The Effects of Microtransactions on the User Experience of Video Games

In the past 10 years, video game companies have introduced a new way of making money off video games through the use of microtransactions, compared to the traditional model of charging a one-off purchase fee for a game. A microtransaction is a business model which allows users to buy virtual items for small amounts of money. Microtransactions commonly feature in free-to-play games, which allows the user to play the core experience of the video game while having the option to purchase additional add on features in games. There are growing concerns that the market trend towards microtransactions in gaming is changing the way video games are being played. There is a growing negative perception among gamers over the use of microtransactions as it enables certain players who make more purchases to have an advantage in the game.

While there is this negative perception by gamers and media on the implementation of microtransactions, this essay will provide designers an insight into how the implementation of microtransactions could fundamentally alter the way a user plays a video game or use an application. It is important for designers to strike a balance between earning profits and creating a cohesive user experience.

The industry trend towards microtransactions

There is a general negative perception towards the implementation of microtransactions in games by the video game development industry. One such example is the controversial implementation of microtransactions on Star Wars: Battlefront II. The game produced by Electronic Arts and developed by Dice Studios received backlash by its player base during its beta testing phase. The implementation of microtransactions on the game is said to give an unfair advantage for players who purchased unlocks of special game characters which is otherwise only accessible after long hours of earning game credits through gameplay (BBC News. 2017). As a result of the negative feedback, EA announced that it will reduce the number of game credits required by 75%, allowing easier access to players who do not wish to get the game characters through microtransactions. Dice Executive producer John Wasilczyk said the following after the beta test phase.

“ There’s been a lot of discussion around the amount of in-game credits (and time) it takes to unlock some of our heroes, especially Luke Skywalker and Darth Vader. Unlocking a hero is a great accomplishment in the game, something we want players to have fun earning. We used data from the beta to help set those levels, but it’s clear that more changes were needed.’’ — (Wasilczyk, J 2017)

Microtransactions is a business model where micropayments allow users to purchase virtual goods. Microtransactions are often used to provide the developers with a source of revenue in free-to-play games. Although microtransactions are a regular feature of the mobile app industry, they are also seen on paid PC games and console games (Lloyd, B. 2019). The Microtransactions business model has been proven to be highly lucrative and profitable by video game publishers. Nearly every major video game publisher now records revenues from microtransactions; in 2017 alone, video game publisher Activision Blizzard announced revenues of $4 billion from microtransactions (Thubron, R. 2018). Microtransactions are attractive to developers as income from microtransactions can help offset the development cost of the main game as video games become more expensive to produce. In turn the developer would be able to focus on developing new content for the existing game as opposed to creating an entirely new game from scratch. During the Xbox to Xbox 360 and PS2 to PS3 gaming console change, the price of a full-priced game went up from $50 to $60, but no such price hike happened in the next generation of game consoles. Developers like Ubisoft are now launching fewer games while promoting certain franchises with new game content over a longer period, some of which will be paid for.

Apart from the video gaming industry, microtransactions can also be seen in many free mobile applications. This feature known as in-app purchasing, enables a developer to provide the base application to users for free while charging users for additional app features. Advertisements are also found in free versions of the applications which allows developers to profit from their application even though the user is using it for free. When users download the app from a digital distribution service such as Google Play store or or Apple’s App Store, users are typically informed that the app they are downloading has microtransaction features. Some have policies that allow refunds should they be sought shortly after a purchase is made. These app stores also take up a percentage of revenue in-app. Consumers making purchases through an application are not required to visit a separate website for the transaction to take place. In fact, trying to perform a transaction by redirecting to an external website infringes the terms of most application stores since it prohibits them from receiving a fee.

Games As a Service

A major trend in the video gaming industry is the trend towards games being treated as an online service, compared to buying it as a single product. This way of selling video games is known as — Games as a service (GaaS) or live service games in the video game industry. I provides users with video games or game content similar to a subscription service (K, Arrambide. 2018). Games published under the GaaS model usually provide constant updates over time, streams of monetised new content to enable players to continue to pay to support the game. This often leads to games that work under a GaaS model being called “live games,” since these updates are constantly changing (Wong, S. 2017). Examples of these game services include Xbox Game Pass by Microsoft, EA Access and Google Stadia. Xbox Game Pass and EA Access give users access to a variety of game from various publishers for a monthly subscription fee while Google Stadia is a cloud gaming service by Google. Over the 10 and 20 years, the gaming industry has grown rapidly, and game developers are now rethinking the use of games as platforms and the relationship between developers and audiences. Gamers have been constantly debating whether games should be purely producer-based or service-based. This has spawned a new wave called Gaming as a Service or GaaS (Barrett, B. 2019).

Game developers such as Electronic Arts would give the player a portion of a game, or more broadly focus on creating shorter game experiences, depending on how subscribers engage with their services. This is like how Spotify can serve users a single song they like, rather than the entire album. The optional benefit of the subscription model can also extend beyond how and where users play games, to what kinds of games users are able to play. A survey conducted by Deloitte in 2019 found that 30 percent of U.S. customers are already paying for a gaming subscription (Deloitte Insight 2019).

The Implementation on microtransactions UX in video games and software

The most basic implementation of microtransactions in a videogame can be seen in many arcade games. These video games have been designed in a way to draw players to spend more money on the game than they initially planned. An example of the implementation of this user experience can be seen in the arcade game Alien 3: The Gun, where a “Continue?” screen appears after the player’s death, followed by a prompt to insert coins into the arcade, enticing the player to put in mode coins to complete the game.

The implementation of microtransactions is highly prevalent in the mobile apps market and the concept implemented by arcades can be seen in mobile games. According to Swrve’s 2016 Mobile Monetization Report on over 20 million mobile game players, more than 90% of mobile games use the Free-to-Play model while incorporating various in-app purchasing mechanics. These mobile games are known as Freemium games. Although just 1.9% of players actually spend money on content in the game, they produce up to 90% of the overall mobile gaming market, which reached $46.1 billion in 2017. (WIRE, B. 2016)

Among the highest-grossing Freemium video games include Clash Royale, Fortnight Battle Royale, and Candy Crush. In the case of Candy Crush, the game developer implemented a form of “premium” in-game currency in the game’s economy which can be purchased with real-life currency. After the player has acquired the premium currency, the player will be able to spend it in the game at any time without having to be notified that they are spending real money. The premium currency is designed to make players feel like they have made an advantage in the game — for example, purchase 100 premium gold bars for 1 dollar. It is made to seem more valuable. This premium in-game currency which is more valuable than the standard in-game currency will then enable the player to be able to purchase in-game items more easily.

The use of in-game currency in the mobile game Candy Crush

To get a higher score, the player can purchase a variety of items to replenish their health if they run out of moves or purchase special item powerups. At first these things aren’t required but come in handy as soon as the player progresses to later game stages and the levels get harder. As the difficulty of the game increases, the player will have more incentive to purchase in-game items.

The interface design of Candy Crush’s in-game store

When a player taps on the purchase button, a pop-up interface appears telling the user that a discount has been received. The app contains several of these discount notifications that pop up at various times during purchase, further enticing the user to spend more on the app.

As such, in-app purchases have been proven to be success as a monetisation strategy. In 2015 Candy Crush made $1.3 billion in one year from in-app purchases (Dredge, S 2015). In 2017, according to researchers from University of Southern California, found that in-app purchases accounted for $2.8 billion of all purchases made through Apple’s app store. However, a large number of the purchases is made by 1% of users showing that there players that spend large amounts of money on the app.

A loot box is an in-game microtransaction feature in which a player spends money on a random game item which could be valuable. These in-game items could range from rare cosmetic items to features that give a player an advantage. The idea is that the customer doesn’t know exactly what they are getting, unlike a typical buy, and those sales are intended to give a sense of thrill and anticipation, similar to gambling. Dr Luke Clark, director at the Center for Gambling Research at the University of British Columbia explains how the application of microtransactions of lootboxes can be so compulsive.

“The player is basically working for reward by making a series of responses, but the rewards are delivered unpredictably. We know that the dopamine system, which is targeted by drugs of abuse, is also very interested in unpredictable rewards. Dopamine cells are most active when there is maximum uncertainty, and the dopamine system responds more to an uncertain reward than the same reward delivered on a predictable basis.” — (Clark, L 2019)

An example of Overwatch’s lootbox

A good example of the implementation of loot boxes can be seen in Blizzard’s first-person shooter, Overwatch. The game contains a loot box feature where players obtain these boxes after a successful game session. Players are able to unlock special game character cosmetic items such as skins, animations and call signs. However none of these rewards affects gameplay or give players an advantage over other players which makes the game a more level playing field. While certain cosmetic items can only be unlocked by completing missions, players who can afford to purchase multiple loot boxes could still get the cosmetic items faster.

Conclusion

In conclusion, the implementation of microtransactions in video games is proven to be highly profitable as it enables developers to increase their profit margins for the development of a video game particularly with the increasing cost of developing premium AAA video games or blockbuster video games by large development studios. However, it is important for the development team to consider the implications of introducing microtransactions features in their video games which would affect the way the game is played such as giving players who spend large money on microtransactions a strong advantage over other players, hence the term pay-to-win. By pushing for high profit margins, over user satisfaction, developers risk alienating their user base from their product as in the case of Star Wars Battlefront II.

Reference List

Barrett, B. (2019) Subscriptions Are About to Swallow Gaming, Wired. Available at: https://bit.ly/2SyBBCW (Accessed: 2 February 2020).

Thubron, R. (2018) Over half of Activision Blizzard’s $7.16 billion yearly revenue came from microtransactions, TechSpot. Available at: https://bit.ly/2SyBBCW (Accessed: 2 February 2020).

Bhagwandin, S. (2019) Candy Crush: A Sweet Treat For All Mobile Gamers

Candy Crush: A Sweet Treat For All Mobile Gamers. Available at: https://bit.ly/2UAHfap (Accessed: 6 February 2020).

Wasilczyk, J. (2017) Change will be a Constant in Star Wars Battlefront II, Electronic Arts Inc. Available at: https://bit.ly/31DROuT (Accessed: 7 February 2020).

K, Arrambide. (2018) Games as a Service — the model of Microtransactions. Available at: https://tinyurl.com/synyngz (Accessed: 10 February 2020).

Deloitte Insight (2019) A look at the changing nature of media consumption. Available at: https://bit.ly/3bsok7x (Accessed: 28 December 2019).

BBC News (2020) Star Wars game faces further backlash, BBC News. Available at: https://bbc.in/378JPH7 (Accessed: 2 February 2020).

Wong, S. (2017) What It Means To Treat Games As A Service, AList. Available at: https://tinyurl.com/vx44q94 (Accessed: 6 February 2020).

Pahwa, A. (2019) Candy Crush Success Case Study: Marketing + Psychology = Success, Feedough. Available at: https://bit.ly/38fI9gi (Accessed: 6 January 2020).

Kooti, F. Grbovic, M. Maria, L. Bax, E. Lerman, K. (2017) iPhone’s Digital Marketplace: Characterizing the Big Spenders, Arxiv.org. Available at: https://arxiv.org/pdf/1701.07411.pdf (Accessed: 10 February 2020).

Tomić, N. (2019) Economic Model of Microtransactions in video Games, ResearchGate DOI: 10.30564/jesr.v1i1.439. Avaliable at: https://bit.ly/2SABiaI (Accessed: 6 January 2020).

Immersive and addictive technologies (2019) Digital, Culture, Media and Sport — House of Commons. Available at: http://tiny.cc/zdjyhz (Accessed: 6 January 2020).

Harrison, C (2018) The User Experience of Lootboxes. Available at: http://tiny.cc/7kjyhz (Accessed: 11 November 2019).

Colagrossi, M (2019) How Microtransactions Impact the Economics of Gaming. Available at: http://tiny.cc/qhjyhz (Accessed: 11 November 2019).

Dredge, S. (2015) Candy Crush Saga players spent £865m on the game in 2014 alone, the Guardian. Available at: https://bit.ly/2SdhcnV (Accessed: 5 February 2020).

EA earns $1.68 billion in microtransactions in FY2017 (2017). Available at: http://tiny.cc/qljyhz (Accessed: 11 November 2019).

Wiltshire, A. (2017) Behind the addictive psychology and seductive art of loot boxes, pcgamer. Available at: http://tiny.cc/1pjyhz (Accessed: 15 November 2019).

Fenlon, W. (2017) The case for and against loot boxes, according to developers, pcgamer. Available at: http://tiny.cc/6ujyhz (Accessed: 2 January 2020).

Kelly, M. (2019) How loot boxes hooked gamers and left regulators spinning. Available at: https://bit.ly/39ooyuu (Accessed: 5 January 2020).

Bibliography

Dredge, S. (2015) Candy Crush Saga players spent £865m on the game in 2014 alone, the Guardian. Available at: https://bit.ly/2SdhcnV (Accessed: 5 February 2020).

Colagrossi, M (2019) How Microtransactions Impact the Economics of Gaming. Available at: http://tiny.cc/qhjyhz (Accessed: 11 November 2019).

Kooti, F. Grbovic, M. Maria, L. Bax, E. Lerman, K. (2017) iPhone’s Digital Marketplace: Characterizing the Big Spenders, Arxiv.org. Available at: https://arxiv.org/pdf/1701.07411.pdf (Accessed: 10 February 2020).

Immersive and addictive technologies (2019) Digital, Culture, Media and Sport — House of Commons. Available at: http://tiny.cc/zdjyhz (Accessed: 6 January 2020).

Pahwa, A. (2019) Candy Crush Success Case Study: Marketing + Psychology = Success, Feedough. Available at: https://bit.ly/38fI9gi (Accessed: 6 January 2020).