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Are Gaming Microtransactions Here to Stay?

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Today, just about every video game you play has some sort of microtransaction element to it. You may enjoy the additional features these bring, or you may lament the fact that you’re being asked to hand over cash continually.

Whatever your opinion, there’s no escaping from the fact that microtransactions are a fact of life for video gamers in 2020, and it doesn’t look like that will be changing any time soon.

Why Do Publishers Charge So Much for Their Games?

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Back in the 1980s and early 1990s, many popular video games were made by individuals or small groups of programmers. Christ Sawyer, the creator of the famous Rollercoaster Tycoon, single-handedly coded both that game and the predecessor Transport Tycoon himself. Though, he did have some help as the graphics were created by Simon Foster.

Today, the average video game is created by a team of around 20 people, though big blockbuster titles like Grand Theft Auto see around five times as many people working on them.

These teams will typically work on them for 18 months to two years before releasing the finished product. Combined with expensive equipment, voice actors, marketing costs, and licensing fees, this makes video games costly investments.

The companies behind them need to recover their costs and make a profit, so they have to charge sizable sums for the games they sell to consumers.

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A History Video Game Monetization

Publishers of video games have used several different methods of monetization throughout the industry’s history. The first was a “pay per play” model, which saw gamers pushing coins into large arcade machines to get more time or lives to play with.

This worked well for years, but slowly fell out of favor as home computers and video game consoles began to take off.

Developers and publishers needed a new way to earn from their work, so they began to sell their titles for an upfront fee. In return, players received a cassette, floppy, or disc containing the whole game that they could install and run at home as much as they liked.

This model worked throughout the 1980s, 1990s, and 2000s, even as publishers began to switch to digital downloads for their games.

However, some publishers were unhappy with monetizing their games this way. It left them excluded from the second-hand market, where gamers would exchange and sell games they no longer wanted to play. For each sale in this secondary market, publishers received nothing.

To combat this, companies like Electronic Arts began looking for ways to make money from gamers after the initial software had been installed. The first way they did this was to create the EA Online Pass; this was a one-time code included in each new game that granted the player access to online multiplayer.

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If the game was sold to another player, the code would no longer work, and they would have to pay an additional $10 to gain access to the online portion of the game.

EA first rolled out this feature in Tiger Woods PGA Tour 11 and then quickly included it in most of its other games.

The feature was widely criticized by players who felt they were being extorted and punished for selling products they legally owned. After a few years, EA and other publishers ended the practice.

Despite this, they still needed a way to monetize their content further, especially since video game prices had not increased for several years. Games have cost $60 for the best part of 15 years, and if they’d tracked inflation, they’d be almost $80 today, a 30% rise in the price.

Enter Microtransactions

The problem with EA’s Game Pass was that it didn’t add value to the player; it made them feel like they were being punished. Therefore, a different type of monetization model was required that would be a carrot as opposed to a stick. Enter the microtransaction.

In the early 2010s, many video game publishers began pushing downloadable content (DLC) packs. These would be additional cars, weapons, characters, levels, or maps that would extend the enjoyment of the game.

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Gamers began to happily hand over their cash in droves. These DLC packs added value since they’d receive more content to enjoy in exchange for their cash.

It didn’t matter if you had bought the game new or from an online marketplace like eBay; if you wanted the extra maps, you had to pay extra.

Mobile – A New Model

At the same time, mobile games were becoming popular on Apple’s iPhone and the string of early Android smartphones. Many developers and publishers were opting to give their games away for free, though they still had a plan to make money.

Some games, like early versions of Angry Birds, generated revenue by displaying ads to players either as small banners while they played or as full-screen popups in between levels.

Others chose to get money directly from the players by offering the option to pay for extra functionality or more lives. This was the birth of the “free-to-play model”.

Just about every genre of game has seen free-to-play titles released. Everything from puzzle games like Candy Crush Saga, where you can buy gold to convert to extra lives so that you avoid wait times between rounds, to card games like PokerStars, where you receive play chips for signing up and every few hours after that, but also have the option to purchase additional ones. In both cases, the game is free to download, install, and start playing, but if you want to play for longer, you may have to hand over some cash.

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This proved to be immensely successful, with games that are free to download and play, generating hundreds of millions and even billions of dollars every single year.

One of the most notable examples of this is Fortnite. According to SuperData, a research and analytics company, the free-to-play battle royale game generated $1.8 billion for its developers in 2019, despite players being able to use the software without spending a penny.

Fortnite is not a one-off, though. A string of other free-to-play, multiplayer games have also taken the app stores by storm.

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Evolving Model

The free-to-play model caught the eye of many publishers who saw an opportunity to add much of the functionality to their AAA console and PC games.

This didn’t mean that they would waive the upfront $60; instead, they started asking players to pay upfront and then hand over more cash to unlock additional content, customize their characters, and (in some cases) win.

This has frustrated many players who believe the practice to be unfair and unreasonable, though it is clear many other gamers find the in-game purchases to be value for money.

In fact, microtransactions have actually helped some games to become hits. For example, Counter-Strike: Global Offensive was released in the summer of 2012. While many players were happy with the game, others criticized it for lack of new content and for having issues with the online player rating system.

However, it has won a string of awards in more recent years, including “eSports Game of the Year” in 2015 and has been nominated for several more in 2017, 2018, and 2019, despite now being eight years old.

The game has been able to remain relevant thanks to a string of updates, including the 2013 “Arms Deal” release, which added the addition of character and weapon customizations. Fans loved the feature so much an unofficial economy sprung up with people trading skins and in-game currency for real-world cash.

Other updates included the ability to replace the game’s soundtrack, remakes of maps from previous games, and “Prime” matchmaking. The game then became completely free to play at the end of 2018, encouraging even more players to take part in online games and pay for microtransactions.

CS:GO is not an anomaly; the practice of adding microtransactions to major blockbuster games is widespread. You’ll find it in the release of just about every contemporary sports game, including EA Sports’ FIFA, Madden, and NHL, as well as 2K’s NBA games. These usually give players the option to unlock skills and moves earlier in the game, though many criticize this as introducing a “pay to win” element to the game.

Grand Theft Auto Online, the multiplayer version of Grand Theft Auto V, is also helping to keep the seven-year-old game relevant. After being released for the PlayStation 3 and Xbox 360, it was re-released for PS4 and Xbox One and is due to be released on the next generation of consoles next year.

Rockstar will also be created a completely free-to-play version of the game to encourage more players to take part in its online ecosystem.

The game’s publisher, Take-Two Interactive, generated almost 60% of its revenue from microtransactions in the second quarter of 2020, which equates to around half a billion dollars.

Here to Stay?

Given that so much money is being generated by video game publishers, it seems incredibly unlikely that microtransactions have anything but a bright future.

Although many gamers criticize their inclusion in AAA titles, the fact that so many players are happy to hand over cash in exchange for the features they offer demonstrates that publishers have been able to solve the problem of the second-hand market.

Also read: List of Most GPU Intensive Games for PCs

In fact, microtransactions may actually help to extend the life of old games. CS:GO is more than eight years old but is still played by millions of players, and its developers can continue to reap the benefits of their work. In the past, a game this old would likely be discontinued and unsupported.

Since, for the most part, everyone is happy with this arrangement, microtransactions will likely only become more prominent in the coming years.

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About Author

Mehul Boricha
Mehul Boricha is the founder of Tech Arrival & Astute Links. He is a computer and smartphone geek from Junagadh, Gujarat, India. He is a Computer Engineer by Education & an Entrepreneur by Passion. Apart from technology geek, he is an audiophile & loves to connect with people.

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