 Okay, so we're going to talk about the news concerning Destiny 2 that came out of Activision's yearly earnings call, but before we do, I gotta drop some facts on you. Fact. Vanilla Destiny 1 was deeply flawed, unfinished, poorly reviewed, and fairly mediocre. With an unsatisfying campaign, a hilariously impossibly bad story, and not nearly enough content, Destiny left many players disappointed. The No Destiny's first expansion was for your average consumer an overpriced, undercooked piece of shit, barely worthy of being a free update, and it provided miserable value to the consumer. Three months later, Destiny 1's second expansion was for your average consumer an overpriced, undercooked piece of shit, but for the hardcore player it was at least a significant improvement. It wasn't good, but it was clearly better, and things were finally moving in the right direction. For a full year, we got The Taken King, which was fantastic, and single-handedly fixed almost all of Destiny 1's problems, finally making it the game the players had expected. And though it was objectively very good and well reviewed, the expansion sales were underwhelming because everyone had already moved on. So now we'll move on to D2. Fact. Vanilla Destiny 2 was a piece of shit, worse than the game it replaced in almost every way. D2's first expansion was the worst reviewed piece of software in Bungie's history as a studio. For your average consumer, it was an overpriced, undercooked piece of shit that did nothing to improve the game and in fact only made everyone more pissed off. Three months later, the Warmind expansion was the second worst reviewed piece of software in Bungie's history as a studio. And for your average consumer, it was an overpriced, undercooked piece of shit. The core, hardcore Destiny players like myself were in fact somewhat placated by Warmind. Very much like House of Wolves in Destiny 1, Warmind wasn't good, but it was clearly better and things were finally moving in the right direction. Still, exactly as with Destiny 1, it took a full year and $110 to get the game the players thought they were getting at launch. Forsaken is unambiguously excellent. Easily the best release in Destiny's 4 plus year history. Almost every major problem was fixed. Systems and gameplay removed forward, the story, lore, and sheer amount of shit to do provides fantastic value and endless hours of play. There are still problems, but they're normal balance, bug, and economy problems, the kind of stuff you expect. It's annoying, but totally understandable. That's the history that everyone knows, but there's also this. Vanilla Destiny 2 inexplicably reviewed insanely well and was the third best selling game of 2017 behind only the unbeatable titan that is Call of Duty and casual, worldwide sales monster FIFA. And even after having five of seven Destiny releases drop as disappointments, Forsaken was September's top selling console release, outselling Spider-Man even, which was considered a massive hit for Sony. So what all these facts add up to? They add up to a game that has repeated a cycle of massive disappointment and poor value only to deliver fantastic fixes a year after release. They've added up to a game that has sold ridiculously well. Destiny and Destiny 2 have both been massive sales hits. What happens when you sell a game that isn't very good to millions of customers, twice, you experience no growth? It seems like Forsaken has been purchased by about 60% of players who are still regular monthly account users. Now that seems pretty damn good, in a season that has seen so many huge releases it seems like I won't even have time to do a video on AC Odyssey, but it's not good enough for Activision. Why? Because of the way publicly traded companies operate, and to really understand this, we need to go to economics class for just a couple of minutes. I apologize to any viewers who have a solid understanding of this stuff already, but in talking to people out in the world I've found that these distinctions aren't actually common knowledge and lead to a lot of misunderstanding about how these businesses work. For all intents and purposes, there are two different types of companies. Publicly traded companies and privately held companies. Both of these have shareholders of a sort. Publicly traded companies are just that. Small pieces of the company in the form of stock or shares can be bought or traded by anyone on stock exchanges. These are the companies like Activision that you hear newscasters breathlessly reporting their daily fluctuations in value as if it was a basketball score. Investors look to put their money where it will get them the greatest return. Companies that make money are desirable as they will pay money out to shareholders and dividends, but profit and dividends are not what investors are actually looking for. People buy and sell stocks as if they are a commodity. The actual money isn't made by getting your meager slice to the profits. Your money is made by looking forward to the day when you will sell that stock. Meeting the number one thing investors are looking for is growth. Growth leads to shocking headlines. It leads to buzz. This leads to more people hearing of the company and telling their brokers to buy shares. The more people who buy shares, the higher the price. And the higher the price, the bigger the profit when you inevitably sell that stock. It is very hard to grow without being profitable, although a bunch of tech companies seem to have done it somehow. But being profitable isn't enough to grow. You've got to be consistently more and more profitable every quarter. For a company like Activision, they've got to come back to their shareholders and convince them, hey, we made a shitload of money last year and we made even more fucking money this year. Don't sell that stock yet, it's going to keep going up. The whole game of investing is buying a stock and holding it as it goes up and selling it when it's about to go down. Staying flat isn't a disaster, it doesn't destroy a company. But a company who reports stagnant profits and little growth is a company that has investors suddenly thinking, hmm, growth stopped. My shares aren't getting any more valuable. Fuck, it's possible they could become less valuable. Maybe I should sell my shares and put the money into a company that's growing and getting more valuable. We're going to bring this around specifically to Activision and the recent drop of their share price. PS, Activision is in no trouble at all, I assure you. Before we get there though, let's just super quick touch on the other type of company, the privately held company. These types of corporations are not traded on stock exchanges. They do, of course, often have investors, but these investors are family members, friends, employees, insiders, etc. To invest in the supermarket publics, you need to be an employee. To invest in coke industries, or Deloitte, or Morris Candy, or the weapons manufacturer Bechtel, you need to be rich and have a way to buy shares there. It's done privately through negotiation and only rarely. These companies do not ever have to release earnings reports. You won't hear stories about how much growth Publix or Albertsons had last year because they're only beholden to a small group of investors who can't just facelessly sell off their stock anyway. They'd have to arrange a private sale specifically if that was even allowed in terms of their shares contract. As such, Publix doesn't NEED to show growth. Growth is nice, it means you're doing better, but all Publix really needs to do is be profitable. That's the number one goal of a privately held company because here, much of the profit an investor gets is from the actual cut of the revenue. The hype and frenzy of growth isn't a consideration. This lets privately held companies focus on long term growth instead of being slaves to quarterly earnings reports a television host will scream about. Let's get back to Activision and EA and the big publishers who, it happens, are almost all publicly traded companies. Like all of them. Activision, EA, Ubisoft, Xenomax, Bethesda, Take 2, even CD Projekt Red. Though there are differences there because they get generous state support in a country that was, until recently, a state controlled economy. For these companies, it isn't a question of just making money. I really love Jim Sterling, he's one of my favorite angry pundits, and I think the work he's done has been beneficial and he is legitimately hilarious. And I am a pro consumer guy who hates loot boxes because they ruin game design in many instances. But often, Mr. Sterling seems to not have a full understanding of the issues at play, or at least not a nuanced one. I tend to think he probably does understand, but, you know, outrage. Call of Duty just made over 500 fucking million dollars in his first few days of release. Destiny 2 was the third best-selling game of 2017 behind only Activision's own Call of Duty and FIFA. Forsaken has a 60% attach rate and was September's best-selling console release. World of Warcraft's new expansion is apparently the fastest-selling Warcraft expansion ever. I don't know how that's possible, but that's what the commercial says. Diablo 3 is selling well on Switch, and it's not enough. Not because Activision is greedy, I mean, they are, of course, but that's what I'm getting at. The system that Activision exists in requires greed. Activision has had massive, massive success these last two years. But this year wasn't more successful than last year. And that means investors who own the company and don't give a rat's ass about the quality of games start to look around and see if their money will be better off somewhere else. Somewhere that's growing better. Somewhere like a chemical company, or a pharmaceutical company, or agro business. And this is totally understandable. If you're an investor or an Activision, you really wouldn't care about the quality of the games, either. All you care about was if Activision was the best place to park your money right now. If it wasn't, you'd sell and buy something that was. And that decision is not based on the quality of the games. It isn't even based on how profitable the company was. It's based entirely on whether your share of Activision is going to rise in price or drop in price in the short term. People derisively say, oh, gamers aren't the customers. Shareholders are the customers. But yes, yes, that's right. That is precisely true. Shareholders are the owners of the company, and they are there to make money. And that money is made by eventually selling your stock for more than you paid for it. As much more as is humanly possible. That's the entire purpose of the venture, period and a sentence. But because this happens based upon growth, a few factors come into play. Mainly the fact that people are irrational and stupid. There is almost zero doubt that Blizzard's piece of shit mobile Diablo game will make truckloads of money, certainly in Asia. But stock dropped terribly because the people investing saw bad headlines, got nervous and sold their stock. Activision did not release a mainline Destiny game this year. They didn't release an Overwatch game. So they didn't grow because several of their most profitable franchises are between main releases. But in a year or two, they'll be a third massively selling Destiny game. And that will release in the same year as a Call of Duty game and maybe a major Blizzard game. And there will be growth and the stock will rise again. So seeing this, as much as we may not like it, it becomes quite obvious the bind that Activision is in. If they can lose $100 million of value because a Blizzard presentation was poorly received and Destiny and Call of Duty were only insanely profitable, but no more insanely profitable than last year, how do you prevent your company from losing value, losing you and everyone who own shares lots of money? You need a way to continually grow your profits in an industry where games take a very long time to make. In this light, it's obvious that a game like Destiny needs to not only be a huge sales hit, it needs to pump out consistent revenue that Activision can point to on a graph and tell investors, hey, check it out, Destiny is still making money even though it's not really releasing anything this year. So now the only question is this, how can Destiny keep making money even when it's not releasing a major game? Expansions by their nature sell far less than the base game. And this is true of every game ever made. No expansion ever sold better than the base game. In fact, the average for DLC sales is generally around 10%. 10% of people who bought a game will buy an expansion. It can be higher or lower of course, but considering 60% of people still playing Destiny bought for sake and it seems safe to assume that's about where Destiny's DLC sales are as well. Now with microtransactions, attach rates can be over 50%. This is why companies want microtransactions in every game. It's not just to bleed their customers, it's because it smooths out the profit and earnings curve. Being able to tell investors that games are consistently producing revenue while the team is working on the next release for DLC obviously means there are less wild quarterly swings. Fortnite brings in money every single day. Every quarter the game is making money long after the development costs are in the rear view mirror. Knowing this, can we really blame publicly traded companies for embracing this? Do we have to like what it does to games? No. Should we insist on microtransactions that aren't game breaking shit like Star Wars Battlefront 2? Of course. But we should at least understand that it's not mustache twirling villainy at work. It's just the nature of being a company whose life depends on the fickle nature of people and being able to convince them every three months that the grass is not in fact greener at Masanto or Dupont. And on top of that, the idea that Bobby Kotick or CEO or board members could not try to increase microtransaction monetization is crazy. If Bobby Kotick woke up tomorrow as not a horrible human being and decided he was not going to have any microtransaction in Activision games, it would not be long at all before the board of directors fired Bobby Kotick and found someone who would monetize games with microtransactions. It is the nature of the beast. It's what companies are there to do. Okay, class dismissed, but let's bring this around to Activision's totally predictable desire to get more microtransactions into Destiny and why that's actually so damn hard in a game like this. Destiny is. It's more like most MMO type games all about the loot. Fortnite and Call of Duty and Titanfall, they have things to unlock as fun little extras to give players medium and long term goals and keep them playing so that they're happy customers. But Destiny, the Division, World of Warcraft, Diablo, these games are about unlocking shit. That is the gameplay hook. As such, unlike in Call of Duty, you can't just sell stuff because that's the whole damn game and buying shit is less fun than getting shit. So how can Destiny implement a sustainable microtransaction system that keeps Activision happy? Let's be honest here, the Eververse Store is a disaster for Bungie. I have zero need to buy anything from the store because after everyone lost their minds at launch, Bungie basically gave up and got so generous that opening my loot boxes is actually a fucking chore now. I go to Test Everest and I see I've got like nine somehow. There is nothing I wanted that I haven't gotten in normal gameplay. And that is great for players and very bad for Bungie. The Eververse Store exists because Bungie must provide consistent revenue to Activision, must. So how can we fix this and give Bungie a microtransaction system that both provides value to us, their customers, and lets Activision provide value to their customers, the shareholders? Well, it only takes a few tweaks that players won't like but hopefully won't hate if Bungie is honest, transparent, and clear. If they ditch the bullshit PR nonsense and level with their players, I am confident most people, if not being treated like fucking Marks, would understand. And before I actually detail the two changes that can help Bungie better monetize Destiny, I want to go over that thing I just said. The thing about not being treated like fucking Marks. When Curse of Osiris launched, I did a Destiny video where I talked about all the problems with the loot boxes and microtransactions and how pissed players were. It's still my most watched video even though it's pretty bad quality wise. But I went over Bungie's response to player complaints about Eververse. It was pure PR bullshit. Let's play that here so I don't have to do it again. Bungie has a habit of responding to criticism of their design by saying things like, hey, we hear you and this was never our intention. So this part right here, this bothers me. We recognize that the scales are tipped too far towards tests at the moment and Eververse was never intended to be a substitute for end game content and rewards so we'll be making three changes for upcoming seasons. Now the Eververse was clearly and obviously designed to be just that. It's not an accident that more than half of the loot added to Curse of Osiris was not available in the game but only through the microtransaction store. That's a design decision. And this design decision hasn't only had a negative effect on loot drops and their reward system, in order to have enough content to sell, Bungie had to radically alter other aspects of the design. Shaders were made consumable for one reason, to have more things to sell in the store. Eververse was made almost entirely cosmetic, further diluting what little bill of diversity existed in the first place, only to avoid having to deal with a pay-to-win scandal. This is exactly what Bungie intended. Now how can I say that with total confidence? Because this is the game that Bungie created. Trust is a funny thing man, you have it until you lose it and the only way to get it back isn't just transparency, it's honesty. What I really wanted to see in this section was something like this and Bungie you can use this free of charge, this is yours. While we love our players and are committed to providing a fun, engaging, ongoing experience, we also have a duty to our investors and partners and ourselves to be as successful a company as we can be. With the industry moving towards an ongoing monetization model, we owed it to ourselves and our publisher and investors to investigate how to best balance the needs of our players with the needs of our business. We did a really bad job at that and we apologize. Many of the issues you've had with Destiny 2 are indeed the result of us doing a bad job integrating our micro transaction model and many of the changes we made in the name of revenue are baked into the game at core levels and will take time to fix. But understand that we realize we've gone too far, too fast and plan on fixing it. We're sorry, going forward we'll do a better job selling you stuff that you want that doesn't break the game in other places. Now that's not what that says up there. What Bungie says is, we realize you don't like the way micro transactions are handled in the game. We don't know how that happened. Somebody must have broken at night to mess with our code. But don't worry, we're going to find that person and get them fired from wherever they work. In the meantime, we're going to start making it less obviously odious. Thanks for the heads up guys. We might never realize everything I said there stands. If you are honest with people and provide them value and respect their intelligence, they are much less likely to go into open revolt when you try to sell them something they used to get for free. I'm about to give a couple of ideas for selling things many players are used to getting for free. And if they're going to do that, they can't vomit a bunch of bullshit about player choice and feelings of accomplishment on us. They need to come out and say something like this. We love making Destiny. We think we've got it better than we've ever had it and we've got ideas to make it even better still. We've made some mistakes, but most of those mistakes were made because we were trying to make the best game we could while also making the most profitable game we could deliver to the people who invested in our company and our vision. The industry is changing. Investors aren't happy with just selling a lot of games now. Studios need to sell games and produce consistent ongoing revenue. With that in mind, we want to be transparent and upfront about some changes we're making. We're asking our players to understand that these changes aren't being made to exploit you or take you for granted or milk you or get over on you. We're doing this because this is what it takes to keep making the games we want to make. Going forward, we're going to need to make more money for microtransactions. Our hope is that we can provide you with cool shit you want to buy that will be at a reasonable and fair price, that none of it will have a material impact on the gameplay experience of anyone, whether they buy something or not. We hope you like what we have to sell, and we hope you'll buy a bunch of it. That's how you show customers you respect their intelligence, that you appreciate them as customers as well as players, and that you're trying to have a business relationship with them, and not that you're out to milk them. So what are these two changes? Well, shit, I'm glad you asked. Transmovification and Emotes. Let's start with the Emotes because they're already in the game. In Destiny 1, the original Eververt store mainly existed to sell Emotes, and you know what? I actually bought a bunch. I refused to buy fucking loot boxes because I don't like gambling. I'm not against gambling. I just don't like it. I like to spend money and get things, not the chance of things. I'm reckless everywhere in my life except with money where I'm conservative and risk averse by nature. I have bought nothing in Destiny 2. Why? Because A, almost everything I want, I've been able to unlock by playing it for free, and B, Bungie won't just fucking sell me something. They sell me a blank fucking box or a tiny little selection of items for silver. There is no situation anywhere on earth where I would feel comfortable giving somebody money for a fucking mystery box. I mean, what the fuck? It blows my mind. I don't even understand how anyone can do it. If you enjoy it, great. But you don't even know what you're buying. You are buying a fucking box. Fuck that. Keep all the green, blue, and most of the legendary emotes in the bright anger and loot boxes, but you cannot buy these for real money anymore. Or better yet, have them drop out in the world as loot, but the really, really cool emotes, the exotic ones, those should be for sale. Not three of them a week, not a box that might contain one, just fucking sell those emotes. They're cool. I inexplicably get jealous when I see someone with a cool one I don't have and they're fun. They're something I have paid for in the past and I would pay for again. A reasonable price point to me seems to be between $3 and $5 per. By all means, have limited edition event ones that are only for sale during specific times, but the vast majority should simply all be on sale all the time for $3 to $5. Low enough that is an easy impulse buy, high enough that selling 100,000 of them isn't anything to sneeze at. Offer loot boxes of random, exotic, or legendary emotes for two bucks a piece if you must. Have one other loot box that gives a random retired event emote for five bucks, boom. You can tell Activision you've got loot boxes still, but also you've got a product that lots of players would find desirable. Isn't exploitative. It's a fair price in a transparent store for an actual product that people want and have paid for in the last game. The second micro transaction is armor transmogrification. Destiny has badly needed a transmog system from the beginning. This is a common feature in loot-based or MMO games. Player customization is important in these games, but getting just the right armor set is also important and these two things are badly aligned. Random roles on armor means it takes forever to get exactly the perks I want and the odds of getting all those perks and all the pieces of armor that I actually want, it is literally zero. The best part of this system is I've got a gameplay hook as well. Destiny already has armor and gun ornaments. These are mods basically that change the appearance of gear and while many are cool, almost all of them are very, very slight changes to the appearance. What we need is an expansion of this system into true transmog. So you can equip an ornament to change the appearance of any armor piece in the game into any other armor piece from Destiny 1 or 2. You'd acquire blueprints for these armor ornaments out in the world. So if you wanted to make your armor look like the Taken King set from the Taken King April update, you'd fight Taken enemies or complete an achievement to unlock the blueprint. You would then take that blueprint to the Evil of Ante in the tower and for a price, she'd apply it to your armor. Something reasonable again. Two or three dollars for an armor piece. Five or eight bucks for the entire set. This way, you can collect all the blueprints through gameplay for people who like to collect them all but Bungie can still charge for the service. I would, without a doubt, make use of this. I'd use the ornaments to change all of my warlock armor pieces to my favorite one, the King's Fall Raid set that I loved more than any other armor set the game has ever had. No perks or rolls would be affected and I could remove the ornament and put it back on like any other ornament once it was unlocked and applied by Eva. This is a cool product that players want. It would lead to significantly more player customization and freedom and they'd sell a shitload of it and put new and fun grind into the game. I am positive a large percentage of players would buy these. I'd almost certainly buy it for several sets on several characters because I'm old and suddenly somehow have enough money to fucking waste. I may as well waste it on making my video game avatar look a little cooler, right? And while we're at it, here's a crazy idea. Sell those emotes and armor ornaments for dollars. Not silver, not silver dust, not platinum glimmer. Just put the real fucking price on the item. This is important. Treat customers like customers. Treat them with respect. Respect that they're giving you their hard-earned money. I don't even wanna think about my job when I leave it and I'm giving you some of the money I make there. Don't treat me like a fucking snook. Don't charge me 613 silver dust. Charge me $5 because you know what that says to me? It says you don't think I'm a fucking sucker who won't realize when I'm paying. It means you're not trying to subtly manipulate me. It means you're not out to exploit me. It means you're trying to sell to me. Selling is an honest trade. Manipulating people into not knowing what they're paying is called grifting. And most people don't have a problem with people trying to sell them things. Fuck man, I am constantly throwing money at anyone who'll sell me even a moderately entertaining game. But people do have a problem feeling like schnooks and marks. They don't enjoy feeling like you're selling them the undercoating on a fucking used car. Treat your players with respect. Level with them. Explain the need. Be transparent and then get to selling me things I want for a fair price and an actual, existent currency. We will buy it and we won't hate you. I'm closing by making clear I don't like Activision and I think the way our system requires companies to always be chasing short-term growth is quite literally destroying the world like literally poisoning it. It will almost certainly be the cause of the extinction of our species. So while it sickens me and I don't like it, I understand it. I get that Bungie has pressures, that Activision is responding to pressure, that investors are responding to pressure. All I ask is that they be fair and honest and I'll reward that and I'll buy the shit out of something that feels fair and makes me giggle for a few seconds. Make it so Bungie. All right, see you next time. Bye.