Diminishing Marginal Utility – The Gamer’s Bane

Without constant and original stimulus, people become bored very quickly. Yet somehow, video games keep some players engaged for hundreds of hours while offering relatively similar content throughout. How is it that developers manage to keep players glued to their screens for so long, when it is in our nature to eventually lose interest? I believe the answer lies in one of the textbook’s most basic economic concepts.

Marginal utility is the amount of extra benefit one gets from the consumption of each additional unit of a good or service. In regular economic theory, marginal utility diminishes as more units are consumed. A classic example is pizza – your first slice of Dominoes thin crust pepperoni gives you far more benefit/enjoyment than your 10th. This doesn’t necessarily mean that you won’t eat 10, or 20, but the marginal utility of pizza consumption diminishes. Visualise this below, as the total utility curve flattens as it approaches point P, the peak utility. The theory states that you will continue eating until your satiation point (X), at which point every extra slice of pizza would result in disutility, or displeasure. If you were to keep eating at this point, your total utility would decrease. This relationship is reflected in the diagram below.

Regular MU

The thought may have crossed your mind that a pepperoni pizza is not the same as a video game. You are right. I believe the utility curve behaviour is drastically different for successful video games:

  1. Unlike pizza, gamers don’t extract maximum utility from their first unit (of time) of consumption in a game. Gaming utility peaks at different times for different players. Usually, this peak occurs when a player has become more skilled, and is able to benefit from more aspects of the game. This creates an initially upward sloping marginal utility curve – players get more utility from each extra unit of consumption up to their personal playing peak.
  2. Players stop playing long before they hit marginal disutility, because there are other games from which to extract more utility if they ever begin to tire of the gameplay. A player is unlikely to play right up until their satiation point (X), because they could simply switch to a new game.
  3. The marginal utility curve can be manipulated during a player’s engagement with a video game. This is done through DLC, expansion packs, microtransactions and other in-game add-ons. On this point, any good which is dynamic allows for a variable marginal utility curve.
  4. There are multiple sources in a game from which people derive utility, which sustains the marginal utility curve longer than other goods. On a pepperoni pizza, people are only able to enjoy the ingredients. In video games, value can be extracted in many ways. Please refer to a previous article for further discussion.
  5. Unlike a simple good like pizza, video games have no guaranteed satiation point. Players appetite for virtual entertainment can be indefinite with the only constraint being time.

I have sketched a couple of new curves to capture these variables in two different scenarios:

NEW VIRTUAL MU.jpg

Please note that the total utility (TU1) curve is mapped only for marginal utility 1 (MU1). I have not mapped MU2’s TU curve, as it wouldn’t explain anything.

A few things to note about the above graph:

  1. As MU1 peaks and begins to diminish, the TU1 curve stops increasing at an increasing rate, and begins increasing at a decreasing rate.
  2. TU1 still peaks when MU1 reaches the satiation point (X).
  3. MU2’s jagged spikes in utility derive from hypothetical releases of DLC or expansion packs. These boost utility in the short run, rejuvenating the playing experience with new and fresh material. These do not usually significantly change the game itself, and as such are unlikely to turn the MU2 curve back upward to a positive gradient. They merely cause spikes, giving the player a new thrill, or a new quest to complete.

The quality of a game is what ultimately determines the gradient of its players’ marginal utility curve. The better the game, the longer the curve will stay above the satiation point. Great games, according to this model, are those which can maintain an upward/horizontal marginal utility curve for as long as possible. As mentioned earlier, gamers are fickle, and once their marginal utility begins to tilt downward, developers don’t have long before they’ve lost the player. Developers are constantly fighting the relentless onset of boredom from an insatiable customer base. It is a fight they cannot win.

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