What Do Microtransactions Mean for the Future of Gaming?

Microtransactional models have emerged in part with the rising popularity of online gaming and connectivity, promising ongoing revenue streams that offer new ways to structure game design and monetization. The initial conception of this strategy projected small amounts of income being generated from a wide range of participants; however, applications of the model returned a different result.

The vast majority of users spend nothing, while a small fraction of dedicated enthusiasts (often referred to as "whales") consistently spend large sums. Companies like Electronic Arts (NASDAQ: EA  ) , Take-Two Interactive (NASDAQ: TTWO  ) , Microsoft (NASDAQ: MSFT  ) , and Sony (NYSE: SNE  ) have begun the push to make microtransactions a gaming staple. Will these efforts pay off, or do they risk fundamentally damaging the value perception of triple-A software?

It's in the game
Electronic Arts has long been one of the industry's most vocal and active proponents of microtransactions. Reacting to controversy surrounding the implementation of microtransactions in its full-priced retail release Dead Space 3, the company's CFO Blake Jorgenson stated that all future titles would incorporate the new way to pay and play. Amidst the additional outcry generated by this stated plan, Jorgenson later amended his comments, suggesting that they only applied to the company's slate of free-to-play mobile games.

The company released more than 60 mobile games in 2013, pushing substantial digital revenue growth, with Apple as the company's biggest retail partner in its first fiscal quarter. Electronic Arts has an obvious short-term incentive to further normalize the revenue model it says consumers are "enjoying and embracing."

Nickel and dime packages
One of the biggest problems with microtransactions is that they either throw off the balance of a game or create situations in which players are aggressively steered toward paying for content that would otherwise be free or more easily unlocked through game-play. NBA 2K14 from Take Two is a title that has generated substantial push-back due to the structuring of its in-game economy.

Performing basic actions such as trading players or firing coaches requires players to spend in-game currency and, wouldn't you know it, this currency just so happens to be purchasable with real world dollars. That the vast majority of reviews for the game have no mention of its surreptitiously demanding economy is not evidence that such practice has been accepted by the consumer base. The big software publishers enjoy notoriously cushy relationships with review outlets when it comes to major titles. There is no doubt that Take-Two will catch a few whales if it insists on casting this sort of net with its console titles. Whether the haul is worth the risk of driving away the core consumer is the pertinent question.

Looking for whales in all the wrong places
Microsoft's Forza Motorsport 5 is one of the premier launch titles for the company's Xbox One and the latest entry in a critically acclaimed series. The game was also released with some of the most egregious microtransaction implementation to date. The game's economy required near ludicrous hours to unlock certain cars and features. Again, this issue went largely un-addressed in published reviews, but fan outcry prompted an apology from the game's developer, Turn 10.

The studio has recently released an update that lowers prices across the game's economy, but it is likely that damage has been done to the series and the move suggests a conceptual misunderstanding of "whales" that appears to be common among publishers eager to push the microtransaction game.

The people pouring large sums of money into mobile games like Candy Crush are, by and large, not the same people who are gaming on consoles. There is a fundamental difference between a "free" game played on a smartphone and a $60 game played on a $400-plus gaming system that is typically connected to a similarly expensive television or monitor. So, even when a game like Sony's Gran Turismo 6 does not drastically alter the series' established in-game economy, the fact that it includes microtransactions throws the value of the game into question. Purchasing the game's most expensive car will cost the equivalent of approximately $196 in game currency.

The "whales" who play games like "Forza" and "Gran Turismo" are the type who spend hundreds of dollars on racing-wheel controllers that offer force feedback, then sink hundreds of hours into mastering the game and unlocking its content. The expectation that console gamers should pay $60 to own a game only to fork over additional cash to have the privilege of not playing it is fundamentally flawed.

Is there a breaking point?
With EA, Take Two, Microsoft, and, to a lesser extent, Sony establishing microtransactions as part of console-gaming's future, the value of software is in flux. How this will affect Xbox One, PlayStation 4, and the long-term viability of the traditional console industry remains to be seen. However, the reason why arcades no longer thrive is worth remembering. Better products with better value were offered elsewhere. 

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  • Report this Comment On December 28, 2013, at 11:25 PM, Vitabrits wrote:

    It's what's eroding the video game industry. I don't mind microtransactions in mobile/casual games but it's the day one DLC and the "beta releasing" of games that will doom companies in the near-future.

  • Report this Comment On December 29, 2013, at 3:47 AM, Spetsdod wrote:

    Microtransactions are destroying the gaming culture. In almost every case, they screw over the player and line the pockets of the publisher. Companies like EA release 1/3 to 1/2 of a complete product, and hold back huge amounts of completed content so they can package it as DLC less than a month after release driving up the price of the game. 5 years ago, a $60 game was rare. Now with DLC, the same game would be released as a $60 game, with $60 of DLC available inside the first month. So called "Free to Play" games are structured to force players into spending money in their cash shops in order to enjoy the title. People who would normally balk at spending $15 per month for a subscription game will inadvertently or unknowingly spend twice that much or more buying things from the cash shop. A coworker of mine has spend well over $2000 playing a "free" game on his iPad. Microtransactions are the bane of good games, and should be boycotted.

  • Report this Comment On December 29, 2013, at 5:08 AM, crymsonkyng wrote:

    Simply put...there IS no future for microtransations on a large scale in console gaming. Gamers will not tolerate purchasing games only to be forced to pay more in game...and the only ones who believe gamers will are the studios who are pushing the transactions. However, when one studies the consumer reviews for such titles, they are lambasted across the board. At most they get 3 stars, with a great many of the 5 star reviews being paid reviewers...a practice which seems to be lulling large studios into believing their own propaganda.

  • Report this Comment On December 29, 2013, at 1:17 PM, cluckey wrote:

    Spetsdod- You missed what microtransactions are. Microtransactions happen usually in free to play games. They are games where you can do everything without paying but it takes hundreds of times longer to get stuff done. DLC's are not really microtransactions because they extend the game. You can play the whole game without the DLC just like any other person. If you liked the game a lot you can purchase add on packs. They are not Microtransactions. Borderlands 2 did a lot of DLC's. The product would have taken years longer if they waited till the DLC's were done. Even without the DLC's you can spend hundreds of hours running around. Some companies don't do it correctly however.

  • Report this Comment On December 29, 2013, at 3:17 PM, Spetsdod wrote:

    I think you are missing the point, Cluckey. Those are still considered microtransactions, often because the game is "incomplete" without them. The Call of Duty / Battlefield series is a perfect example. If you are playing the multiplayer game, without spending the money for the season pass, or the individual "expansion" packs (which I say laughably because they are rarely nothing more than one or two maps, and a handful of new unbalanced weapons), you are unable to actually play the game with anyone else who did spend the money. They become required to play the game. In both of the cases I cited above, the DLC is 1) multiplayer ONLY, so it doesn't extend the story or gameplay in any meaningful way besides multiplayer, and 2) are commonly a part of the completed game that is withheld at launch so as to increase the profit margin of the publisher (not even necessarily the developers). BF4 China Rising, for example, was done before the game was released, but EA removed the content from the game and released a month later as a cash grab. THAT is what microtransactions are all about. Cash grab. I'm not lumping actual game expansions into this category. World of Warcraft, for example, has 4 full expansions available for the game. They are true expansions, adding a sizeable amount of content for an equally proportional cost.

  • Report this Comment On December 30, 2013, at 1:27 AM, Dragonslayer wrote:

    All microtransactions do is provide a way for lazy players who don't want to put the effort into playing the game for its challenge to short circuit the game progression and get the cool stuff without trying or having to earn it.

    Alternatively they allow companies like EA to dump out half finished garbage and then charge people extra money to get the complete game they already paid for.

  • Report this Comment On December 30, 2013, at 6:08 AM, puppybone69 wrote:

    I treat microtransactions and DLC the same way that I treat games available only as digital downloads, I refuse to validate their greedy marketing strategies by buying them. When everyone else adopts the same attitude towards them, they'll go away, but as long as just one idiot falls for their scams, they'll remain the nuisance that they are. The only solution to this problem is to boycott them until they go away.

  • Report this Comment On December 30, 2013, at 10:08 AM, snowcrave wrote:

    micro transactions ruined GTAV online they kept adjusting the amount of money you earn in missions, races, etc... trying to force players to pay for in game money and all they did was drive people away

  • Report this Comment On December 30, 2013, at 11:32 AM, Razor73 wrote:

    Micro-transactions are geared to entice and cater to the new generation of players, the Instant Gratification Generation, as I like to call them. These players want to get to the "end game" as fast as possible and will utilize whatever means they can to do it and that means using micro-transactions. This is what the game developers are counting on and why they continue to release this model. I don't see this model going anywhere while this new generation of gamer continues to line the developers pockets.

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