The impact of forced inclusion: how ESG strategies are changing the gaming industry and cultural values
Abstract. Companies are currently seeking to improve their ESG ratings to attract interest from investment funds and investors whose current and long-term active and passive investment programs are focused on sustainable development. This trend is particularly noticeable in the video game industry: companies are increasingly engaging specialized agencies to strengthen their social and governance component of the ESG rating by introducing inclusive components. However, their forced introduction without taking into account cultural differences and audience preferences can lead to contradictory results. The purpose of this article is to consider how this practice affects the investment attractiveness of gaming companies and their financial performance in the long term. To solve the objectives of this study, certain aspects of the activities of Sweet Baby Inc., a company that the largest players in the video game industry turn to make their content more inclusive in terms of gender, race, and sex, as well as to improve their ratings to attract large investments from funds such as BlackRock or Vanguard. The study addresses the question of how far gaming studios can go to attract audiences, including rewriting stories and destroying social norms, values, and morals. The scientific novelty of this study lies in the fact that for the first time, a comprehensive analysis of the impact of ESG strategies, in particular inclusivity, on the gaming industry is conducted, taking into account the cultural differences of the audience. Unlike previous studies, which focused on traditional industries such as energy and finance, this work considers the unique aspects of the gaming industry, where interaction with the audience plays a key role.
Keywords: values, ESG, inclusivity, destructive influence, gaming industry, video games, investments, gamingsphere.
Highlights:
- companies that now actively implement various inclusive elements in their content achieve higher ESG scores in recognized ratings, which in turn helps them attract capital from major investment funds;
- forcefully embedded in the product, inclusive topics can cause quite diverse re-action among consumers from different regions. For example, in countries where conservative prices prevail, such measures can lead to a decline in sales and company reputation, and conversely, in liberal countries inclusiveness is viewed positively;
- forced balancing between investors` demands to maintain the rating and the main audience`s compliments forces companies to be more effective in managing and minimizing reputational and financial risks, attracting consumers;
- for the successful implementation of inclusive elements, companies use tools such as regional content adaptation, pre-testing in focus groups and active interaction with the audience;
- despite the potential positive results of introducing inclusive elements into their product, companies risk long-term losses that are reflected primarily in loss of reputation in the eyes of consumers.
Olga V. Panfilova, Edgar I. Babin, Nestor I. Spekhov - St. Petersburg State University of Economics, Saint Petersburg, Russia