Microtransactions Under the Microscope
August 31, 2011
By Graham Jans
For our usual Design Dojo meeting last night, we discussed the pros and perils of microtransactions and the free-to-play business model. It was a fascinating discussion, revealing fascinating tension in our normally close-knit little group of designers! There was some intense, fruitful discussion, so this post is a bit of a doozy!
In this discussion we were trying hard to focus on, “How can we use microtransactions properly, for good?” rather than focusing on their negative perception and misuse.
I was overtired last night, so my recollection is a bit shaky. But here’s the salient points as I remember them:
First, Some Definitions
The first thing was settling on a definition of microtransactions and free-to-play which we could utilize for the rest of the discussion. I proposed that, for the sake the discussion, micropayments were basically any money the player payed out after they started playing the game; that playing the game and then paying [more] later was free-to-play. There are two important consequences of this:
The first is that practically everything but a retail purchase can be analyzed in this light, notably DLC and demos that upsell to the full game! Episodic content can also be looked at this way: After the initial purchase of the first episode, the player makes choices to invest in further episodes.
The other consequence is the inclusion of incremental payments (like a base product with DLC), subscription models, as well as standard ‘freemium’ styles of monetization in this umbrella.
We purposely chose such a broad definition, because we felt that these things all sit on gradients; it’s hard for a group of people to agree on the exact moment a retail game with DLC turns into microtransaction ecosystem. As well, many games use a mix of approaches simultaneously to acquire money from the player.
So Why Free-To-Play?
The reason we think this all matters is that the whole concept of free-to-play aligns better with player values. Traditional retail bombards a player with inscrutable advertising, senseless review scores, and non-interactive game media, and then demands that they fork over a large portion of money for a non-returnable box which may or may not contain a game that they actually enjoy.
From the most basic example of a demo, to a cheap-but-ongoing subscription, to a game funded entirely by the sale of novelty hat items, each of these systems allows the player to experience the game as a game and decide for themselves how much value it contains, whether it’s worth their money. The punters can leave with nothing lost. The developers still get paid, and the true fans (or rich fans) have the opportunity to keep on giving. Ideally.
So we wanted to see how to make best use of that system: to figure out how micropayments can be used to make a better game for the player, not a worse one. To make a game which profits from players, but doesn’t abuse them.
Overall, the meeting was fairly unstructured, so I’m just going to lay out the points we covered, in no particular order.
Microtransactions Require Long Play
Microtransactions piggyback on the value system created by the game world. One of the challenges we face as designers, on every game we make, is communicating and teaching the value system for our particular game to the player. This means that we can’t expect players to realize the monetary worth of a game element until this education process is completed. A highly refined experience that lasts only two hours will likely only make its full value apparent to the player when it’s all done — or even a few days later as the player digests the experience! By then, it’s too late to capture their attention for additional content or experiences. Alternatively, a game that brings the player back again and again has many opportunities to convert and upsell the player.
The consequence of this is that the most successful microtransaction-funded games tend to be RPGs, and online multiplayer, and especially online multiplayer RPGS!
There is another synergy of long-play and free-to-play, which is that in most freemium games, the non-paying players provide ‘content’ for the paying players just by being there. They keep the system lively, create nodes for conversation and trade, and even just make the paid players feel good about themselves. However, if the free players don’t stick around very long, then there is less incentive (in this context) for the paid players to stick around either.
Danger of Relying on a Growth Market
Many standard microtransaction formulae gain a lot of their value from customer acquisition. The very real consequence of this is that once you saturate your market or niche, you will stop profiting. This happened to Nexxon; subsequent game releases basically had nowhere to grow except cannibalizing their previous games.
Microtransactions Match the Form of the Game
Farmville and its kin has been slagged from many different angles, especially by gamers deriding it’s microtransaction system. I came into this meeting with spite against these games because many of the things you pay for are ‘amechanical’. There is no standard in-game metaphor for paying to skip the harvest period of a crop; it’s basically an arbitrary barrier that is arbitrarily removed.
But it was then pointed out to me that Farmville itself is largely amechanical! And that’s nothing to hold against the game, or at least a discussion for another day. But the point is, the microtransactions actually match the nature of the gameplay.
In-Game Value and Real World Value are Tied
As mentioned above, the value of real-money purchases is largely defined by the player’s perspective within the game world. But additionally, the real-world value of items affects their perception within the game. The obvious case of this is that selling a top hat item for $1,000 will provide a kind of instant prestige for any player owning that item, even if it has no intrinsic value or significant aesthetic value. It’s valuable because it’s expensive.
There is a more subtle case with content that can be accessed both through real money and in-game effort. Take, for example earning a new Champion in League of Legends. On one hand, the paying player can say, “Woo, I payed $5 and saved myself 5 days of effort!” But the non-paying player can also say, “Woo, I earned this myself, and saved $5!” It actually gives an extrinsic value to the time the player is spending in the game.
Create and Embrace Conventions
In World of Warcraft, players can purchase fully-leveled characters rather than grinding up through the levels. There are a variety of reasons a player may want to do this, and in their mind, the reason always makes sense. But the game doesn’t officially support this kind of transaction; it is actually handled through an external site (such as eBay). It is a firmly established convention within the social circle of the game that if you want to experience the end-game content, by golly, you gotta earn the right! Players who skip the levelling process are shunned by the other high level players and slandered in the forums.
And it’s not because there is anything inherently wrong with skipping low-level content, but merely that the conventions of the social system don’t allow for it. This can be bent both ways: If in your game, it is the convention to work for stronger items, then players who buy them will be called out for ‘cheating’ or ‘playing unfair’ or ‘paying for power’. But if the convention is to only access stronger items through purchasing, then players who don’t purchase are looked at as cheap or not dedicated.
Flattening the Value-Per-Player Curve
The vast majority of the money you make in free-to-play comes from the top paying players. The vast majority of players pay nothing. Not to cut it too thin, they are freeloaders.
Most of the cases where “abuse” happens is when this graph is extremely sharp. Most of the players in a game are nothing but an expense, and so the few players that pay get milked to death. A healthier game flattens out the curve. More players are paying, and each is paying a healthier amount. (Both healthier for themselves, and healthier for the developer.)
A point that strikes me really strongly when I’m playing a free-to-play game is the actual product value of the game. For example, with League of Legends: I look at the game and say to myself, “If that was in a box at retail, I’d probably pay $40 for it.” What I’m trying to do when I do this is divine the value of the assets, the time spent developing and patching, and my own personal load on the servers, and still give them a profit. Obviously this is a rough estimate, but whatever this exact number is: if players don’t pay this much on average, then the game is a loser.
By distributing this load across more players, the amount you need to eke out of each player is reduced. As well, there is the easily observable phenomenon that paying customers are stronger advocates of the game.
Retail, of course, takes this to the extreme, making sure that every single participant pays exactly a standard share. Subscription models sit fairly nicely in the middle, with the players who are more invested spending more money on the game overall.
Different Kinds of Microtransactions
I asserted that ‘paying for content’ was the most obvious format for a microtransaction. We challenged this definition and came up with some other common formats as well:
Paying to expand the experience. This may be access to new content; customization options for personal or social reasons; access to mechanics; gaining power within the system. “Buying a Sword.”
Boosters and Consumables. Temporary purchases that tend to work in conjunction with the play mechanics, either multiplying player stats and activity, or providing a lift over a hurdle or out of a hole. “Buying a Strength Potion.”
Keys and Resources. Indirectly aiding the player by increasing their ability to make choices, or making a new choice accessible. “Buying in-game gold.”
External Privileges: Purchasing goods or powers that exist externally to the game mechanics and world. Pay for name change, a server transfer, access to guild management tools, getting priority listing in advertising channels, etc.
Transaction Fees: If you have players on both sides of a transaction, such as goods transfer, gifting and trading, or auctions, you can reserve a portion for yourself.
Subscriptions came up several times in the discussion as both a reliable income stream, and also a way of treating players more equally (because time passes for everyone at the same rate). We got thinking if there could be a number of smaller streams within the game that the player could subscribe to based on their needs. For example, subscribing for access to high-level content while mid-level content remains free. Or subscribing to recieve every new character that is released for the duration of the subscription. And so forth. Has anyone done this yet?
Greed is a Sliding Scale
One member brought up that such a thing was a tool evil, because the developer could tune the length between releases in a subscription to offer just a little bit less content for the same price. It was countered that, yes, all bars add salt to their food, but you don’t eat at a bar with really salty food. Market forces prevail, people will pay for something what they feel it is worth.
As well, such a thing could be a tool for benevolence. A developer could tune the length between releases to offer just a little more content for the same price, if they felt that was the right thing to do. In fact, most of the factors in microtransactions work this way. The negative reputation these systems have comes from factors that are tuned to maximize profit and abuse players for their money. But that’s not an inherent trait in the system; you could just as easily use it to ensure your own bankruptcy! But obviously, there are various optimums in the middle which allow a person to both make a profit and ahere to their morals.
All Games are Skinner Boxes
The comparison of the feedback loop in Farmville to a skinner box is not accidental. It is a skinner box. As are basically all games. Any time you talk about making a game ‘more sticky’ or ‘more engaging’ or ‘compelling’, you are talking about refining and enhancing the skinner box that resides within your game.
But it’s okay if your game is engaging or compelling. Because there is more to the system than the compulsion loop. There is the experience of playing, which can be exciting and interesting and beautiful and rewarding, and there is the feedback that the game gives in reward for following that loop, which can be interesting and beautiful and rewarding.
Microtransactions have an amplifying effect here, because where most games suck up a player’s time, free-to-play games suck up their time and money! But we are in the entertainment business, people are giving us their money to entertain them. We each have a choice to create a minimal structure which siphons their money away, or to create a beautiful piece of art which enriches them, and for which they give us their money. The fact that it is compelling is agnostic!(source:grahamjans)