Microtransactions

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Informatic

Microtransactions also commonly known as MTX is the purchasing of virtual products with real world currencies. Typically these have been implemented as a means of providing developers of free-to-play games with revenue in order to continue development of said games. While they are available on virtually any platform, we have seen a significant increase in their use in the mobile games market. In a study done by Slice Intelligence, we learned that mobile players spent an average of $87 on free-to-play games while PC/Console players spent around $5 on average. Depending on how micro transactions are implemented these games can be called "pay-to-win" in which the purchasing of these virtual currencies are needed to make significant progress in the game, contradicting the whole free-to-play game aspect. Other games provide "loot boxes" in which players purchase these as a means of obtaining more desirable items or features that allow players to save time obtaining these by playing the game. The entire model is based on the idea that providing these virtual currencies will provide more profit than selling the game through a one-time-purchase.

Revenue

Over the years, gaming giants such as Ubisoft have approached micotransactions with caution, however it has seen a notable shift in earnings for many of its biggest sellers. According to SeekingAlpha, Ubisoft's sales were buoyed by South Park: The Fractured But Whole and Assassin's Creed:Origins, however microtransactions have only shot up even further over the years. Over the last year, microtransactions have grown 1.83x as opposed to the growth of video game sales which was 1.57x. Hinting that microtransactions, the release of additional content to complement existing games is fast becoming a larger market than the market for video game sales itself.

PC Gaming

Since its inception, revenue from free-to-play PC games has doubled since 2012 according to a recent SuperData report. The report which states EA still "has a ways to go in fully understanding gamer's appetite for micro transactions" shows consumers are spending an increasing large amount on microtransactions. In 2012, PC free-to-play generated $11 billion in revenue and doubled to $22 billion in 2017. It is expected to grow a further $3 billion by 2022.

In-Game Items

In-game purchases allow for purchasers to purchase in game items that are normally acquired through progressing the game. These microtransactions receive the most criticism due to the fact that it allows for newer players

Loot Boxes

Main Article: Loot Box

Loot boxes are a form of digital wares sold within an online video game. The purchase of loot boxes are a from of microtransaction. Each box can be used once to receive randomized in-game items that either provide cosmetic changes to the game and player, or provide advantages over other players. Depending on the game, loot boxes may also be referred to as packs, bundles, crates or chests. Loot boxes are typically found only in games with a multiplayer aspect, marketed by the visual feedback from opening a loot box as well as the benefit provided by the items. Due to the randomized nature of loot boxes, they can be seen as a form of digital gambling that brings ethical issues into consideration.

Gambling

Loot boxes contain all of the elements required for traditional gambling. The purchase of a loot box represents a transfer of wealth for a future event. This future event is randomly decided and set by the developer, allowing them to tune their model to maximize profit. Younger players experience gambling for the first time with loot boxes. The UK Gambling Commission does not consider loot boxes as a form of gambling, as they claim the items received do not have any monetary value. The only difference between loot boxes and real world gambling is the absence of a true monetary payout, however games with real money marketplaces can be used for payout, and many have made thousands of dollars. The design choices are clearly seen to keep the player buying loot boxes. Often right after opening a loot box, a player is prompted to buy additional loot boxes, building upon the addictive model.

Transparency

One of the leading reasons why players consume loot boxes is the perceived rarity of the items they could win. This rarity is almost never expressly relayed to the player. Some games will indicate which items are rare and which are common but often do not have any hard data or statistics on how likely the player is to win the item. Because of this, regulations are starting to spring up in Japan and China. For example, the mobile game Fire Emblem: Heroes communicates to its players that there a 3% chance that players will be able to summon a five-star character. This number then starts to increase after the player uses multiple summons in a single game. Another example is the popular shooter Overwatch. Due to Chinese gambling laws, the Overwatch developers had to disclose that the loot box crates will doll out a legendary item after opening approximately 13 crates. This number is different for each country as some countries have stricter gambling regulations than others.

Ethical Issues

The growing popularity of mobile games through the iOS and Android Playstore have allowed many smaller developers the opportunity to put out content either paid or free-to-play. The Micro-transactions model is more appealing for developers because of the fact that it allows a player base to develop before they start selling products when compared to an upfront cost that oftentimes drives away players unless the game has an established reputation already. This brings up the paradox in many mobile games being marketed as free-to-play when in fact a lot of the higher level content is made available to newer players through micro transactions. This in the eyes of players who have advanced through the game by traditional means devalues their accomplishments. Many of these free-to-play games are made to be played passively, in which the player comes back periodically to check on the game. This leaves players with two options for progressing, investing a substantial amount of time or advance through purchasing virtual products that allow for speed ups or higher tier items that would normally require lots of grinding to obtain the higher level items.

Microtransactions allow for developers to release content without an upfront cost, as long developers abide by moral guidelines they provide an excellent form of revenue to developers that may lack the resources needed to produce a wide scale game. The issue arises when developers lock high-level content behind hundreds of hours of grinding and making it available for purchase in which buying it through microtransactions it more feasible than progressing through the game.

Common Terms and Shortcuts

• Free-to play game - Games made available to all players without an upfront cost
• Grinding - Repetitive actions that allows for substantial progress in a game

External Links

• [Outside link]
• [Example link]

References

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