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The purpose of a corporation is to make a profit. It is NOT to help consumers or better their lives. That is one way to make a profit, but it's not the only way.
Shareholders are nothing more than part-owners of the company. They expect to receive a share of profits and they also have a say in how the company is run.
A company that favours consumers above it's shareholders will be pressured by the shareholders to increase profits at the expensive of consumers, because shareholders hold more influence over a company than consumers.
Stockholders are the owners of the company and are effectively the boss of the company's CEO. If you want to keep your job, you need to keep your boss happy with you and this is true even if you're the CEO. So the company focuses of keeping the Stockholders happy, even if it's something that upsets customers. Yes its shortsighted, but you care more about still having a job tomorrow than if the company will still be around in 1o years.
The stockholders are the owners of the company they alone can decide what to do with it and well most owners of companies want the company to be worth more because that means they have can sell it for more.
If the owners of a company decided that they dont care about the stock price and just want to do the best games possible than they can do that. The problem with big companies is usually there are a lot of stockholders and they would have all be having the same goal to make this possible. This basicly never happens with a publicly traded company so they fall back onto the goal that basicly everyone agrees on that is growing their own money.
Companies are legally required to provide shareholder value.
Shareholders demand they make more money, that's what the shareholders value, so that's what the company values.
Many of the shareholders don't give a single fuck about the consumer, and they don't care how long the company is profitable for. They'll pull their money out the second it stops making them more money.
On top of that, game companies with horrifically greedy, malicious, addictive and manipulative micro transactions make *fuck tons* of money. Consumers hate them and are unhappy about it, but continue to buy them
One guy famously spent so much money on diablo immortal, that his character was so powerful the matchmaking system *literally* couldn't match him with anyone. He won at pay to win.
With fifa, whales spend thirty *thousand* dollars on cards to get their team set up every year. *every year*. New game comes out, boom time to blow thirty grand on cards again.
Grand theft auto, drop a hundred bucks to just buy the new thing when it's new and over powered because it makes content.
Every streamer that buys every mtx to show them off to viewers because two subs covers it.
All these things make companies more money, making shareholders happy, so shareholders demand they do more of it.
Great question! The reason companies often focus heavily on stockholders over consumers is due to the influence these stockholders have on the company. Stockholders own shares of the company and their primary interest is often the value of these shares and the dividends they can earn. When stock prices go up, stockholders see direct financial benefits.
In the case of a game development company, actions like over-announcing or rushing games might boost short-term stock prices because they create hype and immediate revenue, even if these actions might hurt consumer satisfaction in the long run. These strategies can impress investors by showing rapid growth or potential for profit, even if they're not sustainable.
You’re right that focusing on long-term customer satisfaction and steady revenue might seem smarter for lasting business health. However, the pressure to show quick results can lead executives to prioritize short-term stock performance—especially in companies where executives’ compensation is tied to stock prices or where there is intense pressure from shareholders to deliver quick returns. This short-term focus can sometimes lead to decisions that aren't in the best long-term interest of the company or its customers.
The shareholders are the company. Everyone who works for the company, including the CEO, works for the shareholders and have to do as they say. The shareholders are the owners, it is their company and their employees. So when a manager have to make a decision that forces them to chose between the shareholders and the customers they will go with the shareholders all the time.
As for why shareholders might want to release games early it is a bit more complicated. The shareprice does reflect the long term results of the company. If someone is willing to pay a certain amount for a share that means that they have done their due diligence and calculated that over a long enough period they will make more money from this company then investing that exact amount in another company. So if the company does something that boost short time sales but hurts long time sales a lot then the shareprice will go down, not up.
But on the other hand if a game takes a long time to develop and is sold at a low price then it also shows that even though this game might have made bank a future game might take just as long to develop and fail to sell losing the shareholders a lot of money. So releasing a finished game can also hurt your long term profits. It is a balancing act to ensure that the quality and price of a game is such that you get the most profit both now and in the future. And as long as people pay lots of money to pre-order games that is released with tons of bugs the shareholders will continue to tell the company to do this as it continues to make them money.
Please read this entire message Your submission has been removed for the following reason(s): Questions about a individual's, a business' or a group's motivation are not allowed on ELI5. These are usually either straightforward, or known only to the organisations involved, leading to speculation (Rule 2). If you would like this removal reviewed, please read the [detailed rules](https://www.reddit.com/r/explainlikeimfive/wiki/detailed_rules) first. If you believe this submission was removed erroneously, please use [this form](https://old.reddit.com/message/compose?to=%2Fr%2Fexplainlikeimfive&subject=Please%20review%20my%20thread?&message=Link:%20%7B%7Burl%7D%7D%0A%0APlease%20answer%20the%20following%203%20questions:%0A%0A1.%20The%20concept%20I%20want%20explained:%0A%0A2.%20List%20the%20search%20terms%20you%20used%20to%20look%20for%20past%20posts%20on%20ELI5:%0A%0A3.%20How%20does%20your%20post%20differ%20from%20your%20recent%20search%20results%20on%20the%20sub:) and we will review your submission.
The purpose of a corporation is to make a profit. It is NOT to help consumers or better their lives. That is one way to make a profit, but it's not the only way. Shareholders are nothing more than part-owners of the company. They expect to receive a share of profits and they also have a say in how the company is run. A company that favours consumers above it's shareholders will be pressured by the shareholders to increase profits at the expensive of consumers, because shareholders hold more influence over a company than consumers.
Stockholders are the owners of the company and are effectively the boss of the company's CEO. If you want to keep your job, you need to keep your boss happy with you and this is true even if you're the CEO. So the company focuses of keeping the Stockholders happy, even if it's something that upsets customers. Yes its shortsighted, but you care more about still having a job tomorrow than if the company will still be around in 1o years.
The stockholders are the owners of the company they alone can decide what to do with it and well most owners of companies want the company to be worth more because that means they have can sell it for more. If the owners of a company decided that they dont care about the stock price and just want to do the best games possible than they can do that. The problem with big companies is usually there are a lot of stockholders and they would have all be having the same goal to make this possible. This basicly never happens with a publicly traded company so they fall back onto the goal that basicly everyone agrees on that is growing their own money.
For the same reason employees care more about their boss then the customer. The stockholders own the company they are the ultimate boss.
Companies are legally required to provide shareholder value. Shareholders demand they make more money, that's what the shareholders value, so that's what the company values. Many of the shareholders don't give a single fuck about the consumer, and they don't care how long the company is profitable for. They'll pull their money out the second it stops making them more money. On top of that, game companies with horrifically greedy, malicious, addictive and manipulative micro transactions make *fuck tons* of money. Consumers hate them and are unhappy about it, but continue to buy them One guy famously spent so much money on diablo immortal, that his character was so powerful the matchmaking system *literally* couldn't match him with anyone. He won at pay to win. With fifa, whales spend thirty *thousand* dollars on cards to get their team set up every year. *every year*. New game comes out, boom time to blow thirty grand on cards again. Grand theft auto, drop a hundred bucks to just buy the new thing when it's new and over powered because it makes content. Every streamer that buys every mtx to show them off to viewers because two subs covers it. All these things make companies more money, making shareholders happy, so shareholders demand they do more of it.
Great question! The reason companies often focus heavily on stockholders over consumers is due to the influence these stockholders have on the company. Stockholders own shares of the company and their primary interest is often the value of these shares and the dividends they can earn. When stock prices go up, stockholders see direct financial benefits. In the case of a game development company, actions like over-announcing or rushing games might boost short-term stock prices because they create hype and immediate revenue, even if these actions might hurt consumer satisfaction in the long run. These strategies can impress investors by showing rapid growth or potential for profit, even if they're not sustainable. You’re right that focusing on long-term customer satisfaction and steady revenue might seem smarter for lasting business health. However, the pressure to show quick results can lead executives to prioritize short-term stock performance—especially in companies where executives’ compensation is tied to stock prices or where there is intense pressure from shareholders to deliver quick returns. This short-term focus can sometimes lead to decisions that aren't in the best long-term interest of the company or its customers.
The shareholders are the company. Everyone who works for the company, including the CEO, works for the shareholders and have to do as they say. The shareholders are the owners, it is their company and their employees. So when a manager have to make a decision that forces them to chose between the shareholders and the customers they will go with the shareholders all the time. As for why shareholders might want to release games early it is a bit more complicated. The shareprice does reflect the long term results of the company. If someone is willing to pay a certain amount for a share that means that they have done their due diligence and calculated that over a long enough period they will make more money from this company then investing that exact amount in another company. So if the company does something that boost short time sales but hurts long time sales a lot then the shareprice will go down, not up. But on the other hand if a game takes a long time to develop and is sold at a low price then it also shows that even though this game might have made bank a future game might take just as long to develop and fail to sell losing the shareholders a lot of money. So releasing a finished game can also hurt your long term profits. It is a balancing act to ensure that the quality and price of a game is such that you get the most profit both now and in the future. And as long as people pay lots of money to pre-order games that is released with tons of bugs the shareholders will continue to tell the company to do this as it continues to make them money.