In the 21st century, gaming has become what television and radio were back during their respective peaks - an electronic entertainment medium that captured the youth’s attention, ultimately emerging as a dominant subculture. Over the years, gaming has evolved from a niche market into an industry projected to reach $138 billion in revenue by 2021, according to a market study conducted by Statista. This growth can be attributed in large part to the introduction of microtransactions, described by Gamespot’sEddie Makuch as such:
There is no one catch-all definition for microtransactions that perfectly encapsulates and represents the term. But generally speaking, a microtransaction is anything you pay extra for in a video game outside of the initial purchase.
Last year, in the United States video game industry, microtransactions made up $26.73 billion out of $43.4 billion total, accounting for more spending than that of hardware, software, and gaming peripherals combined. How did this revenue shift come about, where do microtransactions stand now, and where will they go in the future?
Humble Origins
Microtransactions did not always exist. To understand how they came about, we need to define DLC and mods. DLC is short for downloadable content, and refers to any piece of content that can be installed onto a game after release. Mods in the context of gaming refer to typically fan-made modifications and/or additions to a game’s code that changes some aspect of gameplay, and can be thought of as free DLC.
In the 90s, player-created mods were exploding in popularity, and some developers even supported the modding scene by including official modding tools. As a testament to the enduring legacy of the scene, popular franchises like Counter-Strike and Team Fortress originated as mods from landmark titles such as id Software’s Quake and Valve’s Half-Life. Soon, however, companies saw an opportunity to monetize games even further. The first large-scale backlash came when publisher Bethesda Softworks released a primarily cosmetic horse armor DLC for $2.50 in their game The Elder Scrolls IV: Oblivion. Despite garnering negative reception, the DLC went on to become a top seller; since then, the microtransaction has only gained further traction among publishers, paving the way for its ubiquity in the current gaming climate.
Pitfalls in Design
When analyzing microtransaction design, there are a few key aspects to consider:
Balance between gameplay reward system and microtransaction value
Relationship between paying and non-paying players (in multiplayer games)
Crystin Cox adopts a psychological lens to characterize value-adding mechanisms for players in her GDC 2018 talk:
There are many models available for understanding why people do things. I prefer to use Self Determination Theory because its examination of intrinsic motivation is well suited to game design work, particularly reward and monetization work. Quickly, SDT tells us that many higher level human behaviors are driven by intrinsic motivators, not extrinsic rewards or punishments. Further, intrinsic motivations exist to satisfy three high band human needs: Autonomy, Mastery, and Relatedness. Many microtransactions do fall cleanly into satisfying one of these needs…
Microtransaction delineations, Image @GDCVault
So, what constitutes a good microtransaction design? Let us examine microtransactions in some recent games.
First off is Ubisoft’s Assassin’s Creed Odyssey (AC:O), a 2018 single-player action RPG. In AC:O, the store contains cosmetic changes, premium weapons, resource packs used for upgrades, and XP/money boosters, the last of which are by far the most controversial offerings in the store. This can be explained by the addition of “Olympian Gifts” loot boxes that can be grinded for and that have a chance of dropping premium store items sans XP/money boosters. Given time, all items but the boosters may be acquired through normal gameplay. However, many feel XP boosters are necessary for an enjoyable playthrough. Ben Kuchera from Polygon states the problem succinctly:
This could be poor balancing or it could be a matter of Ubisoft pushing players toward paying to solve a problem the publisher created with the slow and controlled leveling system, but either way it’s a bad deal for players.
If the benefit of the doubt is given, then one may believe that the game is simply balanced poorly. In single-player RPGs, however, mastery/power progression is almost always a core part of the gameplay reward system, so there is little excuse for poor balancing to occur. The inclusion of XP boosters that provide mastery value imply that progression is balanced around that item, and therein lies the conflict: those who refuse to dole out the money for an XP booster end up with a dissatisfactory and inconvenient leveling experience.
In 2017, EA’s Star Wars Battlefront II (BF2), a multiplayer shooter, stirred up extreme controversy over its microtransactions. The original in-game store contained loot boxes, which awarded prizes ranging from emotes to abilities powering up characters to virtual currency needed to unlock new characters. The uproar came from the fact that players could pay to immediately acquire large gameplay advantages, whereas a non-paying player would have to spend thousands of hours to unlock every character and upgrade. So great was the backlash garnered that EA decided to remove the store upon release, only to rebalance it at a later date.
With Battlefront II, a similar problem to that of AC:O arises. BF2’s progression system rewards mastery and autonomy through power-ups and content unlocks (characters). However, it is also heavily time-gated to push players towards gambling through loot boxes, which provide the same values as playing without microtransactions. Also of note is how Battlefront II ignores the second key factor of microtransaction design, the relationship between paying and non-paying players. Players are privy to perceived fairness – for example, if a new player could join and spend money to instantly be on par with an experienced player, that would constitute unfair microtransaction practices – such is the case here.
For an example of microtransactions implemented in a more consumer-friendly manner, look towards Riot Games’ League of Legends. In this game, gameplay rewards are solely based around autonomy value, giving players the ability to unlock more champions to play as in-game. Microtransactions, on the other hand, are catered towards relatedness in the form of champion skins, player icons, and other cosmetic items unobtainable through normal play. By dividing gameplay reward and microtransaction value between autonomy and relatedness, the relationship between paying and non-paying players is kept balanced, creating a fair system.
So, regarding good microtransaction design, it is generally safer to design games such that reward systems and microtransactions each target value propositions in different categories. This ensures that gameplay progression itself does not have to be balanced around spending money. This principle is especially important for multiplayer games, in which having a good relationship between paying and non-paying players is key to maintaining a populated player base. If paying players have an advantage, then non-paying players are incentivized to either pay or quit – and quitting is bad for player count.
Challenges and Opportunities
Public opinion is split on whether microtransactions are a positive addition to gaming. In a 2018 study conducted by Qutee, gamers were surveyed, among other things, for their opinion on microtransactions (see picture below). The results indicate that while most gamers do not openly advocate for microtransactions, they would also rather not pay an increased up-front cost for content. The implication, then, is that gamers prefer the historical monetization approach of direct game sales only. As gaming evolves, however, this approach will only continue to be phased out, especially with the advent of free-to-play games and GaaS (games as a service). As microtransactions are the most lucrative implementation of GaaS, it seems inevitable that they will continue to exist and shape the gaming industry in the foreseeable future. Thus, the real challenge is twofold:
How can microtransaction design fulfill the developers’ and publishers’ need for revenue to improve their games?
And
How can microtransaction design also satisfy the players’ need for a game that maximizes their enjoyment?
Unfortunately, there is no easy answer to these questions. As designers continue to innovate with regards to gaming and monetization, perhaps something entirely new may come about - only time will tell.
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