The Rise of Game Neuroeconomics

The following is an excerpt from my talk at this year's Captivate Conference, titled “How Game Neuroeconomics is Going to Transform the Gaming Industry”, on October 25^th, 2014.

Game neuroeconomics involves combining the fields of neuroscience and economics to improve the ability to predict the utility of game design elements for consumers, and ultimately to predict/modify consumer behavior when they use neuroeconomically augmented interactive media products.

My name is Ramin Shokrizade, I am a pioneer and academic in the areas of virtual economy and monetization design. This is a very hot field right now. Today I'm not here to talk about that. I'm here to talk about what will be hot next. When we combine neuroscience with game economics, to create game neuroeconomics, a whole new generation of interactive media products is going to be the result. These products will meet the needs of consumers in a way that previous products could not, rendering those previous products non-competitive.

Right now a lot of very smart people are being hired to make game developers more successful. They are being tasked with reverse engineering what makes a competing product so successful, so that they can copy and perhaps improve upon previous hits.

Many are not going to be successful.

The reason is not because they are not smart or talented. The reason is because they are trying to find the answer to the wrong question.

What they should be asking is “why do consumers demand our products?”

This exact scenario played out 50 years ago in the tobacco industry, and I am going to use that example to explain what is going to happen to interactive media when neuroscience gets added. I use this example not because I think there is anything negative about games, I think games are awesome and promote learning and social interaction. Games don't cause cancer or heart disease. But scientifically and commercially, what happened in that industry mirrors what is happening in our industry, but half a century earlier.

Now let's go back 50 years to the 1960's. Of the six major tobacco companies in the USA, the smallest was Phillip Morris. RJ Reynolds was selling three times as many Winston cigarettes as Phillip Morris was selling Marlboros. In the previous 300 years, tobacco had not changed much in North America. Then someone at Phillip Morris got an idea. “Let's find out why people smoke our cigarettes?” and they hired a handful of neuroscientists.

They discovered that nicotine triggers a release of adrenalin and dopamine in the brain, only 10 seconds after inhalation. Dopamine, especially, is a powerful reward chemical in the body. But unfortunately, nicotine, an alkaloid, is bound to the plant in such a way that it is poorly available in the blood stream. If you treat it with ammonia, then you can increase the bio-availability by up to 100 times. Rats that would previously get a hit and then go off and do something else, were now self-administering until they were unconscious. Clearly an improvement in consumer demand :)

So Phillip Morris secretly started treating Marlboro with ammonia and by 1978 Marlboro was the world's top cigarette with 20% of adult market share, and ~50% of the child market. Competitors did what game companies do now when a small company comes out of nowhere and begins to dominate the market. They tried to “reverse engineer the success” instead of asking the important question. So they quickly detected the ammonia additive and were able to compete by similarly treating their cigarettes.

Of course this whole competition was kept absolutely secret from consumers and regulators. To me this shows an attempt to deceive consumers, and it is a big part of why I am standing here today to give up secrets valuable to industry, because I feel that consumers are best served when they know what they are purchasing.

Realize that adrenalin and dopamine from cigarettes are two of the reward chemicals you get from sex, and a big part of why sex is so popular with consumers. There are at least a couple more great chemicals you get during sex, oxytocin and endorphins. This rich mix of reward chemicals makes sex hard to beat. But, I'm fairly convinced at this point that the release of all four of these chemicals can be triggered by computer games. Paul Zak, a fellow neuroeconomist, has a great TED talk where he talks about oxytocin, and his work implies that social media triggers oxytocin release. Most of today's most successful computer games have similar social elements.

People buy and play games because games meet their entertainment needs. Here I mean needs. The reward chemicals they get from play help to reduce stress. The more stress a person is under, the more they need these reward chemicals. They are not optional. A person under great stress will pay for entertainment even before food. As I noticed with the rats I used to experiment on, the more rats you put in a cage, the more stress they experience. As our population grows (from 1.25B a hundred years ago to 7B now), our stress will grow in a similar way. So the demand for entertainment will just continue to explode and will command ever larger shares of consumer budgets.

A child may not know what sex is, and almost certainly has no idea what dopamine is, but many if not most of the children I observe these days from the parents around me would rather start the day with a computer game or video, than with a meal. Frankly, they get more reward from the game than they do from eating, so the choice is obvious.

Now I would like to give a very simple example of how virtual economics and neuroscience can be combined to evaluate a common game design mechanic to predict how consumers will react to it. Let's take a typical xp/loot grind area. There are neutral mobs all over that do not get aggressive unless attacked. They give loot and xp typical of their level. Since most online games reward players primarily for killing, the key is for the player to spend as close to 100% of their time killing as possible.

So an area like this that requires no travel between kills, which is very predictable and easy, is ideal for minimizing down time. If a player wants to level as fast as possible and stay competitive, the developer has forced them to come here. This is because economically, the developer has put the “cheese” here.

In the most boring part of the game.

Now let's look at what is going on in one of the most important reward chemicals here: dopamine. Dopamine is released when a person overcomes a challenge with an uncertain result. Failure is possible, and the greater the chance of failure, the more dopamine the person gets if they succeed. This is nature's way of rewarding us for experimenting and learning. Dopamine makes humans natural thrill seekers and learners. To keep us sharp, and prevent addiction, dopamine releases are reduced every time you repeat something, even if it was really cool the first time you did it.

So let's go back and look at our typical ideal “grind area”. The player is experiencing the most possible repetition, with the lowest possible risk. Both factors that inhibit dopamine release. The player actually experiences relatively negative dopamine levels, and enters into a depression. This is so uncomfortable for the player that they will pay someone else to play this part of the game for them so that they do not have to. Thus a whole industry popped up to “power level” players past these horrifically boring parts of games that are all too common, so that consumers do not have to experience them. Of course even 3^rd world players don't want to do this, so bots are used. Since no skill is required, a bot actually outperforms a human here.

The solution is to reward players for taking higher risks, and rewarding them more when they do something the first time. Just like the body does. Thus the game rewards they see on the screen should mirror the chemical rewards they are feeling inside their body as much as possible. This leads to the maximum possible immersion.

So in this example, I would assume the developers were not intentionally trying to torture their players. They just had no concept of how players will react physiologically to their design. What if a company actually tortured their players on purpose? Why would they do this?

Roger Dickey, former lead designer at Zynga, who a couple weeks ago was interviewed with me on National Public Radio, knows that if you give a consumer a game, and then take that game away and tell them they have to pay to continue, a desperate consumer will pay. He calls this “fun pain”. He may not know how it works, but he knows it works. This is an example of the unethical use of this technology. Dickey may only have an intuitive knowledge of how it works, but it is enough to occasionally result in success. If you have millions of customers, even a small success can mean a lot of money due to the effects of scale.

So how can this technology be used to help consumers? By making products give them the rewards they are seeking. Remove all of the painful/boring parts of games that we keep repeating decade after decade. Make video games less predictable and more social. Any company that does this honestly and transparently with their customers is going to quickly build a loyal following, and their products will render today's games non-competitive. You are already seeing this with small companies like RIOT Games and Wargaming doing it right and transforming into huge gaming powerhouses in just a few years.

There will always be people who try to abuse this technology, but I have been working discretely with international regulators for the last year to prepare them for what we as an industry are about to do, before we do it. Without this forewarning, regulators will always be many years behind us and ineffectual in protecting consumers. But, until they are ready to act, and until consumers are well educated as to what we are up to, you will still see cartoon-like animation in games that appeals to children, being used to peddle “fun pain”.