Bad ending route for Sega's "Infinite Wealth": Economic rent

[ggx2ac]

Link to all bad ending threads: https://www.installbaseforum.com/fo...-for-the-video-game-industry.1998/post-228671

My first bad ending thread covered the concept of rent-seeking, but it did not go over the concept of rent in general. Without covering it, it may end up making it difficult for consumers to notice when economic rent is occurring.

To understand the concept of rent, you must first understand Classical Economics. I will be posting quotes from the following blog link containing a transcript of two YouTube videos of a person interviewing a Professor of Economics named Michael Hudson. Source: https://michael-hudson.com/2022/06/economic-rent-and-exploitation/

In the starting section of "Classical economics as a reform program to free economies from economic rent and rentier income":

So that basically how I came to realise that the 19th century fight for 100 years – we can call it the long 19th century, from the French Revolution, up to World War I, and from the French Physiocrats, to Adam Smith, Ricardo and Malthus, John Stuart Mill, Marx, Simon Patton and Thorstein Veblen – was the value and price theory of classical economics to quantify economic rent as unearned income.

The purpose of value and price theory was to define the excess of market price over actual cost value. The difference was economic rent. The essence of classical economics was a reform campaign – that of industrial capitalism. It was a radical campaign, because the basic cost-cutting dynamic of industrial capitalism was radical. It realised that in order to make Britain, France or Germany, or any country competitive with others, you had to get rid of the landlord class and its demands for economic rent. You also had to get rid of monopolies and their economic rent. You had to get rid of all payments of income that were not necessary for production to take place. The aim was to bring prices in line with the actual cost value of production, to free economies from this rake-off to unproductive investment, unproductive labour and economic rent – land rent, monopoly rent and financial interest charges. Those were the three basic categories of rent on which classical political economy focused.

To translate classical rent theory into practice, you needed a political reform, You had to get rid of the landlord class’s political power to block reform. It wasn’t enough simply to say that economic rent was not a necessary cost of production, not part of real value. The landlord class would simply say, “Well, what are you going to do about it?”

Your first question is probably, "Do we live under industrial capitalism?" Unlikely. If you live in the US or the UK, back in the 1980s there was the rise of neoliberalism with Margaret Thatcher and Ronald Reagan which resulted in Finance Capitalism. That's what you live under in those countries and others. Michael Hudson goes over that as well which you can look it up.

You're probably wondering what happened to Classical Economics seeing as economic rent exists today, from that blog post in the starting section of "The fight against classical economics and its concept of rent as unearned income":

Needless to say, the fight for the kind of democracy that will free economies from economic rent was not easy. By the late 1880s, and especially the 1890s, you had the rentiers fighting back. In America the fight was led by John Bates Clark. There was a movement, which today is called neoliberalism, to deny the entire thrust of classical economics. Clarke said that there is no such thing is unearned income. That meant that economic rent does not exist. Whatever a businessman makes, he is said to earn. Whatever a landlord makes, he earns – so there was no unearned income.

This came to a head around 1890 the Journal of Ethics. Clark wrote the first essay, and it was refuted by Simon Patton. There was a fight against the concept of economic rent by academic economics, especially in New York City at Columbia University, where Clark ended up,

Considering the present, you know what happened with neoliberalism. In that blog, the host interviewing Michael remarked how a free lunch does exist (this is related to rent-seeking):

Host: ...and then I’m looking in J is for Junk Economics, and you talk about the free lunch, and how Milton Friedman said that there’s no such thing as a free lunch.

When you look at your work, you prove that actually there is, and that he’s having it! And you say, “Most business ventures seek such free lunches not entailing actual work or real production costs, and to deter public regulation or higher taxation of rent-seeking recipients of free lunches. They have embraced Milton Friedman’s claim that there’s no such thing as a free lunch”.

And you talk about: “Even more aggressively rent extractors accused governments of taxing their income to subsidise freeloaders, pinning the label of free lunches on public welfare recipients, job programs, beneficiaries of higher minimum wage, when the actual antidote to free lunches is to make governments strong enough to tax economic rent, and keep the potential rent extracting opportunities and natural monopolies in the public domain.”

Michael Hudson explaining why Neoclassical Economics is what it's called:

Veblen was indeed was the last great classical economist. He coined the term neoclassical economics. I think that’s an unfortunate term. When I went to school in my 20s, I thought neoclassical meant ‘Oh, it’s a new version of classical economics’. It’s not that at all. What Veblen meant was there used to be the old classical economics of Adam Smith, John Stuart Mill and Marx, all about economic rent and exploitation. “Neo” means there’s a new body of completely different, post-classical economics aiming to make classical economics obsolete. That is the new mainstream economics of today, trying to make itself “classical.” So Veblen he should have used the terms post-classical or anti-classical economics.

Host: Or even pseudo classical?

Michael Hudson: It’s antithetical, because the root of classical value and price theory was to isolate and define economic rents statistically. To deny economic rent is to deny the whole point of classical value and price theory. That is where economics became untracked.

Unfortunately, it became untracked largely by Henry George, who rejected classical economics and very quickly followed J.B. Clark and accepted his mushy value and price theory. Removing all elements the cost of production from value theory, analysing prices simply in terms of consumer demand and what people want, and not analysing what determines land and other asset prices, loses focus.

How accounting in Classical Economics would have defined rent:

This raises the question of just what income and product actually mean. Well, this brings us back to what classical economics is all about. The “product” should be measured by what its actual necessary cost of production is. But there’s a lot of income over and above this necessary cost of production. Namely, economic rent, that’s unearned income. But the income and product accounts don’t say how much is “earned” and how much is “unearned” land rent, monopoly rent, natural resource rent, interest and financial charges.

A classical economic accounting format would show how much of the prices for what our society produces is actually necessary, and how much is a subtrahend. Classical economists treat the land rent that you pay, interest charges and monopoly prices as a rake-off. So not all of your income is income equals “product,” because only a portion of that income represents a real product.

In America, the head of Goldman Sachs a few years ago said Goldman Sachs partners – a financial management firm – make more money than almost anyone else in America, because they’re the most productive. If you make a lot of money, by definition, you make it by being productive. That’s the false identity.

A reminder that you make money through rent, not earning income (read my first bad ending thread again for rent-seeking examples):

You can get much more money quicker by extractive means – by rent extraction – than you can by investing in plant and equipment and developing products and marketing them and making a profit over time, and spending on research and development. That’s why in today’s United States, 92% of corporate revenue, called earnings, (although not all of it is earned – that’s a euphemism) is spent on stock buybacks and dividend payouts, not on new capital investment.

So the way that the economy works today is no longer industrial capitalism; it is finance capitalism. Instead of Industrial Engineering, making society produce more with all of the environmental protection cost included, you have financial engineering, making wealth by increasing stock-market prices. Wealth is not achieved by earning it. You don’t save up your earnings and get wealthy. I think half of Americans are unable to raise $400 In an emergency. They have no savings at all.

For most people it’s very hard to save up money, especially if they have student debt, credit-card debt, medical debt and mortgage debt. After paying this, there’s really no income left to be saved. So you have the 1% of society, the rentier portion that had to pay income tax back in 1914, getting huge amounts of income and the rest of the society getting less and less. The result is economic polarisation. The dynamics of society are financial and basically rely on rent seeking that has been financialized.

That was all I wanted to quote from that transcript. The blog that was linked has the YouTube videos linked in it so you can watch two hours of video.

Now that you've read through all that, you are now an expert on Classical Economics and Neoclassical Economics. What's that you say? You didn't learn what Neoclassical Economics is? You most likely have during school; you would have learned about "The Supply and Demand Curve". How does that make you an expert on Neoclassical Economics? It makes you an expert in realizing that it's nonsense.

Here's an example of why the Supply and Demand Curve is nonsense; you understand that the supply and demand curve is a graph that has two lines each representing supply, demand and that the intersection of those lines is where the price ends up. Now let's apply this curve to housing. You assume that the price of housing is determined by the supply and demand of houses available, wrong. You live in an area of a city, and the city decides to use its taxes to expand its public transport in that area. After the public transport expanded to that area, property values suddenly went up, what happened? More housing didn't get built (nor any demolishing of housing) but the price of buying a property went up based on something that didn't have anything to do with housing. Now what happens, it's obvious you're not the owner of the property you live in, you rent from a landlord. Now that property values went up, the landlord decides to raise rent because the real estate agencies told all the property owners their properties are now worth more. Now you are paying more in rent to your landlord that did not produce that public transport. The price for housing went up despite supply and demand not changing.

You might say, "That doesn't count. The price was affected by land and land is not a product; it doesn't invalidate the supply and demand curve." Let's do another example then. Luxottica Group is a company that owns around 80% of the eyewear market, which they got from all the acquisitions they did. Why do you pay so much money for a pair of sunglasses from one of their brands? It's not because of supply and demand, it's because of monopoly rent.

Neoclassical economics did away with the concept of economic rent to keep the rentier class in power so that you ended up learning the nonsense that is the "Supply and Demand Curve" which isn't applicable in the real world.

Now we can finally talk about Economic Rent in the video game industry and what this has to do with Sega.


With a Classical Economics point of view, you can now think about times in the video game industry where rent-seeking may have been applied. In my first bad ending thread I already talked about how some forms of DLC could be considered rent-seeking, such as when character cosmetics that used to be included in-game for free are now a separate DLC that you have to pay money for.

Maybe you want to think about gacha games and/or loot boxes where you are paying an excessive amount of money that doesn't equal the cost of the product you are trying to acquire by chance. That's economic rent.

Have some homework and look up whether there were arcade games that had economic rent applied to them by doing things such as huge spikes in difficulty to make players spend more money to get past a point in a game.

Have some more homework. Remember how video game rentals were made illegal in Japan but, in the West during the 90s video game rentals were prominent? There was always the idea that video games in the 90s were harder in the West than Japan because of rentals. There's been plenty of examples of games that were harder in the West compared to their Japanese counterparts such as Contra: Hard Corps:

The Japanese version, titled Contra: The Hard Corps, is significantly easier than its overseas counterparts due to the addition of a life gauge that allows the player to take three hits from an enemy before losing a life. The Japanese version also features unlimited continues, in contrast with the American version, which only allows the player to continue five times.

The idea is, if you make a game harder to complete. Then it is difficult to finish the game in a single rental period, you would end up having to pay more money to the rental store to keep renting the game. At what point do you decide it's not worth renting the game anymore and instead you would be better off buying the game since it is so difficult to complete in one day? That's so then the video game company gets a sale instead of you continuing to rent the game from a rental store.

Look up whether this idea was true and implemented by video game publishers. Unrelated to harder video games, that time Nintendo sued Blockbuster: https://en.wikipedia.org/wiki/Nintendo_of_America,_Inc._v._Blockbuster_Entertainment_Corp.

There was a time where the video game publishers didn't earn money due to video game rentals and second-hand games. Now that we don't see video game rentals and second-hand games so prominently, instead the video game publishers are the ones making money via economic rent from loot boxes and microtransactions.

What did Sega do?

An IGN article appeared titled: "Like a Dragon: Infinite Wealth Limits New Game Plus Access to Digital Deluxe and Ultimate Editions": https://www.ign.com/articles/like-a...ccess-to-digital-deluxe-and-ultimate-editions

...Sega is locking an otherwise commonly unlockable game mode behind more expensive versions of the game. For context, the Standard Edition is $69.99, the Deluxe Edition is $84.99, and the Ultimate Edition will set you back $109.99.

Sega has locked New Game+ behind DLC named the Master Vacation Bundle which is included in premium editions of the game "Like a Dragon: Infinite Wealth". This is economic rent. You are now paying an excess amount of money to access a feature that is commonly featured in most games for free.

The waters are now being tested and soon other publishers will think, "Early Access editions aren't enough, let's put common game features behind DLC to include in premium editions of games."

I have no bad ending scenario to write. The above is enough for you to know.

 

[Ystad]

I don't think Sega's move will have any major impact. How many regular players play NewGame+? I believe this is the option after one completes the game, yes? Hardcore gamers are more likely to buy the premium editions anyway.

In 2011, Capcom did a rent seeking move when they released Resident Evil: Mercenaries for 3DS with no possibility to reset the save data. This was seen as a method to limit used game sales, although Capcom denied it.

Capcom explains Resident Evil: Mercenaries 3D save system flap

 

[Vena]

I don't think Sega's move will have any major impact. How many regular players play NewGame+? I believe this is the option after one completes the game, yes? Hardcore gamers are more likely to buy the premium editions anyway.

In 2011, Capcom did a rent seeking move when they released Resident Evil: Mercenaries for 3DS with no possibility to reset the save data. This was seen as a method to limit used game sales, although Capcom denied it.

Capcom explains Resident Evil: Mercenaries 3D save system flap

Its not as bad as Capcom selling a game's ending as DLC (Asura's Wrath).

And yes, NG+ is for replays.

I just find it a baffling choice because (a.) many people do not even finish games, (b.) few people replay games, and (c.) the people who this would anger are the people who would potentially replay your game aka fans. So it's just a new form of trying to re-monetize dedicated fans of a series.

 

[Ystad]

In the game "Like a Dragon: Infinite Wealth", does one get extra content in NewGame+ or is it the same game but with extra difficulty only?

 

[Vena]

In the game "Like a Dragon: Infinite Wealth", does one get extra content in NewGame+ or is it the same game but with extra difficulty only?

Not a clue.

 

[ggx2ac]

I don't think Sega's move will have any major impact. How many regular players play NewGame+? I believe this is the option after one completes the game, yes? Hardcore gamers are more likely to buy the premium editions anyway.

I had to update my OP to point out that New Game+ is locked behind DLC which they include in the digital deluxe and ultimate editions of the game. You can still buy the DLC that includes New Game+ even if you decided to buy a standard edition of the game months later if you were waiting for a discount.

Why I said that. What is a "Hardcore gamer"? I am just pointing out for you that I suggest you don't use nebulous terms like hardcore gamer for sales data. When companies get statisticians to find out what makes their games sell, they don't tell the statisticians, "Find out for us what percentage of sales came from HARDCORE GAMERS!!!" because the statisticians will react the following way, "...What?".

You've already seen the terms hardcore gamer and casual gamer enough in life to know who uses them, people that want to create groups that exclude others, i.e. gatekeeping. Those terms are not relevant in statistics from sales data.

In 2011, Capcom did a rent seeking move when they released Resident Evil: Mercenaries for 3DS with no possibility to reset the save data. This was seen as a method to limit used game sales, although Capcom denied it.

You are also reminding me of the time when Capcom wanted to charge $10 more for each copy of Resident Evil Revelations (3DS) but consumer backlash stopped them from doing that.

While they did fail with that, they still got what they wanted in the end. Making more money from each sale of a game, how? By focusing more on digital sales and less on physical. We have seen from the FY data for the last few years and even from their previous Q&A sessions that they want a high percentage of their game sales coming from digital and not physical copies.

In the game "Like a Dragon: Infinite Wealth", does one get extra content in NewGame+ or is it the same game but with extra difficulty only?

The following is from me finding out what there is from the Master Vacation Bundle DLC which is what contains new game+.

Official sites: https://infinitewealth.sega.com/

Explore a bonus dungeon, get special Sujimon, resort guests, outfits, new game+ & more

『龍が如く８』 公式サイト｜SEGA

『龍が如く８』公式サイト

ryu-ga-gotoku.com

DeepL translation:

You can take over the cleared data of "Ryu ga Gotoku 8" and enjoy the "PREMIUM NEW GAME" in which you can play around with three different difficulty levels (NORMAL, HARD, and EX-HARD) and the new scenario "Final Hawaii Dungeon". This special pack also includes additional challenging elements such as costumes and items only available in this pack.

Go to this gamefaqs link for the previous game in the series "Yakuza: Like a Dragon" and you can get an idea of what the New Game+ elements might be like for the latest game: https://gamefaqs.gamespot.com/ps4/2...aqs/78735/new-game-plus-and-premium-adventure

There's already one common feature mentioned among both those games, a difficulty selection appears when doing new game+.

 

[Ystad]

What is a "Hardcore gamer"? I am just pointing out for you that I suggest you don't use nebulous terms like hardcore gamer for sales data. When companies get statisticians to find out what makes their games sell, they don't tell the statisticians, "Find out for us what percentage of sales came from HARDCORE GAMERS!!!" because the statisticians will react the following way, "...What?".

Yes, poor choice of words from my side. Vena's description "dedicated fans of a series" is more appropriate.

DeepL translation:
You can take over the cleared data of "Ryu ga Gotoku 8" and enjoy the "PREMIUM NEW GAME" in which you can play around with three different difficulty levels (NORMAL, HARD, and EX-HARD) and the new scenario "Final Hawaii Dungeon". This special pack also includes additional challenging elements such as costumes and items only available in this pack.

Go to this gamefaqs link for the previous game in the series "Yakuza: Like a Dragon" and you can get an idea of what the New Game+ elements might be like for the latest game:

According to the Gamefaq link, "Yakuza: Like A Dragon" has:
- Premium Adventure which is just post-game content with a Final Millenium Tower dungeon,
- NewGame+ which additionally allows one to begin the story from the beginning with some save data applied.
Seems to be more or less in line with the new game.

There's already one common feature mentioned among both those games, a difficulty selection appears when doing new game+.

Difficulty selection... an option which was free (included in base price) since the inception of computer games decades ago...