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What Gamers Think About Microtransactions

December 3, 2009 Article Start Page 1 of 3 Next

[As game developers grapple with making microtransactions more appealing to Western gamers, Daniel Kromand talks to core gamers to gauge the effectiveness -- and ineffectiveness -- of current microtransaction practices.]

This spring, I interviewed a group of gamers in free-to-play online games on the topic of microtransactions. The interviews were meant to identify how the gamers determined the value of microtransacted goods, what item designs they approved, and generally how they perceived microtransactions in their respective game. The ultimate goal of the interviews was to understand how to maximize the appeal of microtransactions and in turn hopefully finding the recipe for making a lot of money.

But first, a brief overview of microtransactions: The PC gaming market is often depicted as either entirely dead, or at least in a dire crisis. A major cause for this crisis is of course not that the PC is finished as a gaming platform, but rather that a high level of piracy is undermining the traditional retail model.

Microtransactions can help to revert this trend and revitalize this market segment, but its implementation is still relatively new -- at least in Western game development. While microtransactions have been tried in single-player games (Oblivion's horse-barding maybe being the most famous), they are most widely used in online, multiplayer games, and for sake of simplicity I will only look at the latter.

The business model is often to give the game itself away for free -- in order to render piracy superfluous -- and then sell these small upgrades at low prices. Each consumer might not spend the full amount of a traditional retailed game, but the total sum of revenue gained can surpass that of a traditional game, which encounters piracy.

The microtransaction itself is more transparent than when purchasing a regular game through retail: In a microtransaction the player can pick and choose between the different features, and the properties of each good can be compared to price, while a retail bought game comes completely packaged. Willingness to pay describes how much a given consumer is willing to pay for each separate feature, but of course the actual number varies according to personal preferences.

The Guinea Pigs

The people chosen for the interviews were all experienced gamers and ranged from early twenties to mid-thirties. They were all male too, which in no way was a predetermined discrimination on my part, but rather the result of being unable to recruit any women for the interviews.

The following analysis has a natural caveat of only applying to hardcore, male gamers, since they were the only ones who were being heard. This doesn't mean that the conclusions can't be used with other demographics, but please don't sue me if things go awry.

The interviews revealed some of the influences that affect the consumer willingness to buy in both positive and negative directions. By examining each influence it is possible to offer suggestions on how to exploit the effects better and create more engaging microtransactions. The recommendations are fitted into two categories for key points that relate to the assets themselves and to general game design that facilitates microtransactions.

Secondhand Lands

Value for Money

In a trade situation consumers look at the value proposition and compare expenses to gained utility. The utility of virtual assets is, however, usually confined to a single game, since it cannot be transferred from one game to another.

Most virtual assets in current games are actually rented, rather than bought, and this means that the consumer has to compare the expected gained utility within the time frame of the purchase. Because the future use within a set time limit is uncertain, this can cause some annoyance, as seen for example seen in this quote:

"I find it kind of annoying that when you rent items it is in real time, not in-game. So if you rent an item for a week and then only play twice a week then you only have the item for four or eight hours." (Peter)

Games encounter this very product-specific problem. Consumers obtain goods that have a physical presence in the game world, a sword for example, but also realize that the virtual reproduction of the item is costless: there is in fact no logical reason as to why the developer needs the sword back. The clash can easily produce annoyance if the players believe that they have to agree to unfavorable conditions that only serve to maximize the developer's revenue.

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Jake Romigh
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Microtransactions are a great way to add content to your game that has no actual benefits, such as additional skins or characters. Two games on Steam that I can think of off the top of my head for example are Killing Floor and Madballs in Babo Invasion.

In each of these games, you can buy content to customize your avatar in the game world, but it has no real influence on the gameplay. This is a very smart move for developers, i would think; this adds options for players who have a strong connection to your game without inconveniencing other players, and it generates income.

And if you're looking to develop along a "games as a service", these kinds of superfluous additions to your game can keep current player's attention and also fund future development.

Tom Newman
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While I like being able to play mmo's for free, microtransactions just leave a bad taste in my mouth. Weather it's items, or a buff to your xp intake, I like to play games the old-fashoned way, and don't want to play in an environment where someone with more disposible income has an edge. Fees for server transfers; etc. I'm okay with, but overall I'm anti-microtransactions.

And for those who complain about the boring level grind: this is a reflection of the developers. Why IS the level grind so boring? Some mmo's make it fun and compelling.

Jonathan Lindsay
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I think this is a great business model for the PC market and for games in general. My girlfriend plays Farmville quite a lot, but there is no way in hell she would have spent money on that game if she had to pay up front first because, in her words - 'I don't play games'. But since Farmville is free to play, she can try it out with absolutely no risk, enjoys it and maybe spend a little here and there if she chooses, which she sometimes does. With the traditional revenue model the games industry would never have seen any of my girlfriends money and she would not be playing a game that she now really loves. Sounds like there are two winners there.

But anyway, as a designer of these types of games (epic browser game my opinion might be somewhat bias.

Brian 'Psychochild' Green
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A lot of developers are still taking baby steps toward microtransactions. I've been studying the business model for a while, from the time it was mostly in Asia. A lot of companies don't understand what makes it work, so I'm glad to see someone taking some time to do some research.

The big thing is that microtransactions should balance time vs. money requirements. Current subscription-based MMOs are biased toward people with a lot of disposable time for a relatively low monthly price. Microtransactions give benefits to people who are willing to pay a bit more, and those people subsidize the free players. A good game design needs to balance the needs of these two groups while still making enough money to keep the game running.

I was a bit surprised to see Secondhand Lands' picture. I helped consult on the business model for that game! If they would have had a higher number of players it would have worked well, I think. The comment in the article shows the philosophy I talk about here showed through.

Elliot Green
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I like playing MMOs for free, but I think that the micro-transactions model tries to make a business by deteriorating the game's fairness.

It is difficult trying to think of things that people will want to buy that are not frivolous and do not affect the game's fairness. I have thought of a few.

Lower graphics quality in certain areas. You still want players to be shown the game at its best, but you want to entice players into paying for the best graphics everywhere.

Have players pay for the sound track to the game or all of the sound. An in game mp3 player would let a player that is not paying listen to their own music.

Impose a time limit on how long free users can play. It may be 3 hours per week or 30 minutes per day.

Let users pay to use a pendant/logo/whatever it is called. A free account will have a pixelated logo with only a 50X50 picture. However, a paying user can have a 120X120 logo. A paying user could be charged per pixel per month.

A paying user would be able to have dual screen support.

Shadow Tech
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A good example for this method can be seen in an old game I once played, "". There you can purchase superfluous items, vehicles, porta-zones, and your own home for your avatar. These items could be purchased by either the in-game store, or from the auctions created by other players. They employed an in-game currency such as T-bux™ (There bucks).

It worked well, and it had the look of an in-game eBay page, and anyone that could not afford to buy items have the option to become designers themselves and sell their products through the creation of photoshop and Gmod type programs, their creations would be rendered only to the designer and no one able to copy them unless the designer also chose to sell their ideas and patterns. In addition, there were in-game classes with schedules that players would attend weekly and were posted on bulletin boards in-game.

These classes would teach anything that the player also desired to teach outside of the scope of photoshop and model designs. Such as tutorials for home decor tips, auto repair, anything the tutor chose to teach as he would place on the bulletin for those who were interested to sign up for.

Timothy Ryan
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Any way to generate more revenue is a good thing from our perspective, but from a player perspective obviously there is a stigma. It removes skill and replaces it with money. It's like cheating. And yet some games with such microtransactions are still successful. I think a lot depends on the kind of game and whether there are alternatives, but all in all there is an undeniable trend that shows consumers are getting over the stigma and designers are willing to forgo their sense of fairness and let players spend more money to give themselves a leg up.

I compare what's happening now to what happened to the paper/dice/card/board game industry when Magic the Gathering (MtG) first appeared. Some people cried foul at the microtransaction scheme that allowed players to improve their decks by spending more money on booster packs. Other people understood that it was the nature of collector card games to buy and trade up to get a winning hand. The latter thinking obviously won out because MtG managed to dominate the market and put some paper-game companies that were too slow to adapt out of business. It seems that if a game makes collecting and customization through microtransaction part of the game play, then consumers will get over the stigma.

Like MtG consumers did, the video game consumers may decide to spend more over time on upgrades to their current games than investing in new and unproven full-price games.

John Petersen
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I stick by my $50 a game method. I will not spend more than $50 on any game for any reason. Unless it's a poker game, but then I have a chance of getting something back from my investment.

Players see what developers are doing, $50 real US dollars for a bag for extra loot, I'm not buying it with real money. I'd rather play a game where everything was right there in the game, obtainable to anyone for 1 single price, and that's how I choose what games I play.

If I feel that I can't get ahead and have fun without going over that limit, the game isn't worth the time of day.

Ed Alexander
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The only free-to-play game I've ever partaken in micro-transactions is AdventureQuest from Artix. I played it for a couple of weeks, seen a flash game take on a much bigger scope than I had seen previously as well as tackle a genre (RPG) I haven't seen executed so well in a flash game.

From that regard, being impressed by the efforts of Artix, I opened the wallet.

But that is the only free-to-play game I've ever paid for.

This trend also stretches over into DLC for pay-to-play games as well. I never buy DLC content unless you totally blew my skirt up with gameplay I want to see more of. (Disgaea 3, Valkyria Chronicles, Rock Band, etc)

The only way to milk money out of me (beyond an initial purchase in the case of a pay-to-play) is to astound me with gameplay, which most never really do.

When Home was first released on the PSN and there were actually discussions of sales behind the curtain, I forget exactly who said it, but they summed up all of the micro-transactions as an 20/80 system. 20% of users make up 80% of the revenue.

At least to me it's weird to consider that 1 in 5 are so gripped by something potentially superfluous and really unnecessary or completely vanity that they would continually purchase such things. But to each their own, it's all about perceived worth after all.

Tristan Pilepich
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@ Timothy, your analogy with MtG is flawed, as cards purchased are physical. You will have them forever and in most cases, the value of the rare cards will only go up over time. The server will never go offline and you will never lose all your purchases, as can happen with MMORPG's.

This last sentence sums up the article perfectly.

"It is important to create a good game where players can have fun with other people, but that is in no way exclusively tied to microtransactions, of course."

Games which are designed around micro-transactions are doomed to fail. A well designed game however that has well designed micro-transactions which compliment the game play are set to succeed.

Michael Joseph
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Does implementing micro-transactions in your game make you feel sleazy?

I know it's not fair to compare games with other entertainment media (movies, books) in this case but I'm going to do it anyway. How lame would it be if you bought a digital copy of LotR and you were nickle-n-dimed every time you wanted to read the back story to a new character that was introduced?

Personally, I'd have to find a way to reconcile this feeling of withholding content and then nickle-n-diming people to death with my old fashioned sense of providing a good product at a (single) fair price (fair price is a whole other story... in general mainstream games are too expensive.)

I don't want to make this too political, but micro transactions to me wreaks of all the same type of customer money milking schemes found in every facet of our world. It reminds me of back when McDonald's was charging people for BBQ sauce to go with their chicken nuggets.

Well... i guess this is one reason I'm not the CEO of a mega corporation.

Jason Fleischman
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@Michael Joseph, remember that most of these games are offered as free-to-play to begin with. Beyond that, I don't think it's so sleazy to try and "nickel-n-dime" your customers so that something of a profit is actually made.

If your micro-transaction system is designed well enough it shouldn't have the sleazy and scammy feel to it. The key points of the article are true enough, and following them should lead to a pretty fair moneymaking plan.

henry bracey
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I have a worry that the whole microtransaction trend could destroy some games if it goes too far. imaging playing "FF7" or "Zelda: Ocarina of time" if you didn't get any of the music and tons of the side quests had to be unlocked by paying for them; i would expect people would be constantly checking reviews of the individula quests to see if the reward was worth it, which would certainly harm the players feeling of involvement.

I doubt i would have enjoyed "Oblivion" as much if it prompted you with "to play this quest please pay 100 MS points".

Obviously the trend of microtransactions is bound to continue but i think downloads work best if they are percieved as adding to the game or giving earlier access to something, not hiding existing content. Multiplayer map downloads work well as they are additional and i find that people tend to assume that the map has been created after the game came out, with some games the addons seem like the developers have finished the game and then cut bits out of it to sell separately.

Victor Perez
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I believe to play a game needs an investment by gamers; a new game needs my attention for a while and there so many and the reviews are so confuse that free to play provides the opportunity to play and check. After you can monetize it by micropayment or whatever but the most important is the format: creating new games needs to include the free to play as essential part of it. Old games for sure do not match with the new format but clearly is the most important trends, and I do not see a different scam from huge marketing campaign pushing you to buy bad games/ movies games… so things have changed to be the same: sale fun. If it is fun, it is good… easy.

James Brumbaugh
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I have been playing free mmorpgs for a while now and I understand the need for micro transactions. If the game has really nice graphics, game play, plenty of quests and has a nice thought out story then I am more apt to pay for a few things that help me to either level faster or increase the enjoyment of the game. I do limit the amount of real money I pay for these things and I believe that helps me enjoy the game longer. I will agree that many free mmorpgs out there do not effectively cover all of my requirements and I definitely would not spend money on them. So finding the right game to begin with is very important. Is the game good enough to play for free and allow tons of fun play time? Sure some of them are. I am very selective on which games I play so when I find the right game, I will spend a limited amount on it to enhance the experience.

Enhance is a good word to use when thinking about spending money on a mmo. If the game requires you to spend real money to complete and quest then it is not a game I am willing to play. So I am all for micro-transactions for a game that is very well put together.

Raphael Santos
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I like the way League of Legends is doing it.