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Yodo1's AI-driven whale hunt is a bad look for the games industry | Opinion

Transformers players spending $150k grabbed headlines, but Yodo1's GCAP talk raised tough questions about responsible monetisation in mobile

Numbers can often supply a ready-made angle for a story. The depth of a price cut, the unsettling scale of redundancies, the length of a surprise delay; in each case, the headline would hang upon on a number, and the bigger the number, the better.

It was no surprise, then, to see reports -- per Kotaku -- of Yodo1 CEO Henry Fong's awed revelation that a player had spent $150,000 (USD) in Transformers: Earth War. That is a huge, almost inconceivable number for a player to spend on a single game, and it was also no surprise that developer Space Ape Games then sought to create a little distance between its work and the apparent machinations of the company handling its business in China.

But that one, astonishing number was not the whole story. Not least because, as our own Rob Fahey pointed out in his op-ed last week, there is nothing intrinsically wrong with a single player spending a vast amount of money on a single game -- even a sum as vast as $150,000. However, when the amount reaches that level some important caveats come into play, Fahey said -- "I'd want to feel pretty confident that the person involved can afford $150,000, for a start."

"About a year ago I decided, what if I could teach AI how to find whales inside of games?"

Henry Fong

I was in the audience at Game Connect Asia Pacific when Fong delivered his talk, and much of what he said besides that enormous number spoke directly to this concern -- a concern that has been at the very heart of so much debate this year, as politicians across the world have turned their attention to the ethical and moral responsibility the games industry has (and seems to abdicate) when monetising its audience.

Fong was actually the host of a larger session involving two of Yodo1's Australian clients: Hipster Whale, the creator of Crossy Road, and Featherweight Games, the studio behind Rodeo Stampede. By working with Yodo1, both companies had fulfilled the objective laid out in the title of the session: "Making Great Money to Make Great Games."

"So why am I giving this talk about making great money from great games?" Fong asked the GCAP audience. "I got into the games industry not to make money, but because I love games... Games are my passion. I've been playing games, and actually making games since I was about eight years old, when I got my first Commodore 64.

"The other reason is that I'm actually really good at making money. It's not something I love doing, but it's something I've learned to do and I'm really good at, and I started doing at a really young age."

One of Fong's early slides provided the evidence; a linear path from making money selling PCs at the age of 14, right up to making multiple millions in the present day from Yodo1 and (in an odd detail on the slide) "flipping houses in Macau."

"I made my first million at Microsoft, then I made a few more after that," Fong said. "But who's counting?"

Fong was speaking alongside Yodo1 client Featherweight Games

Fong was speaking alongside Yodo1 client Featherweight Games

Yodo1 was born out of the idea to combine what Fong loved (games) with what he was good at (making money), and the company has generated $150 million in revenue from its games in its lifetime. Hipster Whale (which was absent from the talk, leaving Fong to give its presentation instead) and Featherweight gave an impression of how they had made money from their products, but the idea that generated the headlines arrived after the developers had finished speaking.

"Some of the interesting things [Yodo1 is] doing, because I'm really lazy," Fong said. "We've learned a lot about making money from games, and making and managing good games. About a year ago I decided, what if I could teach AI how to do all of this? What if I could teach AI how to make money from this? What if I could teach AI how to find whales inside of games? What if I could teach AI how to moderate a game community of millions of players?

"The accuracy at picking potential whales after 14 days was about 87%. We think we can get it up to about 95%"

Henry Fong

"[Then] I wouldn't have to do it. That was really the impetus for us going down that path."

The investment in AI from companies like Google, Microsoft and Amazon have resulted in toolsets that "make it really, really easy" to apply AI to a host of different problems. "All it takes is the right data and the right application," Fong said, and "as a game monetisation company we already had years and years of very granular data that we could feed into the AI models, and kind of train AI up."

In setting up the motivation for using AI, Fong asked a series of questions that it could help to answer. Finding whales was just one of them, but it was the question that Yodo1 focused on, and the question Fong chose to highlight in his talk at GCAP.

"Let me tell you why that's important," Fong said. "In a game like Rodeo Stampede, we got a lot of players, and they all spend a bit of money. A big player might spend a couple of hundred bucks. In a game like Transformers: Earth Wars, a whale spends $150,000 (USD) in the game. So knowing who they are, and knowing how to manage them, is extremely important."

The conversation that followed the revelation of that $150,000 spend at least calls into question how important many believe it is for single players to spend such enormous sums, but that is Yodo1's goal for its new AI application. According to Fong, it took about a month to build the technology, and it was then fed two-and-a-half years of detailed behaviour and monetisation data collected from players.

"As of last week, the accuracy of the AI application at picking potential whales after 14 days was about 87%," Fong said. "We think we can get it up to about 95%."

Sitting in the crowd, it was hard not to be reminded of Google's demonstration of its AI Assistant booking an appointment at a hair salon. While the technology was undeniably impressive, the reaction demonstrated that many people have ambiguous feelings about the hidden use of AI to interact with and guide the decision-making of real people. In the Q&A session, GamesIndustry.biz asked for more information on how the AI "manages" players into becoming whales.

"The AI is trying to predict which players could become a whale," Fong said. "We built a data model that analyses the behavioural differences between people that become whales, and people that leave the game or don't spend any more money. We were looking at characteristics like spending patterns, spending velocity, the amount of time they spent in game, how many sessions, what they would buy, what guilds they're in.

"I always used to think that if you monetise your audience too hard, they'll leave the game. But it's actually the other way around"

Henry Fong

"It's a lot of stuff, and it's really hard for a human to crunch all of this data -- especially in real-time."

To give an impression of the quantity of data that Yodo1 collects, Fong said that it would take one human an entire year to "crunch" what it collects in a single day. Around two-and-a-half years of that data was fed into the AI that finds players with the potential to become whales.

"Once you know that this is a potential whale, they could go either of two ways: they can stay in the game and become a whale, or they can decide that this game is not for me, I'm gonna take my money and go elsewhere," Fong continued.

"By being able to predict who they're gonna be, we can then start to analyse how to keep them in the game [and] analyse their behavior. How do I increase their sessions? How do I increase their session times? How do I gently present to them a very attractive in-game bundle that is going to help them stay in the game?

"The funny thing is, I always used to think that if you monetise your audience too hard, they'll leave the game. But it's actually the other way around. Our retention rates for paid users in this game [Transformers] -- 30-day retention for paid users -- is 85%. So once they start spending, they don't leave. They want to stay in the game and preserve their investment, and when they stay in the game, they spend more."

The claim that a Transformers: Earth Wars player had spent $150,000 grabbed the attention of the press

The claim that a Transformers: Earth Wars player had spent $150,000 grabbed the attention of the press

This speaks to the point raised by Rob Fahey. It could be argued, he said, that it is not the responsibility of the developer or publisher to make sure players can afford to spend huge sums, just as it's not the responsibility of the bank to make sure that every penny of a bad loan is spent wisely. However, that argument overlooks the unique qualities of the relationship between a game and its players - particularly in the context of free-to-play mobile games.

"It would also be intellectually dishonest to ignore the fact that mobile game monetisation is inherently a process of creating wholly artificial scarcity of items whose necessity, creation and consumption the developer alone can control," Fahey said. "That's a lot of power over how much compulsion a player feels and it does, I think, introduce a slightly different moral argument to the question of whether the game operator has a responsibility to ensure they're not doing financial harm to their players."

Fong said on numerous occasions that players "spend when they want to... there's no pressure, they spend when they want to spend." Can the presence of an AI loaded with vast quantities of data explicitly designed to construct ways to get a player to spend more money be interpreted as "pressure"? It is a valid question, and it is the kind of question being asked more and more frequently by people both inside and outside the industry.

"I spend money in games to be entertained. If I don't want to spend, nobody can force me to spend"

Henry Fong

In the Q&A session, a member of the crowd asked what Fong would say to someone "who has issues with the concept of whales." When asked to elaborate, the person described the "psychological tricks" that can be used to encourage a player to spend money in free-to-play games. Fong chose to respond from his own perspective, citing the example of Tencent's Arena of Valor, a game he played for 18 months and spent the equivalent of around $0.15.

"It's really hard to get [players] to spend money in a game, by the way, but once I do [pay money], I can spend a lot," he said. "Another game I played for a month, and I spent $8,000. I spend money in games to be entertained. If I don't want to spend, nobody can force me to spend. If I want to spend, I'm happy to spend within my means.

"So when you're designing your game systems, keep that in mind. Design it from the player's perspective. There will be things that we design that we will price specifically... We'll do a price elasticity analysis, and we will price it so that, if you're a kid or someone that can't afford to spend thousands on a game, we'll price it so high that you won't even consider looking at it. It will be priced at $300 a pop -- you'll likely not even go near it.

"But for someone who can afford to spend thousands or even tens of thousands, they'll look at it and go, 'Oh, $300 bundle? $1,000 in value, let's pick that up.'"

This assumption that players only ever spend what they can afford is both dubious and problematic. As a millionaire many times over -- "who's counting?" -- a $300 bundle is of course affordable to Fong, but the idea that a kid presented with that same bundle "won't even consider looking at it" is at the very least fanciful.

What was missing from Fong's analysis of the need for AI to "manage" players into becoming whales was an acknowledgement of a third option in the stage before a player chooses that path. They can stay and spend or leave and spend elsewhere, of course, but they can also stay and spend money they can't afford or (in the case of younger players) shouldn't be spending at all.

The role game companies play in enabling compulsive behaviour is one of the primary concerns fuelling political and legal pressures of the kind embodied by this year's DCMS enquiry in the UK -- in which the participating game companies were described as "wilfully obtuse" around the key issues, and accused of only paying "lip service" to avoiding problematic monetisation methods.

What the DCMS would make of Yodo1's AI -- with its 87% success rate, rising to 95% -- is anyone's guess. But removing the last scintilla of human oversight from the gap between a player and $150,000 of their money is a very bad look for the games industry.

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Latest comments (16)

Not taking any position on the means of getting a person to spend $1000, $30.000 or $150.000 to a mobile game, but what is interesting is the automatic view that it is bad. Even a $1000 is a lot of money for us average people but nobody sees it exploitative that there are a lot of items being sold that are ridiculously expensive.
$1000 sneakers, $30.000 jacket, $150.000 handbag. Surely $30 handbag is equally good for carrying your shit around than the 150K one? But we do not blink if people who have money spend it on stuff like that, let alone that we would question the morale of someone selling them with such a high price.
So is the only question here one about the delivery method? Or are we once again using double standard against games?
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Brendan Sinclair North American Editor, GamesIndustry.biz28 days ago
@Kim Soares: The ongoing nature of the relationship, the developer's ability to track player behavior and adjust monetization methods on the fly according to that, the opaque nature of the value proposition, the difference between selling a physical good that can be resold or modified and used for other purposes and selling a digital good which the customer doesn't actually own but only has limited access to, the way many games implement tactics borrowed from casino games in order to bump up the amount people spend... Those are a few of the differences that make the luxury goods parallel less appropriate and make this more than people having a double standard about games.
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Eddie In Product Manager - Games, Mobile, Boss Fight Entertainment28 days ago
a $300 bundle is of course affordable to Fong, but the idea that a kid presented with that same bundle "won't even consider looking at it" is at the very least fanciful.
The problem isn't that luxury goods or F2P games have really high priced bundles, it's that kids have access to $300. Having met Henry, I'm sure he'd agreed that if there were a reliable way to teach the AI to stay the hell away from kids, he'd do it immediately because that's not how many of us are designing these systems.

@Brendan Sinclair: I can guarantee you that we want to tread carefully when pushing too hard for the ability to own / resell virtual items. I hear this criticism of microtransactions a lot but the second you put in a cashout feature, that's when you turn kids into zombies, day traders and hustlers and hackers. You know that famous story about the people who die in PC cafes in Korea while playing MMOs non-stop for days and days? The part the media missed in that story is that those guys were doing it to chase a payout. Let's safeguard the current environment for kids before going that route.
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Show all comments (16)
Andrew Jakobs Lead Programmer 28 days ago
And how is this any different from other sectors monitizing stuff, like magic cards, slotmachines or scratchcards in local stores. If people want to spend so much money on junk, it's their problem. If kids spend hundreds of dollars in those apps, it's the parents responsibility..
But what do I know, I'm one of those people that don't spend any dime on games like this and don't go for microtransactions and wait with episodic games until it's done before buying the set.
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Bob Johnson Studying graphics design, Northern Arizona University28 days ago
Caveat Emptor.

All I needed was a way to protect my kids from themselves and iOS has had that for years. They can't make any in-app purchases.
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ElvisHasLeft Gaming since '82 27 days ago
Great article. Thank you.
People like "who's counting?" Fong, can be classified and entrepreneurs, unethical, immoral, greedy humanoids, but the most important point, is that the "who's counting?" Fongs of this world are ruining the gaming industry.
Caveat emptor!
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ElvisHasLeft Gaming since '82 27 days ago
@Bob Johnson: I have done the same to my kids and I spend time spreading the word to my friends, to protect their kids. If the game needs cash to be fun, then try another game.
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ElvisHasLeft Gaming since '82 27 days ago
@Kim Soares: No double standards. It's perfectly fine to spend $1000 for a bottle of red wine or even more, If one can afford it and one is an adult capable of making that decision.
My point is that teenagers and children should not be able to spend any money on games, like they are not allowed to pay for $1000 sneakers, $30.000 jacket, or a $150.000 handbag.
Put the right controls in place, then the gaming industry can have a blast with "adult" whales.
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My point is that teenagers and children should not be able to spend any money on games, like they are not allowed to pay for $1000 sneakers, $30.000 jacket, or a $150.000 handbag.
Put the right controls in place, then the gaming industry can have a blast with "adult" whales.
@Orochimaruh: Yes, it is a problem if kid would spend $1000 of their parent's money that the parents cannot afford. But as couple of people already pointed out, parents can easily disable purchases from the device.
Any Money on games
I don't see why kids should not spend ANY money on games?

Another thing is that some kids do get $1000 sneakers, $15.000 home entertainment systems etc. from their parents and those parents can afford and will let their kids spend a lot of money on games. There was no outrage about Club Penquin (my kids spent hundreds on it) or Skylanders (my kid spent around $500 on those damn toy figures and they are as useless as digital goods and much worse for the enviroment).

Again, kids should not be exploited, not by games, not by burger joints, not by toy companies, not by the music industry.
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Alex Barnfield Lead Engineer, 17-BIT27 days ago
It's nothing to do with the value of the games, it's how they are sold. If you have $150k and want to pay to have your ideal game made then great. Sell someone a custom flight simulator for that money and it certainly won't make headlines. The issue here is that this product has no set value and is closer to gambling than a concrete purchase like the comparisons made here.

Edited 2 times. Last edit by Alex Barnfield on 22nd October 2019 8:38am

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Kenneth Young Freelance Composer & Sound Designer, AudBod27 days ago
It's all good - post-Brexit, England is going to be a *fantastic* place to run an exploitative business.
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Ian Griffiths Product Owner, Hutch27 days ago
@Orochimaruh: Why do you think it's appropriate to call Fong immoral? You also seem to class entrepreneurs as immoral which seems odd, without them we wouldn't have a games industry.

You talk about not allowing children the ability to spend money, that's actually legally and morally a the right and responsibility of their parent or guardian. The platforms provide tools to empower parents and guardians to enforce their decisions on these matters, for example they allow them to restrict games by age rating and disallow any in-app purchases.
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ElvisHasLeft Gaming since '82 27 days ago
@Kim Soares: I did not mean any money on games - my bad. I meant that any money spending by children and teens must be approved by a responsible adult (parent, legal tutor, etc.)
(IMO, good games do not need u-transactions or time-savers or surprise mechanics, to become better games and fortunately, there are plenty of examples around)

What I ask for in a nutshell 1) better game ratings that help parents keep children away from ca$h grabbing tactics; 2) ca$h transactions can be blocked and need to be approved by an adult. Simple to implement.
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Klaus Preisinger Freelance Writing 26 days ago
Fong's moral choice was made when he trained the AI to look for people who would spend large amounts. He did not ask whether they should spend that amount. He did not ask whether he should take that amount from a single person. Fong did not ask what he could give to people with his game, instead he optimized it towards what he could take.

Buy tickets now for my next show called "Don't Worry, it is all part of the Act", in which a group of performance artists will shake down the audience for every penny they got on them, which is totally not armed robbery, but art.
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What I ask for in a nutshell 1) better game ratings that help parents keep children away from ca$h grabbing tactics; 2) ca$h transactions can be blocked and need to be approved by an adult. Simple to implement.
@Orochimaruh:

But we already have both, right? Age ratings in mobile games focus on game content but if the game has micro transactions it is clearly stated in the game store page. And purchases can be disabled from the device using parental controls.
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Ian Griffiths Product Owner, Hutch24 days ago
@Klaus Preisinger: I completely disagree, Fong did ask people if they wanted to spend money, that is part of what makes a fair and legal transaction. Fong describes presenting players with offers and those players deciding to purchase them, that is the basis of most consumer transactions in retail.

Optimising to the consumer is nothing new, we see it in everything from car sales to bank loans to supermarkets. Now of course digital environments allow for this to be personalised but there's nothing out of the ordinary. If anything, as a consumer, wouldn't you want a good or service to be better tailored to you? If a pay for use product or service is improved specifically to your demands then it makes sense that you would spend more on it; that's simply supply and demand.

You imply some sort of 'shake down' but you present no evidence of mistreatment, mis-selling or anything untoward by any standard I can see. In fact even in your analogy nothing untoward has happened, if people don't want to give every last penny, they can simply choose not to.

Fong didn't take money from anyone, he worked on offers to players which we must assume are legal transactions. The player would have been presented with an offer and decided to purchase it. That transaction will be covered by relevant consumer laws
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