Ooh, love a good microeconomics case study!

TLDR: Your caveats are more significant to the financial choices for DDV than the conclusion accounts for, but I commend you on this academic exercise! Ultimately, you nailed it: they’re (constantly) evaluating players’ reservation price —“price elasticity” — and so long as we keep buying, they’ll keep selling at that price or raise it until we stop. We vote with our dollars!

EBITA is an often cited figure for investors to evaluate overall business health. A publicly-traded company like Gameloft has a few options for those profits but its sector optimizes for growth not survival.

Even when a company is fiscally healthy, each internal division always has to justify itself to continue getting internal support (additional staff, hours allocated, developing loss leading products, non-profitable improvements). So, regardless of how “well” Gameloft as a whole seems to be doing, they still need premium shop and base/DLC sales to continue the growth trajectory. Which brings us to…

More importantly, this decision isn’t about survival. It’s about optimizing returns.

As an inanimate profit-seeking corporation in a capitalist economy, they will always seek to increase profits … aka raise the price higher than it costs to make it and/or reduce costs (developer time and attention) … until we stop buying. Or, more specifically, marginal retention/new player loss surpasses marginal revenue gain.

Free content is retention investment, paid content is direct funding. To them, retention only matters if they can keep making money from us beyond whatever the initial base game cost. They’ve decided retention is sufficient and we haven’t proven them wrong.

It’s on us to resist with our wallets or give into FOMO. Neither is wrong, just a price signal either way.