one considers the vast amounts of capital being generated by Epic, the incentive to explore the business model may be difficult to resist for publishers and studios.

However, with an unknown real average player age – existing surveys only looked at people over 18 – but a strong suspicion in industry observers that it might hover around the low teens, if things persist as they are the endgame for Epic and other games targeting youth could be much harsher than for tech firms engaged in surveillance capitalism. Public outcry and legislative reaction might be more severe in its judgement of gaming publishers’ moral and ethical stance than that of companies who present us with ads, specially given the consequences of gaming addiction that are beginning to be documented thoroughly.

When a seventeen year-old Thai teen is so addicted to a game he dies[9] while playing a marathon session of a multiplayer online battle game, a nine year-old in the UK checks into a rehab clinic[10] to treat her addiction to Fortnite, another gamer suffers collapsed lungs and keeps playing DOTA2 from his hospital bed[11], can we really question why Internet Gaming Disorder is recognized and integrated into the DSM? With hardcore players developing drug addictions to stay awake longer to play Fortnite and professional players getting arrested and jailed for pitching games of Starcraft and Counterstrike at the behest of criminal gangs running gambling networks,[12] one wonders to what degree gaming companies should take some sort of responsibility for their products, the social consequences of these, as well as the business models underlying the game mechanics and their outcomes.

In the coming years it will be interesting to observe how not only gaming publishers and studios affirm CSR policies to engage with these emerging issues concerning their players and the online ecosystems they create around their games, but equally media platforms such as Netflix and Amazon Prime Video that also exploit addictive design features on their platforms. Perhaps by acting proactively to demonstrate a commitment to users’ mental health and a concern with the negative consequences of certain design choices, firms might achieve a more positive image in the minds of consumers and their advocates; a positioning that could equally insulate gaming companies in particular from the harsh penalties and restrictive regulations that legislators might begin contemplating if incidents with young players keep bubbling to the surface.

[1] https://www.who.int/features/qa/gaming-disorder/en/
[2] https://www.casino.org/news/uk-threatens-to-prosecute-video-games-publishers-over-skin-gambling/
[3] https://variety.com/2019/gaming/news/lawsuit-loot-boxes-fortnite-1203152894/
[4] https://www.huffingtonpost.ca/entry/quebec-fortnite-lawsuit_ca_5d97e96de4b0993897fff914
[5] https://www.epicgames.com/fortnite/en-US/news/loot-unboxing
[6] https://www.wired.com/story/loot-boxes-parliament/
[7] https://www.businessofapps.com/data/fortnite-statistics/
[8] https://www.thesun.co.uk/tech/6501566/why-is-fortnite-so-addictive
[9] https://nypost.com/2019/11/05/teen-video-game-addict-dies-after-marathon-session-report/
[10] https://www.thesun.co.uk/tech/6501566/why-is-fortnite-so-addictive/
[11] https://dotesports.com/league-of-legends/news/league-of-legends-cloud-9-hai-du-lam-202
[12] https://www.thesun.co.uk/tech/10283201/death-gaming-marathons-collapsed-lungs-esports-teenage-stars/