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Microtransactions in Online Games Today

Author:  Ian Garris
Date:  2008.12.15
Topic:  Editorials
Provider:  TechwareLabs
Manufacturer:  TechwareLabs

Getting what you pay for, or getting nickle-and-dimed?

It honestly surprises me that this topic slipped under the radar and all, but I've been having more than a few discussions and/or arguments over the topic of microtransactions in games. For those who don't know, microtransactions or micropayments are "now ... often defined to mean payments too small to be affordably processed by credit card or other electronic transaction processing mechanism" by Wikipedia. A less abstract definition would be to look at Xbox Points, Wii Points, and anything like that. The gist of these systems seems to be pre-paying for content in large, convenient (for credit-card processing purposes) blocks, and then assigning you credit that can be spent at an associated online store for online content downloaded as part of a game. Three fundamental problems crop up immediately: The most immediately obvious is the potential for breaking games, and is probably the most in-depth. The next have to do with handing money to an e-tailer up front, the way that it must be bought in (for example) 2000 point blocks when games don't happen to be priced in convenient $5 increments, and the last has to do with spending imaginary currency on imaginary property, and what happens when something goes wrong. To further reduce things, the problems are in gameplay, pricing, and reliability.

Gameplay: Keeping it fun, fair

In terms of gameplay, microtransactions can be done right, and they can be done wrong. I'm really not aware of a middle ground, but if I'm wrong, you know where the forum is - let me know what you think. To see how things are done right, I'm going to look at the beta-through-1.0 release of Alaplaya's S4 League, a free online over-the-shoulder shooter. At present, microtransactions are used to buy AP, or Alaplaya Points, one of two in-game currencies alongside PEN, earned by playing and winning matches. PEN is used to buy weapons, upgrade your armor, purchase esper skills, all nicely internally consistently. All well and good for the beta - but when it hit 1.0, AP was added. My stomach fell out when I realized that dozens of new costumes and armors had been added - and without the level requirements imposed by their older cousins. But when I looked closer, all the new items were recolors of older ones, costume enchantments were still purchased with PEN, and level-requirements were only ever in place so experienced players had bragging rights - they were functionally identical to any other item. So what did they do right? They added the option to further customize your character by expanding an already huge set of items. The content, as much as I hate to admit it, is fairly compelling. Also, it provides absolutely no advantage in the game.

Get into the exhilarating competition. Participate in the online video game tournaments and win cash prizes!

Now let's look at how to do it wrong - Lumines for Xbox Live. It's being sold as four interlocking chunks for $7.50 each - note how this lines up fairly badly with the Xbox point increments; even buying two 1600 point cards, you're left with a half to a third of a game worth after you finish buying the whole of Lumines. Annoying, but forgivable if the game is good enough. But unless you buy the whole package, when you begin a "VS CPU" game, only the first level is playable - to progress in this mode, you need to buy the rest of the levels the game needs before this game mode will operate properly. "But", you're thinking, "The game is only 750 points, or roughly $7.50." Yeah, and the dealer said your first one's free. By imposing such limits that are only discovered after the game is irrevocably bought, the user is forced to throw good money after bad in order to make the first eight bucks not feel wasted. Don't laugh - this has a very powerful psychological effect, and while it may not work on everyone, "there's a sucker born every minute" and enough of them are on Xbox Live that the dirty trick business model works. This is the same effect that compels people to buy more Xbox points so those they have stagnating in their account don't feel 'wanted' because they aren't quite enough to buy something worth owning. And since the refill cards are never in convenient sizes, the cycle continues.

Now, a momentary aside on Battlefield 2142 vs. Battlefield Heroes and Team Fortress 2. This is really about unlockables in general, but options bought are in the same field here. In Battlefield 2142, you spawned as a rank n00b as cannon fodder. In Battlefield Heroes, they have promised that this will never again be true, and anything you buy will be limited to costumes and emotes. In Team Fortress 2, Valve's stated design philosophy was to add flexibility without adding straight-up power and unbalancing the game. Aside from the tools running around the server farming acheivements to earn these unlockables, they don't cause game problems. This is a Good Thingtm and should be emulated.

Pricing: It's the economy, stupid

Pricing has been another contentious issue with microtransactions and systems based around them. Gran Turismo HD was notoriously cancelled based on its pricing scheme, which rumors report would have gone something like this: You buy the game with a couple tracks and a few cars; to fill out the roster to the same extent as the PS2 game it was based on, you would then spend about $400 a buck or two at a time to buy all the cars and tracks in GT4. There's no way to know if Sony was serious about that at some point, but it sums up the frustration of many gamers confronted with this business model. Basically, "the boys upstairs want to see how much you'll pay for what you used to get for free". Now, nobody in their right mind would consider doing something similar, but have no doubts: corporations exist only to earn money for their shareholders (Read as: CEOs), and they are legally obligated to do so as efficiently as possible. This is a huge can of worms for a later time, but the take home message is that they really aren't trying to do you any favors. If they maintain a good reputation and good customer service, it's primarily to ensure brand loyalty. The good news is earning loyalty is harder than Sony thought, and gamers just aren't willing to take that degree of abuse.

More subtle is that the money paid for Xbox or Wii points is floating around in Microsoft or Nintendo's coffers earning them interest between the time you buy the points, and the time they're redeemed for cash by software developers. In practice, this probably isn't hurting you or any other individual much, but it's another way of extracting that little bit more from you. My resources are limited and I have to pick my battles, so I don't really consider this a priority, but it should be made evident.

The last problem here, I mentioned in the 'fun factor' section - the way points are bought is in large increments that (deliberately?) do not translate well into "n games on the Virtual Console". In math, this is called a remainder; consumers really can only respond to these remainders two ways - try calling Microsoft and asking for a refund for a quarter-card worth of Xbox points; if you succeed, you are my new hero. The first way is to buy more points so you can spend the remainder of your old points, probably leaving you with a remainder again, and hopefully some fun old games. The second - which many are loathe to do - is simply write it off as a loss and walk away from those points, which may have just doubled the cost of whatever was purchased by microtransaction. This, and the ability to split a game up into modules, episodes, or expansion packs seems to be deliberately designed to hide the full, real cost of the game in real money, making it easier to make impulse purchases with "fake" money like Wii Points. How can this be made right? If I knew that, I'd be working at Microsoft, not here - but I'll hazard a guess anyway. I propose a universal standard - perhaps Paypal or Google Checkout - be used to handle card processing. Unused balances could be withdrawn, and games would be priced in dollars, not points. I don't think this will ever happen, but one can dream.


How do you kill that which doth not live? Same way you own something that doesn't exist: You don't, really. You've all probably heard of at least one case of multiplayer servers or old MMORPGs shutting down, taking with them the things people had worked ground hours and weeks to earn. People were justifyably upset, film at eleven. Now imagine that those things were bought with real money. Whatever protest there would have been, multiply it tenfold - that's about the response I expect when the first real-money online game goes down. The next problem is that when things break, (Red Ring of Death, maybe?) content is tied to the machine by DRM and copy protection. Only recently has Microsoft begun systematically allowing users to re-download content after a warranty replacement. Will this be available when the Xbox 420 supersedes the 360? Probably not, since the 420 port of your games will be separate products, and even if the 360 downloads are still available, I am not confident that it will be possible to exchange the license for your old downloaded content for the new revision. Why am I this pessimistic? Look at the next 360 Dashboard release - it will render user icons purchased for prior versions obsolete, replacing it with a Mii 3D avatar system. A comment by "Misfit Toy" on Joystiq sums it up nicely: "Who would buy a theme or gamerpic now that they'll be going away?" Protest has overall been at a quiet grumble so far, since Microsoft has yet to confirm that gamerpics are really gone forever, and most people are somewhat mollified by the improved interface they will be getting in return for their purchased themes and icons.

Until some reliable method for backing up and restoring downloadable content to other consoles exists - which would mean abandoning all pretense of copy protection - then there is no way to ensure that you will be able to hang on to your Virtual Console games as long as your dusty old NES games. This is a bit of a buzzkill for people who are interested in anything that isn't the latest-and-greatest like me, and as a result people like me are very cautious when venturing into the realm of micropayment and downloadable content. There are two ways to ensure that some level of reliability is maintained, and prodcuts will still be ownable even when no longer supported or after the producers have gone out of business. One is to simply have an ironclad reputation like Valve or Google; the other is to have some kind of insurance policy in escrow - game companies have occasionally promised to release an activation crack for all their games if they go under, but I am not inclined to trust that - they'll be busy trying desperately to bail out the company, not save your collection, and someone may buy the rights to a franchise after bankruptcy.

So how do you bring the risk-averse into the micropayment fold? Again, if I knew I'd be working for Microsoft or Nintendo or Sony. But I'll hazard a guess again - key escrow for activation cracks, with an agreement to make final patches available by a reliable third party. Sound business practices that reliably avoid any sort of trouble that could get a company's servers shut down. Ultimately, I know of no answers that can provide both ironclad copy protection and bulletproof security for users. Maybe the only good solution to this is to make optional content so cheap as to be a negligable risk, one that users are willing to treat as a rental. This would have other benefits as well, but cuts into profit margins.

In Conclusion:

Micropayments offer a new way for people to get what they want, and developers - people - to get paid for what they do. It has the potential to improve life for gamers and developers, especially smaller ones who have traditionally found it hard to find an in. It also has the potential to alienate gamers from the hobby if it's abused, something I think we all - even Microsoft - can agree is a Bad Thingtm. Ultimately, it's free markets (As of this writing, with America in the middle of a big and nasty recession, that's kind of a dirty word) and maybe - just maybe - intelligent discourse on the subject that will provide the shape of things to come. I can only hope that games are still sold in a playable configuration, and meaningful free content updates are still published. If these two conditions are met and purchased items never become mandatory to remain competitive, then microtransaction-based services can only make games a better place. Well, at least for those who consider such digital trinkets worthwhile. For those that don't, the goal should remain making games that are fun. If gamers and game makers are careful, no toes will be stepped on and the world will be a brighter, cheerier place because of it, and all it takes is a long-view approach to marketing. I'm confident that after a teething period gaming will reach this point, and if we gamers make our voices heard, that tething period will be quick and easy.




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