Microtransaction

A microtransaction (MTX) video game business model is one where users can purchase in-game virtual goods with micropayments. Microtransactions are often used in free-to-play games to provide a revenue source for the developers. While microtransactions are a staple of the mobile app market, they are also seen on PC software such as Valve's Steam digital distribution platform, as well as console gaming. Free-to-play games that include a microtransaction model are sometimes referred to as "freemium". Another term, "pay-to-win", is sometimes used pejoratively to refer to games where purchasing items in-game can give a player an advantage over other players, particularly if the items cannot be obtained through free means. The objective with a free-to-play microtransaction model is to involve more players in the game by providing desirable items or features that players can purchase if they lack the skill or available time to earn these through regular game play. Also, presumably the game developer's marketing strategy is that in the long term, the revenue from a micro transaction system will outweigh the revenue from a one-time-purchase game. Loot boxes are another form of microtransactions. Through purchasing a loot box, the player acquires a seemingly random assortment of items.…

A microtransaction (MTX) video game business model is one where users can purchase in-game virtual goods with micropayments. Microtransactions are often used in free-to-play games to provide a revenue source for the developers. While microtransactions are a staple of the mobile app market, they are also seen on PC software such as Valve's Steam digital distribution platform, as well as console gaming. Free-to-play games that include a microtransaction model are sometimes referred to as "freemium". Another term, "pay-to-win", is sometimes used pejoratively to refer to games where purchasing items in-game can give a player an advantage over other players, particularly if the items cannot be obtained through free means. The objective with a free-to-play microtransaction model is to involve more players in the game by providing desirable items or features that players can purchase if they lack the skill or available time to earn these through regular game play. Also, presumably the game developer's marketing strategy is that in the long term, the revenue from a micro transaction system will outweigh the revenue from a one-time-purchase game. Loot boxes are another form of microtransactions. Through purchasing a loot box, the player acquires a seemingly random assortment of items. Loot boxes result in high revenues because instead of a one-time purchase for the desired item, users may have to buy multiple boxes. This method has also been called a form of underage gambling. A study in 2020 found that 58% of games on Google Play Store and 59% of games on the Apple App store contained loot boxes, Features available by microtransaction can range from cosmetic (such as decorative character attire) to functional (such as weapons and items). Some games allow players to purchase items that can be acquired through normal means, but some games include items that can only be obtained through microtransaction. Some developers ensure that only cosmetic items are accessible this way to keep gameplay fair and stable. The reasons why people, especially children, continue to pay for microtransactions are embedded in human psychology. There has been considerable discussion over microtransactions and their effects on children, as well as regulation and legislation efforts. Microtransactions are most commonly provided through a custom store interface placed inside the app for which the items are being sold. Apple and Google both provide frameworks for initiating and processing transactions, and both take 30 percent of all revenue generated by microtransactions sold through in-app purchases in their respective app stores. 2.50 price.|thumb|left|upright=1.3]] The Elder Scrolls IV: Oblivion was released in March 2006¹ by Bethesda Softworks. From April 2006 onwards, Bethesda began releasing small, downloadable packages of content from their website and over the Xbox Live Marketplace, for the equivalent of between one and three US dollars. The first package, a set of horse armor (barding) for Oblivion s steeds, was released on April 3, 2006, costing 200 Marketplace points, equivalent to US$2.50 or £1.50; the corresponding PC release cost was US$1.99. Bethesda offered no rationale for the price discrepancy. These were not the first Oblivion-related Marketplace releases (the first was a series of dashboard themes and picture packs released prior to Oblivion ' s publication, in February 2006, for a nominal fee ) nor were they entirely unexpected: Bethesda had previously announced their desire to support the Xbox release with downloadable Marketplace content, and other publishers had already begun to release similar packages for their games, at similar prices. A November 2005-release of a "Winter Warrior Pack" for Kameo: Elements of Power was also priced at 200 Marketplace points, and similar content additions had been scheduled for Project Gotham Racing 3 and Perfect Dark Zero. Indeed, Marketplace content additions formed a significant part of a March 2006 Microsoft announcement regarding the future of Xbox Live. "Downloadable in-game content is a main focus of Microsoft's strategy heading into the next-gen console war", stated one GameSpot reporter. "With more consoles on their way to retail, 80 games available by June, and new content and experiences coming to Xbox Live all the time, there has never been a better time to own an Xbox 360", announced Peter Moore. Nonetheless, although Xbox Live Arcade games, picture packs, dashboards and profile themes continued to be a Marketplace success for Microsoft, the aforementioned in-game content remained sparse. Pete Hines asserted, "We were the first ones to do downloadable content like that – some people had done similar things, but no one had really done additions where you add new stuff to your existing game." There was no pressure from Microsoft to make the move. The horse armor content sold relatively poorly, ranking ninth out of ten in DLC sales for Oblivion by 2009. Despite this, Oblivion horse armor became a model for many games that followed for implementing microtransactions in video games, and is considered the first primary example and often synonymous for microtransactions. In June 2008 Electronic Arts introduced an online Store for The Sims 2. It allowed players to purchase points that can be spent on in-game items. The Store has also been a part of The Sims 3 since the game's release. In The Sims 4 Electronic Arts removed the ability to buy single items, instead downloadable content is provided exclusively via expansion packs. In the late 2000s and early 2010s, games like Facebook's FarmVille (2009), Electronic Arts's The Simpsons: Tapped Out (2012) and Supercell's Clash of Clans (2012) pioneered a new approach to implanting microtransactions into games. In conjunction with having virtual currency be used to purchase items, tools, furniture, and animals, these mobile games made it so users can purchase currency and then use that currency to reduce or eliminate the wait times attached to certain actions, like planting and growing carrots or collecting taxes from the townspeople. In March 2009 the Ultimate Team game mode was introduced in FIFA 09 in which gamers can buy "packs" containing items such as players, stadiums and contract extensions with currency earned by playing the game or real world money. EA followed this success by introducing the game mode to Madden NFL beginning with Madden NFL 10 in January 2010. In March 2014 EA marked the fifth anniversary of Ultimate Team and shared statistics showing the explosive growth in popularity of the game mode. By the late 2010s, Ultimate Team was generating billions of dollars every year. From around 2017, another major transition in how microtransactions are implemented in games occurred. "Live-service" games, like Epic Games's Fortnite, with constantly changing and updating content, became more prevalent in the video game market. These types of games heavily employ the use of the loot box microtransaction type. According to the September 2019 report by the UK Parliament's House of Commons and the Digital, Culture, Media and Sport Committee, they define loot boxes as "... items in video games that may be bought for real-world money, but which provide players with a randomised reward of uncertain value." The widespread usage of loot boxes by game developers and publishers have garnered a great amount of criticism from gamers in the past decade. Game developing corporations, like Electronic Arts (EA) and Activision Blizzard, make billions of dollars through the purchase of their microtransactions. In FY2017, EA raked in around $1.68 billion and Activision Blizzard earned over $4 billion respectively. The aforementioned Fortnite is an example of a microtransaction model in which all purchases are solely cosmetic: players can choose to purchase "skins" (cosmetic changes to the way characters, weapons, and vehicles look) to show off to other players. However, a player can experience all the content of the game and be on an even playing field without purchasing any microtransactions because no feature or gameplay-affecting piece of content is locked behind a payment. These games still occasionally take accusations of being "pay-to-win" as combat-focused video games, such as Apex Legends or Call of Duty: Warzone, offer skins that are inspired by real-world military equipment – often including camouflage – which technically can give players an advantage by obscuring them to human opponents. ==Impact== Mobile web analytics company Flurry reported on July 7, 2011, that based on its research, the revenue from free-to-play games had overtaken revenue from premium games that earn revenue through traditional means in Apple's App Store, for the top 100 grossing games when comparing the results for the months of January and June 2011. It used data that it analyzed through 90,000 apps that installed the company's software in order to roughly determine the amount of revenue generated by other popular apps. They discovered that free games represented 39% of the total revenue from January, and that the number jumped to 65% by June, helped in part by the fact that over 75% of the 100 top grossing apps are games. This makes free-to-play the single most dominant business model in the mobile apps industry. They also learned that the number of people that spend money on in-game items in free-to-play games ranges from 0.5% to 6%, depending on a game's quality and mechanics. Even though this means that a large number of people will never spend money in a game, it also means that the people that do spend money could amount to a sizeable number because the game was given away for free. A later study found that over 92% of revenue generated on Android and iOS in 2013 came from free-to-play games such as Candy Crush Saga. Electronic Arts Corporate Vice-President Peter Moore speculated in June 2012 that within 5 to 10 years, all games will have transitioned to the microtransaction model. Tommy Palm of King (Candy Crush Saga) expressed in 2014 his belief that all games will eventually be free-to-play. According to Ex-BioWare developer Manveer Heir in a 2017 interview, microtransactions have become a factor in what types of games are planned for production. Free-to-play coupled with microtransactions may be used as a response to piracy. An example of this is the mobile game Dead Trigger switching to a free-to-play model due to a high rate of piracy. While microtransactions are considered a more robust and difficult to circumnavigate than digital rights management, in some cases they can be circumvented. In 2012, a server was created by a Russian developer, which provided falsified authentication for iOS in-app purchases. This allowed users to obtain features requiring a microtransaction without paying. Consumer organizations have criticized that some video games do not describe adequately that these purchases are made with real currency rather than virtual currency. Also, some platforms do not require passwords to finalize a microtransaction. This has resulted in consumers getting unexpectedly high bills, often referred to as a "bill shock".

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