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Microtransactions getting a bad name

November 27th, 2006 (Visited 9566 times) Tags:

For better or worse, the consensus developing among gamers is definitely that microtransactions are a bad thing. Witness The microtransaction song, from Shacknews. And today I read in a thread on Joystiq or Kotaku (no, I can’t tell them apart, and don’t lynch me over it!) the cute summary that “Companies and gamers like different things about microtransactions. We like that we can buy things fast. They like that they can put everything under restrictive licenses, sell you incomplete games, force you to overspend buying points in blocks, and ding you over and over for stuff that should have been free.”

It’s going to be hard to fight that perception.

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RLMMO :: View topic - Micro-transactions wrote on November 28th, 2006 at 1:15 pm:

[...] I found an interesting discussion over at Raph Koster’s blog, regarding micro-transactions. Microtransactions getting a bad name [...]

The Forge · Virtual World Business Models part 2 wrote on November 29th, 2006 at 7:22 pm:

[...] http://www.raphkoster.com/2006/11/27/microtransactions-getting-a-bad-name/#comment-64574 Name Email Website Your comment [...]

Excellent article on Microtransactions in Korea - PlayNoEvil Game Security, Game Cheating, Gold Farming and RMT News & Analysis wrote on November 29th, 2006 at 7:39 pm:

[...] Excellent article on Microtransactions in Korea Raph Koster has an interesting discussion on microtransactions going, but a great place to start is Gamasutra’s excellent summary on the state of microtransctions in Korea from a recent report by Pearl Research. Also, I wrote an article a while back about Killing the Golden Goose of Microtransactions. Some key points from the article: + “selling and buying in-game assets or content for $0.25 to $15″) make up at least 50% of South Korea’s $1 billion online games market in 2006 Note the small size of many of the items. Many US microtransaction system bias towards larger items than in Korea. + “A critical success factor in growing the online games market is having a reliable and inexpensive system to bill, make payments and collect micro-payments. In Korea, the development of a mobile billing system, capable of processing small payments of less than $5 has been instrumental in helping publishers monetize gameplay.” + 58% of South Korean online gaming payments are done through phone bills, with just 27% by credit card, significantly different from the Western market. This is a critical factor. Micro-transactions have a big billing problem. Chargebacks, processing fees, and other expenses have a serious impact on these transactions… e-commerce is broken in the US and getting worse (merchants see this, consumers don’t – so far). Phone and other billing systems have a completely different dispute resolution structure that makes them less expensive. This is a big problem and opportunity!!!!!!!!! + Overall in Korea, 7 out of 10 online games used in Internet cafes are free to play, but with extra payments to advance or master the games. The casual game market is also growing swiftly too, at 30% of the overall online game business, according to Pearl Research. There is also an opportunity, in Asia, to get Internet cafes more actively involved in the game as opposed to simply passively renting time on their PCs. Posted by SecurePlay in Game Industry, Virtual Asset Purchase Games, Virtual Currencies & Micro-Transactions, Korea Online Games at 10:07 | Comment (1) | Trackbacks (0) View as PDF: This entry | This month | Full blog Trackbacks Trackback specific URI for this entry No Trackbacks Comments Display comments as (Linear | Threaded) Nice analysis. Some short complements are here. 1. Payment by cell phone is really critical factor not only its convenience but also it acceptability, especially for parents who have gaming children. Most successful games by micropayment in Korea are biased toward younger users. It is easy to understand that their paying comes from their parents. Fee-based model gives parents a second chance to think in that the size of payment is somewhat considerable, but item payments through cell phone seems to be looked as trivial. There tends to be much less resistance to pay. But, from time to time, the total size of spending in micro-payment model is larger than that in traditional one. 2. To my opinion, the last comment on PC bang is a little bit misleading, because payment systems/methods are same between PC bang players and players of their own PCs. It it true that PC bang has the unique mechanism for drawing much lively gameplaying, but there is no serious difference in payment between two types. #1 Huhh, Jun-Sok (Link) on 2006-11-29 15:42 (Reply) Add Comment [...]

Asian Online Games - PlayNoEvil Game Security, Game Cheating, Gold Farming and RMT News & Analysis wrote on December 2nd, 2006 at 9:51 pm:

giantron @ MindSay wrote on August 23rd, 2007 at 9:51 am:

[...] Roph Koster’s blog, where people are talking about how much they HATE micropayments. Here’s the link: Hmm…. 3 replies – reply « All Entries » « Blog Archive » [...]

RLMMO :: View topic - Micro-transactions? wrote on August 29th, 2007 at 10:47 am:

[...] November I made a post with a link from Raph’s blog about Microtransactions. Microtransactions getting a bad name I’d suggest you take the time to read through the comments as well, since Raph responded there a [...]

MMO Monetization Roundup « Tish Tosh Tesh wrote on February 5th, 2009 at 6:10 am:

[...] Microtransactions Getting a Bad Name [...]

Reader Comments

Steven Davis said on November 27th, 2006 at 7:33 pm:
Raph -

Concur! The way US companies are handling micro-transactions could destroy this excellent strategy.
Vargen said on November 27th, 2006 at 7:47 pm:
The way you fight it is by not pulling that crap. I’ll buy stuff from iTunes because I can pay with real cash as I go, and because I can burn a CD and not be tied to the hardware. I’m smart enough to tell the difference between that and having to give Nintendo $20 to purchase a $5 NES game that can only ever be played on one specific box. And Nintendo is being nicer than most companies out there, what with 1 Wii point = 1¢ as opposed to Microsoft’s Zune thing where a 79 point song costs 99¢ because they want to fool you. And look at what the cell phone industry has been doing, what with their locked-down phones and the charging to transfer pictures to your PC. The bad reputation is earned.

You fight that reputation by making sure you keep the user experience in mind all the time. From a designer/implementer perspective a “points” system makes sense so that you don’t lose your shirt to Visa every time you make a charge. The end-user neither knows nor cares about that however; all they know is you just charged them $20 for a $2 download. Be honest with your customers. Don’t hide your prices. Don’t make the process needlessly difficult (and don’t forget what you see as needless and the customer sees as needless are two different things). In short, you fight the reputation of being a jerk by not being a jerk.
csven said on November 27th, 2006 at 7:47 pm:
I think this is where “sharing” mp3 files starts to affect perception. Any monetary transaction is likely to be perceived as a bad thing.
magicback (frank) said on November 27th, 2006 at 8:24 pm:
Players in the US are becoming more cynical about the whole thing, but I think they will still keep their minds open and make judgment on a case-by-case basis.

The original Wizard of the Coast really innovated with this business model with Magic: the Gathering by incorporating and taking customization, scarcity, and microtransactions to a whole new level. Lego does a good job without the scarcity. There are other good examples.

However, the perception IS that most video game companies ARE looking at microtransaction as a way to MILK money from existing playerbase rather than using the business model to grow the playerbase.

I think I rather have Google ads running on a permanent window on my game client rather than getting “nickled and dimed” via microtransactions.

Frank
Aaron said on November 27th, 2006 at 8:57 pm:
It would be a mistake to assume that perception always follows reality. Being honest and fair in your implementation of microtransactions will affect the views of many gamers, but it might not prevent a significant number of gamers from continuing to distrust the practice. You’ll need propoganda at some point.

I think the main misconception that you’ll have to confront is the idea that microtransactions are a sign of an incomplete game. You have to convince gamers these are truly expansions and not just fixes and fillers.

And that won’t always be easy, because many traditional expansions are admittedly features the developers originally wanted in the core game. The borderline between a complete game and an incomplete game is often not clearly defined.
Michael W. said on November 27th, 2006 at 9:52 pm:
It simply comes down to companies being responsible in how they implement micro transactions.

This penny arcade comic shows what not to do:
http://www.penny-arcade.com/comic/2006/11/15

I would argue that micro transactions have a place…They are present in other inudstires and they seem to use them effectivley

Let’s say you enjoy classic rock, you don’t have a particular devotion to one band, and getting a few Doors songs, some Stones, and that song about blind pinball guy burned on to an CD sounds good. You don’t have 6 hours a night to listen to originals while you discuss, why the Who haven’t put out an album in eight years, you just want to entertain yourself while you drive to work. Apple’s Itunes store would be perfect for you, allowing you to get a good variety of music, without the financial investment, and the artist benefits because someone who may have just decided to listen to the radio or buy only one album from another band, gave them at least SOME money, that wasn’t there before.

If we continue to get scenarios where gamers percieve developers actively omiting or locking features, then they will only find resentment among consumers, who expect what they consider a “full” product.
Techbear said on November 27th, 2006 at 10:41 pm:
What choices do players have, ultimately? I mean, if the idea is that eventually every game will be a multi-player game, and bandwidth costs someone money, then the ONLY apparent business models are:

1) subscription
2) premium purchases
3) advertising supported

Am I missing any?
Cael said on November 28th, 2006 at 4:42 am:
Government sponsored, as in America’s Army (which is actually a very good game).
JuJutsu said on November 28th, 2006 at 6:55 am:
The way you fight it is by not pulling that crap…In short, you fight the reputation of being a jerk by not being a jerk.

I wholeheartedly agree with Vargen.

I’m smart enough to tell the difference between that and having to give Nintendo $20 to purchase a $5 NES game that can only ever be played on one specific box.

What’s worse than getting hosed by a company? Being treated like an idiot that won’t recognize what’s being done.
Trucegore said on November 28th, 2006 at 7:12 am:
Do not forget that all games are competitive, even if its a single player game. The act of buying something that will increase your power (what ever metric that may be) is considered cheating in most gamers minds.

This is especially true in MMO’s. and why most US gamers view the Koren influxes of F2P games that use transfered real cash to buy items, Lame.

The industry my want microtransactions, but players do not.

Even those players on SOE exchange servers are looked down upon by the general populace.
David (Tal) said on November 28th, 2006 at 8:04 am:
When it comes to the MMO space, I like what Sony’s done with EQ2, where you still pay the normal subscription, but there are other things you can get as well. A few more dollars a month for more character slots, or maybe $7 every 6 months for some extra, optional content. This type of thing is perfectly acceptable to me becuase I am getting something in addition to the base service, and it’s something that would not harm my gameplay experience in any way if I didn’t have it. If I couldn’t afford it, oh well, I can still play with my friends.

If I were going to run an MMO as a microtransaction-only model, here’s what I think I would do:

- Distribute a base game client and some content for free. However the game is set up, the entire game should be playable without ever having to engage in micropayments.
- Each player gets an account, like a paypal account, that they choose to deposit money into. This money is translated into points of some sort. This abstracts the money spent on the game so that players don’t feel so much like they’re being nickel-and-dimed.
- Accounts are nonrefundable, so there’s no allegations of gambling, profiteering, or money laundering.
- Players can also earn small amounts of points by achieving things in the game. (Like the way XBox Live is set up)
- Players can use the points in the account to purchase additions – special titles, bonuses, in-game cash, more character slots, unlockable art assets, access to new (optional) areas, services like avatar makeovers and so on.
- Players can trade points with each other as a currency. So if you have a sword that I want, I could trade you some points for it.

Now players have several options.
1. Play the free game and miss out on some of the cool stuff, but still have a lot of fun.
2. Earn points by playing (and optionally transactions in-game with other players) and use those for some of the cool stuff.
3. Buy points and use those for some of the cool stuff.

To me, this seems like a fair way to set up a microtransaction model without making players feel like they’re getting nickel-and-dimed for incomplete game content.
Relmstein said on November 28th, 2006 at 8:13 am:
Micro-transactions remind me too much of Arcade style gaming where I had to continue popping quaters into machines to get more lives. Of course with MMOs, the companies aren’t limited to just charging you a fee whenever you die. The can charge you for every item you might want to collect for your characters. Companies exist to make money and you can expect them to try to make the most amount of profit without hurting their public image. Micro-transactions is just a way to allow game companies to really raise the cost of playing an MMO without the bad PR of high subscription charges.
Bissrok said on November 28th, 2006 at 8:17 am:
The fact that so many companies are praising the idea is what has me so concerned. They’re not going through all this effort to save me a few bucks every month, they’re doing this because they know there’s people out there who don’t mind spending $30+ a month to make their character the best.

They want make a little extra money, gameplay-be-damned. It’s like selling a hotdog and charging fifty cents for the bun -it’s glaringly obvious they that just want more money without doing any extra work.

I really hope someone goes ahead and tries this. Maybe after it falls flat on its face, the rest of them will give up on the idea.
Techbear said on November 28th, 2006 at 9:23 am:
Wow, Raph was right! There’s a lot of venom on this thread, directed at micro-payments. I can assure my players that they won’t have to pay c50 for the bun, but if they feel so negatively about micropayments as a general rule, they’ll avoid my game and never become my players in the first place.

As a developer, I like the idea of micropayments as an alternative to subscription. Blade Mistress taught me that going from free to subscription destroyed 2/3rds of my player base, and suppressed further community growth.

So whats the answer? Assuming I’m not trying to screw my players, how best to deal with the negative perception of micro-payments? Change the name, to something like ‘premium content’? Display the micro-payment ‘menu’ up front? Give users a choice between subscription OR micro-payments?
David (Tal) said on November 28th, 2006 at 9:46 am:
The fact that so many companies are praising the idea is what has me so concerned. They’re not going through all this effort to save me a few bucks every month, they’re doing this because they know there’s people out there who don’t mind spending $30+ a month to make their character the best.

You could just as easily say the same thing about car manufacturers, TV networks, or any other industry on the planet. They are, after all, in the business to make a profit.

I think a lot of everyday, normal people (of whom most gamers are a part) just simply distrust the motives of any company that charges for a service. So no matter what you do, people will always feel like they play too much. So I’m going to sort of echo what Bissrok said: I really hope someone goes ahead and tries this. That way, someone can do a study on it and we can all see actual numbers comparing the consumer cost of a microtransaction-supported MMO to the consumer cost of a traditional subscription model.

I’m guessing that you’ll find in a microtransaction model, the average consumer ends up paying less. But to prove that one way or the other it would take a game actually doing it, and a study a few months in
Michelle Readman said on November 28th, 2006 at 10:07 am:
I believe that one truth on this matter can be found in the conclusion to Raph’s article “Are microtransactions actually the future?”.

Ultimately, people can find ways to hack the game to add more content. Existing in-game items can be ‘farmed’. If the game is actually complete without the need for microtransaction puchases, why would people even consider buying any of them?

The original Neverwinter Nights actually provides us with a good case study. From it’s very release, the community had tools at it’s disposal to mod the game and create new worlds. Over time, more tools appeared, allowing for significant community development. Yet not only did it have two expansions, Bioware also successfully sold ‘premium modules’.

These premium modules were actually no different from what the mod scene could produce. The later modules began to see patches made to the game to allow the content to work fully, but no restrictions were then placed on the use of any of the new features.

Despite the fact that the community could make equal content itself, people still purchased these premium modules, and generally I haven’t seen much complaint over their sale. Premium modules worked as they offered a level of gaurentee over the content within, promising a level of polish to the design, new artwork and music, and unique challenges. None of which would break your existing game, but rather simply added value.

In comparison, let’s look at The elder scrolls IV: Oblivion. Oblivion has also seen microtransactional content offers, and again also has had comprehensive editing tools availible for it from launch. Most of the official paid downloads are again entirely within the reach of the community’s development skills.

Whilst with Neverwinter Nights you were buying an entire new story to explore, Oblivion’s mod support allowed developers, both official and community member alike, to add to the existing world. As any world designer should be able to tell you, such additions must be approached carefully. The effort you save by not having to create a setting is balanced by an expectation that your additions will be balanced within the world and remain consistant with the lore.

Ultimately, from the community reactions I have read, Oblivion’s paid downloads failed to impress. Your character is alerted to the new content by ‘a mysterious note in your pocket’, which is added immediately upon a new game or loading a save, no matter how inconsistant with the plot such an event would be. You can gain immeasurable power from the material wealth offered to you within the new content, helping to break balance. Finally, in what was most annoying for some players, the downloads would simply hand you vast collections without ever having to work for them. Some players had spent time collecting every book in the world, only to recieve a mysterious note telling them of a tower, and within this tower they found an already complete library.

Looking for more examples, I’m going to stretch matters some by presenting The Sims. Although it’s eight were more macrotransactions than microtransactions, it still set a fairly new precident for the number of expansions with minimal game changes one could produce and successfully sell.

Even Second Life deserves a mention. Although the transactions are happening between players rather than between a player and the service provider, there is a bustling trade for what appears to be (from an outside observer’s perspective) mostly fashion items.

If you read the reasons why Penny Arcade penned a script which derided EA’s microtransaction model, the core complaint was that it was taking content which previously came with a game and now charging for it. It’s no wonder that players are pretty upset over a move such as this.

I can’t find the last thing I wanted to reference, but I recall reading the other day an interesting article on the clothing industry and fashion labels. The relevence in this case is that it stresses appeal and quality over needing to be the only supplier, and acts to show again that microtransaction content is not mutually exclusive with a player editable game.

There’s quite a few conclusions we can draw from all of this. Firstly, despite recient outcries, I think it’s entirely unfair to say that players as a whole generally don’t like microtransactions. Players have happily forked out year after year for expansions to a game, some games have had very effective microtransaction models, and other games have made regular and easy microtransactions a core part of what they are.

Secondly, there is no need for the provider of the microtransactions to have exclusive control over all new content. Ultimately the quality of the service and the content on offer is more important.

Any such microtransactional content must take care not to enhance, not harm, the gameplay experience. Fashion items, such as new car bodies, clothing, etc, are good candidates for this, as they allow greater personalisation of the game. On the other hand, unbalanced additions can seriously ruin a game. Furthermore, microtransactional content should not be approached as an entirely new product which must be of equal value to it’s cost. Players purchasing microtransactional content do so for an existing game, and they expect the addition to be more game.

Don’t cheat your customers. Microtransactional content works well when it is ‘added value’, and poorly when it is in the form of ‘required or witheld value’. EA fell foul to this, by making content that players expected paid-only. Microtransaction content, in the sense of game additions intended to be purchased regularly, should not be required to be able to play the game as it was designed.

Finally, the above conclusion leads naturally to note for anyone attempting to build a microtransaction business model. Even if you have designed in from the start a large selection of microtransactional content, it may be better in terms of marketing to slowly trickle out this content, so as to avoid the appearance of all such content being required to play the game as designed.
Raph said on November 28th, 2006 at 10:22 am:

Micro-transactions is just a way to allow game companies to really raise the cost of playing an MMO without the bad PR of high subscription charges.

Actually, it’s a more complex picture than that.

What microtransactions affects most of all is end-user price sensitivity. It lets you charge both more and less.

Less matters because the subscription fee is a huge barrier of entry for many people. Simply going free is usually enough to get you a 10x multiplier on trials. This is a huge and needed step to grow the market.

More matters because subscriptions are also “all you can eat,” when the actual usage pattern is very different. We see this manifesting via multiple sub holders in the subscription world. Basically, the actual price point for the typical sub payer is actually TWICE the typical sub fee. And above and beyond that, there are those quite willing to pay 10x or more.

Actual ARPU figures for microtransaction based worlds go anywhere from $5 to $30, depending on what the world is like.

The whole “sell something for full price and then charge for yet more” is a variant model. Tiered pricing is, of course, nothing new. Even if we get the sort of “One Big Provider” that Prokofy mentions elsewhere, tiered pricing is likely to still be with us.
csven said on November 28th, 2006 at 11:20 am:
“The industry my want microtransactions, but players do not”

For the record, I play and I want microtransactions. If a company can do their business, put out a good product such that I would buy from them again, and some unrestrainted player can’t help but fund their development by buying every new skin that comes out for his avatar (while I use the default), that’s okay by me.
Gunman21 said on November 28th, 2006 at 11:47 am:
The day microtransactions hits a MMO like eve, eq, etc, is the day I stop playing those games, and many others as well, especially the ones that didn’t want to fork over subscription fees in the first place.
Michelle Readman said on November 28th, 2006 at 11:53 am:
The day microtransactions hits a MMO like eve, eq, etc, is the day I stop playing those games, and many others as well, especially the ones that didn’t want to fork over subscription fees in the first place.

To gunman21:

You realise that the definition of microtransaction is actually very poor, technically it is simply a transaction which is comparitively small. That subscription fee which you might pay actually can class as one – it’s a small payment which you make to have access to a service, much like renting a film (a common real-world microtransaction).

Clearly you have some specific possible types of microtransaction in mind which you would prefer to avoid, any chance you could discuss these specific cases with us?
Michael W. said on November 28th, 2006 at 12:07 pm:
More matters because subscriptions are also “all you can eat,” when the actual usage pattern is very different. We see this manifesting via multiple sub holders in the subscription world. Basically, the actual price point for the typical sub payer is actually TWICE the typical sub fee. And above and beyond that, there are those quite willing to pay 10x or more.

Those players however, are also well aware of the aspects of the game that don’t cater to their lifestyle. They notice the mechanics and content suited for the casual player, even in some of the biggest lifestyle games like EVE, the lifestyle gamer can feel the invisible wall of skill progression moving slowly. Holding even the most devout players back.

Mechanics like this in my opinion cannot coexist in a game that will charge its heavy users more money, because it contradicts there lifestyle.

If we are talking about a game, built for lifestyle gamers, with enough content to feed them, then possibly high sub rates would work, but making those hardcore gamers pay more for simply playing more of game that they feel hinders their progression would be frustrating to the player.
Kressilac said on November 28th, 2006 at 12:23 pm:
Microtransactions can work if done correctly though correctly varies by genre. In the sports genre, expansions to a franchise are purchased over and over again. Most people buy Madden 20xx for the updated rosters and not for any of the game play improvements. Golf games work well when selling additional courses as micro-transactions. I’ve bought a bunch on the original Xbox and will buy more on the 360 when/if Tiger 07 releases them. Racing games are even getting into the mix with the release of the new GT game on the PS3. Most of the cars in that game are downloaded and purchased through microtransactions. In MMOs, microtransactions can work as well. EQ2 uses them for minor expansions which is not unlike adding a golf course or race track to other types of games. The content is optional for those that want to buy it. Xbox Live does microtransactions very well by integrating a gift card into the process. How many of us with 360s want these cards in our stockings this year. We want them for microtransaction purchases.

The point here is that microtransactions are a) not going away and b) not nearly as EVIL(tm) as most people make them out to be. Sure some companies are going to screw up how they implement microtransactions and some people are going to feel screwed in the process but businesses will learn as consumers show them where to go with their dollars. Microtransactions stand a chance to lower the average cost of playing these games and for the most part is an unavoidable giant in the room.
Kent said on November 28th, 2006 at 1:03 pm:
The problem that I see with micro-transactions in MMORPGs is the assumption that the players can be made unequal because of the deep pockets that they might have in real life.

Of course, I do think that it all depends on how the transactions are done.

Example 1: The best gear can only be obtained by paying the company, particularly if it is impossible to trade the gear with other players. In such a system, it would be essentially impossible for players to compete without spending on the micro-transactions. Work and time in the game is made pointless.

Example 2: Specific gear can be purchased through micro-transactions, the gear is no better than what can be acquired (with enough time) through the game. The difference is that it looks different.

I would never consider playing in a game where the first example is active. However, I would play in the second example.
StGabe said on November 28th, 2006 at 3:34 pm:
I closesly followed the controversial microtransactions for the recent XBox Live Arcade title: Lumines. There a lot of people were unhappy but most of the reasons for being unhappy were, IMO, misconceptions. The game shipped with several features disabled at launch and requiring microtransactions to be played. The key misconception was that the game was “crippled” because these features were disabled. In fact, those features were largely just fluff and the core game was all there. Also, it was a very polished and professional game and a bargain, comparitively, at the price at which it was offered (it was originally a full priced title on the PSP).

So I do think that consumers can get riled up over a lot of nothing but on the other hand I think that those producing the content need to be a lot more savvy about how they do it. If, for example, the Lumines Live version had been released completely without the fluff microtransaction-enabled features it would have been much more positively received (a few reviewers might have complained that some features from the PSP version were missing but that would have been overshadowed by the high-def graphics and online options). This makes no sense if you think about it — in essence consumers were upset over being offered too many options. That said, this is something that the XBLA team and the Lumines team should have been smart enough to predict in advance. Consumers aren’t rational (sorry, dearly departed Milton Friedman) and you need to be prepared for this sort of thing. Consumers are grumpy and they don’t like to change the way you do things. Microtransactions have be put out there in a way that makes sense to consumers first and then consumers will be as comfortable with them as they are with iTunes (notice that no one is really complaining about the addition of microtransaction payments for movies that were just released on the XBox).
Allen Sligar said on November 28th, 2006 at 4:49 pm:
@Michael W.

“benefits because someone who may have just decided to listen to the radio or buy only one album from another band, gave them at least SOME money, that wasn’t there before.”

Thats the point of the longtail, in my mind while the microtransaction model may produce exceptional income streams in Korea, porting the same model to western players is going to be a tough sell. If you look at the success rate and stats comparatively anyhow…

@Truce

“This is especially true in MMO’s. and why most US gamers view the Koren influxes of F2P games that use transfered real cash to buy items, Lame.”

I think thats because the trajectory of the MMO’ models and how they are monetized are significantly different. Microtransactions are common in Korea, in the US it seems to be standard to have a sub based game. I think for cultural reasons.

Whats interesting to me from a data perspective is going to be tieing game consumption to game expendatures, you can get a very telling ratio to answer the question:

Does one particular strata of gamers consume a larger number of games but spend less per game over time?

In this I think Raphs explaination is telling:

“Less matters because the subscription fee is a huge barrier of entry for many people. Simply going free is usually enough to get you a 10x multiplier on trials. This is a huge and needed step to grow the market.

Which means you’ll have more users, but make less money, and likely recoup it over time if I understood this correctly. But the next question would be:

In a case where your market churns through games (high consumption rate)
but spends less on games via microtrasactions how sensative to price point will they be to changes in microtransaction price?

What you’d need is a good study on the Korean games market that includes a sensativity analysis related to price points. Its hard to say if youd find a higher sensativity in a population more used to small regular payments.

More matters because subscriptions are also “all you can eat,” when the actual usage pattern is very different. We see this manifesting via multiple sub holders in the subscription world. Basically, the actual price point for the typical sub payer is actually TWICE the typical sub fee. And above and beyond that, there are those quite willing to pay 10x or more.”

And if your market pays more and has a higher price point, or rather consumes fewer games but pays more for them, I would think the customers would expect a more polished bug free, high content gaming experiance. In fact I’d expect they might want thier expansions to be free. This is why WOW kicked everyones teeth in IMO.

@Techbear

“As a developer, I like the idea of micropayments as an alternative to subscription. Blade Mistress taught me that going from free to subscription destroyed 2/3rds of my player base, and suppressed further community growth.”

Thats because your initial value proposition and community buy-in was destroyed the minute you changed business models. And those players who left, likely helped in suppressing your community growth through word of mouth. A few other companies have learned the same valuable lesson recently, what sounds good in meetings and on P & L sheets for building and selling widgets is much different than when your bread and butter come from paying customers (who increasingly) require engagement. Especially where decesions are made effecting player buy-in.

I had a good (hypothetical) discussion the other day: If 20% of your player base is board and complaining about content. But 45% hate the fact that you’ve raised the level cap in a new expansion therby making all thier gear obsolete, (and they now have to grind more) is it a good idea to raise the level cap or just improve/expand on the content?

Whats 15% of 7 million? And how many new releases for MMO’s are comming out in 07?

@David (tal)

“That way, someone can do a study on it and we can all see actual numbers comparing the consumer cost of a microtransaction-supported MMO to the consumer cost of a traditional subscription model.”

I went into this above, but I’m curious, how granular would you need the data to be? daily, weekly, monthly, quarterly or annual?

I think (assuming one had captured a significant population sample!) monthly is doable, this will suffer from self selection/estimates bias somewhat of course unless it was data from a company’s internal metrics (good luck there!)

Also it would require comparing apples to apples so to speak, so a common data point besides raw cost.

@Michelle

“Don’t cheat your customers. Microtransactional content works well when it is ‘added value’, and poorly when it is in the form of ‘required or witheld value’.”

/cheer! I agree 100%

As long as someones providing a polished game (even if limiting and eventually lacking meaningful content) and free expansions some all encompassing microtrasaction schema is not going to increase revenue or garner increased market share for an established brand. In fact it’ll likely be met with distain by an already conditioned consumer segment (egalitarianism in games), somewhat pissed off by the bigger publishers lack of engagement with thier players.

In other words, if a huge gaming publisher says to me as a gamer:
“hey were going to charge you for a game, and charge you for content, and charge you for expansions.” Of course we cant garuntee a better play expariance, or that the power differentials between a person who spends $50 a month and someone who spends nothing wont be effected…

Im going to have to pass, because they look like greedy bastards.

If some indie developer or small studio puts out a game free or not, and they want to charge me microtransactions, but its helping them feed the server hamsters and keep the lights on…

Hey thats cool, and wheres the PayPal donation button to, cause I’ll use it. (developer’s kids gotta eat too!)

Now the reasons both companies are doing this might be THE EXACT SAME on the backend, but on the front end, facing the consumer its all about perception, engagement and buy-in.

IMO if a larger company wants to do the microtransaction thing (without supporting data, or analysis about the market) they’ll have to get US gamers on board (again buy-in, sorry to flog the dead horse)

1. Eat the upfront cost, provide the game free
2. Polished, and full of kickass content.
3. No unbalanced items purchased via RMT (the best gear should be player crafted IMO anyhow).
4. Allow for the same system two ways: rare gear from content (dungeons, raids etc), and purchased gear (NOTE: There should be some mechanisim where the player has to earn the RIGHT to purchase the items, faction grinding etc.)

Raph:

Im sure you were being snarky on the Joystiq/Kotaku thing but I’ll break it down for you anyhow:

Joystiq is a Weblog Inc holding, run by Mr Jason Calcainis, who recently left Netscape. (much drama)

Kotaku is a Gawker property, run by Nick Denton.

Both have good content
Both hate eachother
Both are egomaniacs….
Anon said on November 28th, 2006 at 5:45 pm:
I can’t find the last thing I wanted to reference, but I recall reading the other day an interesting article on the clothing industry and fashion labels. The relevence in this case is that it stresses appeal and quality over needing to be the only supplier, and acts to show again that microtransaction content is not mutually exclusive with a player editable game.

Was this the article you were looking for? (ArsTechnica on fashion and “IP Piracy”)

Choice quote from it:

the fashion industry has what they term a “low-IP equilibrium,” in which clothing designs enjoy almost no copy protection and designers frequently turn large profits by copying each others’ work. In spite of the lack of IP protection for clothing designs—or rather, because of this lack, the authors argue—the fashion industry remains vibrant and profitable, exhibiting none of the negative effects on creativity that advocates of strong intellectual property (IP) rights would predict in the absence of government-enforced monopolies on creative “content.”
magicback (frank) said on November 28th, 2006 at 6:16 pm:
I think it would be useful to note that many people wearing business hats, particularly at large companies or had formal business education, think in the computer hardware upgrade model:

You can buy a computer for $500 or $5,000 that both provide the basic function of office productivity (MS Office), internet access, and light gaming (minesweeper). But you can then enhance or customize your computer with additional parts. The $5,000 computer is likely to have bundled more parts from the beginning, but you can upgrade the $500 computer to have the same feature. The purchase of these additional parts are the equivalent of microtransactions. This is all good so far.

What gets consumer’s ire is the sense of Planned Obsolescence: working with software developers to develop new software that require more parts (Vista anyone?), bad software that require paid “upgrades” rather than free patches, hardware designs that require expensive consumables (printers), or hardware designs that uses set the lifespan (printers or HDs build for X cycles).

Sometimes decisions are not made in the pursuit of providing customers value. I think most consumers can make this distinction.

See, in the fashion industry (and now in the computer or car industry) it’s not about having the right bling. In Second Life, it’s about the bling. In online games that have item sales, it’s about the bling too.

If you try to sell essential parts (like buttons or zippers for fashion) you get slammed by the customer. But if you sell branded bling (like exotic fabric, a designer original, even designer fakes at discount), customer will like you better for it.

Hmm, this is getting long. Penny Arcade is more concise

Frank
Raph said on November 28th, 2006 at 7:27 pm:

The key misconception was that the game was “crippled” because these features were disabled. In fact, those features were largely just fluff and the core game was all there.

I have both the PSP Lumines, and I bought the Live version. The missing features are NOT just fluff. Entire game modes were cut from the initial Live release: the “puzzle” mode being the bigger loss, which is actually also the training mode for how to play effectively. The addition of the multiplayer mode was nice, though.

The cost of Lumines new at this point is like $20; getting the full Lumines title from Live is more like $50.

If it had been marketed as a three-part title, which is what it effectively was, then the backlash would have been lessened, certainly.
Aaron said on November 28th, 2006 at 9:10 pm:
In regards to the MMO model of a free core game and microtransactions versus the traditional subscription model, in that case it seems you would be taking smaller but more frequent risks. That also means smaller but more frequent returns.

That may be better for attracting players initially to the core game, but traditional (larger) expansions would likely attract more players than micro-expansions because they make a bigger splash. That means greater enthusiasm, which equals more impulse buying and more word-of-mouth advertising. Few, large expansions will certainly catch more attention from gaming news sources than frequent, smaller expansions.

Also, I’d imagine that the more common microtransactions become, the more frugal the targeted gamers will become. When microtransactions are few and far between, players think, with a bit of surprise, “hey, cool”. But when microtransactions are a dime a dozen, most players will likely realize that buying them habitually, purchasing every cheap feature that comes along, adds up to a lot of money fast…so they’ll moderate their purchasing. They’ll become more thoughtful in their buying decisions when it’s no longer a novelty.
David (Tal) said on November 29th, 2006 at 4:18 am:
I went into this above, but I’m curious, how granular would you need the data to be? daily, weekly, monthly, quarterly or annual?

I think (assuming one had captured a significant population sample!) monthly is doable, this will suffer from self selection/estimates bias somewhat of course unless it was data from a company’s internal metrics (good luck there!)

Also it would require comparing apples to apples so to speak, so a common data point besides raw cost.

Monthly would probably be best. Basically what I would hope could be illustrated is that players could actually play the game for less $/month than they would shell out for a normal subscription, if they wanted to. This would help show that microtransaction-based systems can work to the benefit of the consumer as well.

It would never be a perfect comparison, because most microtransaction models are very a la carte, while as you said, a subscription is all you can eat. But it would at least demonstrate that you could play for less under a microtransaction model, if you wanted to. That would go a long way towards convincing many people who aren’t sure they like the idea of microtransactions.
JuJutsu said on November 29th, 2006 at 7:22 am:
a subscription is all you can eat.

Either I’m completely mis-understanding Raph or I think he’s flat out wrong. It’s safer to assume the former. How is subscription all you can eat? I subscribe to SOE_game_001 and grab my plate. Can I go to the table with the prime rib? No, that’s reserved for groups of 40+. What about the salad bar? Nope, groups of 4 or more so I have to spend an hour and a half convincing other customers to go through with me. Hmm, the dessert table? I can do desserts by myself but the turnstile is set to only let people in every 8 hours.

I download Korean_game_006 which is free-to-play and grab my paper plate and plastic spork. I can buy a better plate and fork if I want. There’s a table with rubbery chicken, overcooked green beans, wilted lettuce and tomatoes, and stale dinner rolls. Salt, pepper, a pat of butter, and salad dressing cost extra.

Which is really all you can eat?

I’ve played nothing but free to play games for the last 5 months. Trucegore and others can sneer all they want but there’s a bunch of other people in those games along with me and most of them seem to speak english…or at least babble in 133+. Since the NPCs also speak english I’m inclined to believe the players around me aren’t asian.

But it would at least demonstrate that you could play for less under a microtransaction model, if you wanted to.

A goodly number of people have already figured that out

But when microtransactions are a dime a dozen, most players will likely realize that buying them habitually, purchasing every cheap feature that comes along, adds up to a lot of money fast…so they’ll moderate their purchasing. They’ll become more thoughtful in their buying decisions when it’s no longer a novelty.

It doesn’t take very long to realize
Trucegore said on November 29th, 2006 at 8:09 am:
I think you guys are still ignoring the fact. Gamers don’t want this.

I have read all the responses, and none of them will impact anything about how players view micro transaction, or purchasable content. I know i’m an extremist around here, but i do keep my eye on current trends in mmo players.

I feel confident that using any scheme that requires or allows this will not be profitable, nor will it ever be taken seriously.

Take a look at the game that DO use this model, from where ever they are. They are lighthearted, stylized, simple game play, not allot of innovation…and some would say..Childish, and or marketed to very young people.

You will not see the next Vanguard, AOC, or EvE use this system.

I have read all of the discussions and posts about this topic in the two threads, and i see a very real disconnect between developers (as i know allot of people here are) and players.

To many posts are really reaching for comparisons to validate this model, using examples that are a far cry from reality trying to some how compare QVC Shoppers to gamers.

People (especialy amercians) want to buy a full product (In reality or View) , and be done with it, full ownership, no strings.

Expansions are NOT micro transactions. They are more akin to sequels, in most players minds.

If you really, trueley wish to know the answer to this question, than poll gamers. Stop the “in Talking” between developers and Ask.

Contact mmorpg.com and have them put up a poll.

No amount of talking is going to change the views of the gamers. And no “wall of text” trying to validate it will work eather.

Please understand, its not that i dislike the idea, my business side sees the possibility’s, but my gamer, and designer, and PR side, whole heartedly disagrees with the majority of this concept.
Vargen said on November 29th, 2006 at 8:11 am:
Another thought: the purchase interface itself can go a long way towards shaping the customer’s perception. If I have to leave the game and go to a web site to purchase access to the latest $4 dungeon and it takes a while to process, that’s going to feel like I’m being forced to pick it up just in case my friends want to go there. If instead I can play my normal routine and instantly purchase the new content from within the game itself should a group of friends decide to check it out, then I’ll feel more like I’m only being charged for what I actually use.
David (Tal) said on November 29th, 2006 at 8:55 am:
@Trucegore:

When did developers stop being players? I’m just not seeing the us vs. them here.

It probably would be a good idea to define what constitutes a microtransaction for the purposes of discussion, although I have a feeling that it’s going to be very difficult to do so.

Does extra purchasable downloadable content for an existing game world equal a microtransaction? If so, when does it stop being a microtransaction and become something else?

Do additional purchasable cosmetic options, character slots, artwork, or services for your characters in a game world constitute microtransactions?

Do out-of-game services for players, such as character web pages, constitute microtransactions?

Does game supported RMT (ie purchasing items or skills direct from the game with real money or “points” instead of earning them through gameplay over time) constitute a microtransaction?

To my mind, only some of these things are bad, and you could very well base a game’s business model around selling just the good ones. But from what you’re saying, any sort of microtransaction business model is doomed to failure. To me, that suggests that while I’m thinking of a microtransaction as getting a set of neat skins for the furniture in my house, or for getting access to an optional dungeon that I can go to instead of the regular one, you’re thinking of something else.
Aaron said on November 29th, 2006 at 9:51 am:
People (especialy amercians) want to buy a full product (In reality or View) , and be done with it

.

A desire for simplicity may be a strong argument against microstransactions sometimes. Developers put a lot of time and effort into making UI as simple as possible. If microtransactions are not just occasional to a game but are integral, then that’s a complication that may put off many gamers looking for a simple gameplay experience.

Another consideration is that any involvement of RMT is a distraction from immersion. The less arcade and more roleplay-oriented a game, the more important it is to keep distractions few and far between.
Michelle Readman said on November 29th, 2006 at 10:23 am:
Trucegore,

As I explained in my original post, not only do we already have microtransactions within the gaming industry, but the players happily utilise them even in the ‘western’ market.

And the very subscription itself for an MMO is a form of microtransaction, albeit one that is normally entirely automated.

The problem lies not in the term, which is far too loose to be of much use on it’s own, but on the content, marketing, perception of microtransaction products.

Gamers don’t want incomplete games.
Gamers don’t want to have to pay more to be able to compete on a ‘level playing field’.
Gamers don’t want new content that is not worth it’s cost.
…and so on.

In their best use, microtransactions do what gamers actually desire:

Gamers want to personalise their experience.
Gamers want to get new and interesting gameplay experiences.
Gamers want to be able to get new life out of their old but favourite games.
Gamers want certain games to be kept modern and accurate.
Gamers want to spend money on what they enjoy.
Gamers want access to items that make them better at their game (note the access, more on that in a moment).
…and so on.

When it comes to MMOs, I didn’t really discuss microtransactions simply because MMO players happily purchase access month after month, and RMT is already happening and is a vibrant enough industry for it to gain the attention of crooks and lawmakers.

If we consider the issue of microtransactional item sales within an MMORPG, there is but one additional concept that may be of use. Players within all MMORPGs with items that allow item trading quickly create a trade economy. Allowing microtransactional content to be traded both acts to allow all players, regardless of RL wealth, access to the microtransactional content, which will generally increase player acceptance of the concept. Furthermore, it makes for a better business model, since you can now consider all the players potential customers, not just a subset who will happily engage in RMT.

Actually, from a design point of view, the microtransactional availibility of good items is probably a wonderful thing! The character power demographics in most MMOs tend to be highly biased towards the low and high ends of the scale, with very few players within the mid ranges. This leads to the mid ranges being a barrier to content, since the high-end gamers are those which new content normally is targeted at. In addition, the lack of players in the mid ranges reduces player trade at these levels. Microtransactional content can help players get past this barrier via better items, and can help players gain access to appropriate items for their level dispite poor in-game trade conditions.
Raph said on November 29th, 2006 at 10:59 am:

How is subscription all you can eat? I subscribe to SOE_game_001 and grab my plate. Can I go to the table with the prime rib? No, that’s reserved for groups of 40+. What about the salad bar? Nope, groups of 4 or more so I have to spend an hour and a half convincing other customers to go through with me. Hmm, the dessert table? I can do desserts by myself but the turnstile is set to only let people in every 8 hours.

None of those things have anything to do with the business model, only with the game design.

“All you can eat” means that you can play as much as you like in that month. A lot of costs are driven by the amount of time a person spends in a virtual world. The typical player is actually subsidizing the harder core players in terms of costs. A good example would be forums — most players don’t use ‘em. There’s a lot of costs associated with forums, and you help pay for them even if you don’t make use of the facility. You can think of this as “subscriptions define a base level of service.” Some people will overpay relative to the amount of service they actually require, and others will avail themselves of everything.

With microtransactions, the basic level of service is generally set much much lower. This results in people who have glancing relationships with the title actually paying a la carte for the services they want. On the flip side, people who use everything are covering the costs personally and directly, rather than spreading it around to other service members.

In the rest of the business world, it’s not unusual to see microtransactions paired with tiered sub plans. Think of what your cable bill or phone bill looks like: a combination of subscription tiers, plus a la carte charges for special services, sometimes prepaid into a “wallet” either as a one-time fee or as part of the sub package.

I think you guys are still ignoring the fact. Gamers don’t want this.

I think that’s an oversimplification. Gamers DO want XBox Live Arcade, after all. They DO want Runescape. Plenty of evidence of that.

Take a look at the game that DO use this model, from where ever they are. They are lighthearted, stylized, simple game play, not allot of innovation…and some would say..Childish, and or marketed to very young people.

You will not see the next Vanguard, AOC, or EvE use this system.

Your objections are centered on the game design, not the revenue model. There’s no reason why a free game with microtransactions would have to be lighthearted, stylized, simple, derivative, or childish. In fact, Runescape is not simple at all — it is very much like UO, in fact.

A lot of the things you describe as “childish” actually means “mass market.” Free-to-play games live and die off of accessibility. Subscription games instead say “we’re hardcore” quite unapologetically, and fight over this much smaller pie.

FWIW, and this may disappoint you, I’m far more interested in reaching a larger group of people than in fighting over and over again with each year’s Vanguard, Horizons, EQ2, etc. I imagine microtransactions will play a big part in what I do next. But the way I would encourage people to think about that would be “the game will be free to play unless you sign up for more advanced stuff.”
JuJutsu said on November 29th, 2006 at 1:13 pm:
“All you can eat” means that you can play as much as you like in that month.

Ok I’m officially confused. I can play as much as I like in a month on Korean_game_006. I thought it was ala carte because I could buy stuff in an item shop if I so desired…so forget the customer side, lets look at the business models.

All you can eat means 1 flat subscription fee for the company?

Ala carte means tiered pricing for multiple service levels/features and/or
item shop type micro transactions?

I’m not being obtuse on purpose but I’m really having difficulty in distinguishing between game design and business model here /blush
Daniel James said on November 29th, 2006 at 1:36 pm:
We’ve been operating microtransactions in our MMO Puzzle Pirates, for coming on two years. I can absolutely assure you that some players do want microtransactions. We also operate subscription servers, and Raph’s analogy is pretty much what I told our players when we introduced the microcurrency service; subscription is an all-you-can-eat offering, microtransactions are ‘a la carte’. Our players did not have a problem with this distinction; some of our subscribers have moved over, and some doubloon (microcurrency) players migrate to subscription. It depends what suits them.

Both games have an indefinite free trial with compelling core gameplay, to get extra vanity items and privileges (e.g. to be an officer in a Crew) you need to subscribe or pay with microcurrency. This works — it’s not that controversial or, as far as I can see, that offensive.

We have a new game just ending beta, Bang Howdy that uses only the microcurrency model. Again, I’ve not heard any complaints about the business model — the core game is free to play, extras (like the Indian Trading Post ‘expansion’, currently free in beta) cost a little coin.

I understand that there’s a backlash to clumsy attempts to gouge players for additional revenue from games that they’ve already paid full retail price for. I agree that this is pretty lame. However, this is not what ‘microtransactions’ are about, at least in the case of our games, Korean games, etc. They are about free basic gameplay and the option to pay more for extra features. Certainly there are complex game-specific issues of balance here, but the business model itself is very natural and beneficial to players.
Trucegore said on November 29th, 2006 at 1:39 pm:
Sometimes oversimplifications are the only way to look at the broad picture, complicated discussions and attempts at validation only confuse, and Ultimately do not matter to the player base.

XBox Live Arcade, isn’t a micro transaction, they are buying full games at discount prices. With ad-ons to already full games (IE: they completed there development cycle and have full content)

My objections are mostly all encompassing, not just game design. They are Cultural, game design, and mentality.

I can’t agree about your associating “childish” with “mass market”.

All the F2P games i have encountered were exactly what i said, targeted to very YOUNG audience. The kind that can’t (for one reason or another) pay a subscription fee, but do have some form of supporters that will fork over 1$ if they get an A on a test for a new sword.

Ill admit, that market is HUGE. The risk involved is also. Most, if not next to all, will not give you a dime. Hence the low production value, extremely short development time and investment, and disposable game play.

Enter: G-potato arguably, the most successfully Micro transaction suit of games around, all Developed outside of the US market, in about a year, targeting preteen, motley Asian market players.

They spit out these game very quickly, and most, have the same game play, Grind.

They all have cute art (mostly “Chibi” style anime), repetitive game play, and are very limited games, with slightly low production values.

Furcadia also uses this model, in fact, I was going to pattern my model after there system, but recently i have decided not to, as the idea is great, but they are going under. Why?

Player would not spend money. Plain and simple. No, some of this could be attributed to the fact that there are out of game proxies that negate the need to pay for certain services used in game, and the fact that “Dreams” also negated to need to pay for the “Public uniqueness” that you could buy.

But this is essentially the “Micro transactions” you are referring to is it not? Because the Associations you and others have been using are clearly not related to this type of “Micro transactions” IMO.

Habbo hotel?

Great idea, cool game, i spent some time there. But last i read, going under also. Whats the target audience?

Please don’t take me as a “hardcore” type of person. I really do not care about that war.And none of my post, once again, means im 100% right, or that onyone elese is wrong, ill admit it when i am.

My main problem with this discussion in both threads is the comparisons people are making with unrelated products that do not directly translate to “micro transaction”. The above games use micro transactions, and i Believe that is the same type of micro transaction that have become so popular in other country’s.

Hence my “Trying to compare QVC shoppers to gamers” remark. We all know gamers are a more rabid bunch, that do, for the most part, have an unwritten honor code, so anything beyond “cute” games using micro transactions will be sneered at and mocked, and considered lame, cheep, and cheating.

Now, like i and others have said, you need to define, explicitly, what you mean by micro transactions. Because if it is not of the above models, then it needs to be explained, the definitions and examples given do not fit within the realm of “micro” and most cant be linked to what you are advocating IMO.

And in closing, applying the above models to more, for lack of a better term, serious games, will not be popular, nor fair, as loot centric or skill based game will be completely lopsided to “He who has the bigger pockets”.

On the flip side, the micro transactions that, are nothing but fluff, and have no bearing on the players power in the game, be it PvE or PvP, will go broke.

On the complete flip side, Module packs (A-la eq2), gated advancement, e-bay, XBox Live Arcade, gated features, and the like are not considered “Micro” IMO and others.

I apologize if i raise blood pressures around here, its never my intention, tone is always lost on “The internets”.

“the game will be free to play unless you sign up for more advanced stuff.”

Planet side has not been to successful with this, in fact, i haven’t seen many at all be very successful at this, not without severally crippling costs, that translate directly to quality.

Truce.
Allen Sligar said on November 29th, 2006 at 2:36 pm:
David (tal)

“It would never be a perfect comparison, because most microtransaction models are very a la carte, while as you said, a subscription is all you can eat.”

Actually I didnt say that, Raph said that, I quoted him but was to lazy to use the B-Quote button, OTOH Im mostly to lazy to use a spell checker apparently also…lol.

Also we’ve already anticipated the need for historical trending, on all data points and it is a monthly function. (annual/bi-annual/quarterly as well)

@Truce

If you really, trueley wish to know the answer to this question, than poll gamers. Stop the “in Talking” between developers and Ask.

Contact mmorpg.com and have them put up a poll.

No amount of talking is going to change the views of the gamers. And no “wall of text” trying to validate it will work eather.

Actually, given the penetration of microtransactions vs subscription based MMOG’s in the west, the poll would likely be skewed towards subscription based, and as Raphs’s title suggest its got or is getting a “bad rap” with players.

Also given the reach of MMORPG.com (mainly US) this presents a bias. (Note: Im not bagging on MMORPG.com I like thier site a lot)

So this is actually a 2 part process: (not to get to complex)
1. A comparative analysis between populations (Sub and MT based models)
2. Sensativity analysis of your target population using the findings above.

Reasoning:
You want to see what cost/consumption patterns are present first. Then you want to know at what price point you’d need to introduce the MT model to your target market. And once you have that point you want to cut 10% off of it to encourage adoption of your product. (not required but make it a pain for new entrants to the market)

It is not unreasonable that western players would adopt a MT model Trucegore, but it is debateable at what price a publisher would need to introduce such a service initially to capture market share.

I dont think any dev is honestly thinking: “lets introduce MT and screw players out of money”, IMO I think its more like: “how do you introduce MT’s and expand the player base, while providing a rich game, and expanding revenue”

As a player I have a hard time setting aside my own bias on things, but getting to the point where what I’m doing with our project “bridges” the divide between “gamers” and the “video game industry” by providing data its been necessary to tell my internal “vocal biased gamer voice” to shut up and accept the fact that anything is possible, (even things I think are crap) and to be neutral about how data gets captured. Especially where one starts to understand a bit more of the issues related to the creation/marketing/distrobution of games, its a lot of hard work, and mostly misunderstood.

The “wall of text” is necessary, it helps flesh out the issues here, and elsewhere around the web where players, devs and etc. comment and blog, and debate and provide conjecture about things, it also to me reveals data that needs to be captured.

The video game industry barely has any demographic and consumption data thats valid for a 27 billion dollar market so the analysis I’ve modeled above is currently not possible by anyone, because those data sets dont exist.

Yet

PS: OMG I think Raph just posted some link bait….
Michael Chui said on November 29th, 2006 at 2:45 pm:
Techbear asked:

What choices do players have, ultimately? I mean, if the idea is that eventually every game will be a multi-player game, and bandwidth costs someone money, then the ONLY apparent business models are:

Matt Mihaly made an effort to exhaustively answer that question.

http://forge.ironrealms.com/2006/08/15/virtual-world-business-models-part-2/

I haven’t seen a Version 3 from Matt yet.
StGabe said on November 29th, 2006 at 4:05 pm:
If it had been marketed as a three-part title, which is what it effectively was, then the backlash would have been lessened, certainly.

Exactly. They should have seen the backlash coming.

Still, it’s a bargain. Anyone who has played the PSP Lumine game very much should be fully aware that puzzle mode and vs. CPU mode (the two modes which were made into transactions) are things you play for maybe an hour or two each whereas the core game (challenge and time attack) is where the vast majority of the fun is. I’ve played many hundreds of hours of the latter. I beat puzzle mode and never had the slightest interest in going back. In fact the only reason I beat it in the first place was to unlock stuff.

The vast majority of the value of the product is in the core game and you can buy that for just $20. Which is $10 less than Lumines 2 on the Playstation 2 (which has the “fluff” modes but not the online stuff nor HD support). The original Lumines was $40.

My point is that it was really only the marketing and the expectations that got them in trouble. If not for that they had a pretty solid product.

Also of interest is the reason why they cut those modes. A big part of the motivation was the 50MB limit per XBLA download. That limit is in place because MS wants players with memory cards to be able to, in theory, download a full game. That means that there is a limit to the number of skins that can be released in one pack. It’s a stupid limitation and it got in the way of their sales model. Unfortunately the choice they made to get around it left a bad taste in consumer’s mouthes.
Raph said on November 29th, 2006 at 6:44 pm:

I can tell you for a fact that Furcadia is not going under — I just spent several days hanging out with Dr Cat. Habbo Hotel likely isn’t either — they have been quite successfully raising tens of millions in venture capital, and they have more active users than WoW does, worldwide.

I wasn’t the one who said the games were childish — you were, to my reading. You cited “childish” as a characteristic of the free play games, and I am saying that it’s just not that way. Something like Albatross 18 may seem childish to Western eyes, but it’s not. Runescape is far from childish in its complexity. And Furcadia — dude, it’s a furry world. For kids, it’s not.

My sense is that many Western gamers consider these worlds childish because they are brightly colored, use “cute” art, and have simple learning curves. But Western hardcore gamers are conditioned to like Giger, green-brown worlds, tons of gore, and hyper-realistic greaphics. This isn’t real “mass market.” Mass market is a lot closer to the cutesy look than to Gears of War.

And in closing, applying the above models to more, for lack of a better term, serious games, will not be popular, nor fair, as loot centric or skill based game will be completely lopsided to “He who has the bigger pockets”.

Again, we run into the issue of defining “serious games” here. What about the #1 game in Korea, which is basically a Counterstrike clone, but with microtransactions to buy ammo? Yes, it’s lopsided. Yes, it’s unfair. Yes, it’s #1.

I wouldn’t try bringing that game to the Western market, but it’s not because of the intrinsic characteristics of the model. I wouldn’t do it because a free offering already exists, so the game will always look like a worse deal in comparison.

On the flip side, the micro transactions that, are nothing but fluff, and have no bearing on the players power in the game, be it PvE or PvP, will go broke.

Every bit of evidence suggests this is completely wrong. People LIKE this sorts of purchases more — they want the stuff, and they are willing to pay for it, and several services subsist on it. Ringtones are a microtransaction for exactly this sort of fluff, and that business is now worth billions a year.

On the complete flip side, Module packs (A-la eq2), gated advancement, e-bay, XBox Live Arcade, gated features, and the like are not considered “Micro” IMO and others.

I do not know anyone in the industry who doesn’t consider some these “microtransactions.” Live Arcade in particular uses what’s called the “wallet model” of microtransactions. Gated features with a small fee out of a wallet is a classic microtransaction. I would agree that eBay and modules are generally not. But buying a new car for a racing game on Live arcade sure is. Or a new theme pack for the desktop on Live Arcade.

So, that brings us to defining microtransaction, I guess. I’d define it as “a one-time purchase fee for an added service or product that is additive to the base price for the product and falls below the typical threshold for a single credit card purchase.”

The original impetus for the wallet model was to allow people to pre-buy points and then spend them in tiny amounts — because the tiny amounts were not something you could charge for directly. (They were small enough amounts to often fall below the merchant service charge for a credit card purchase.)
magicback (frank) said on November 29th, 2006 at 7:40 pm:
Raph,

Base on the general misperception of microtransactions, I think we should stay clear of that term. And after reading your definition for microtransactions, I definitely think we should move away from using that term or disctinctively break out the product and transaction mode.

It is interesting to note that around in 2004, microtransaction was the rage for other businesses (before iTunes). Many attempts failed because the could not show the value. iTunes works because consumers had to choose between a “bundled” album with around 10 songs or purchase individual songs. The value is immediately compelling. In that era, the definition for microtransaction was only the second part of your definition: “a purchase that falls below the typical threshold for a single credit card purchase”

What many game companies employed is actually closer to F2P + Premiums that made money from the “Long Tail” value of customizable choices.

So the first part of your definition speaks to a large varied choices of Premiums you can have via microtransactions. If you use the wallet system that that is topped up at $100 increments (macrotransaction) and then purchase stuff at smaller increments (microtransaction).

In summary, separate the product from the transaction in the definition.

Frank
Raph said on November 30th, 2006 at 12:20 am:

I think it’s awfully hard to fight the public current on the definition of a term, once it’s entered common usage… (didn’t we have this conversation surrounding my use of the term “fun” in my book?)
Michael Chui said on November 30th, 2006 at 3:58 am:
I think it’s awfully hard to fight the public current on the definition of a term, once it’s entered common usage… (didn’t we have this conversation surrounding my use of the term “fun” in my book?)

This is why we speak English: it’s okay to make up words as long as you can convince everyone else that it’s not gibberish. Not that I take my own advice; not that you should, either.

an added service or product that is additive to the base price

I’d disagree with this section of the definition. Not only is it redundant, but unless the base price may be zero dollars, that seems overly exclusive.
David (Tal) said on November 30th, 2006 at 6:34 am:
I think the words we’re looking for is added value.

If a game is a service, then a microtransaction is any optional purchase made from the publisher that adds value to the existing service in some way.

People don’t generally consider expansion packs to be microtransactions because the purchase prise is usually high enough that they feel like they’re buying a new game, but the lines there are rapidly becoming blurred because more and more expansions are being released as downloadable content as opposed to a box on a retail shelf. Either way though, they’re an optional purchase that adds value to the original service.
David (Tal) said on November 30th, 2006 at 6:35 am:
words we’re looking for are*

I need more caffiene this morning.
JoeW said on November 30th, 2006 at 11:27 am:
It is entirely possible to have a fully functional free game based on Mico-Transactions that does not tuck away content or give players an advantage by using these items.

In MapleStory global at least; the items offered in their store are all either based on customization or convenience. At this time, there are no items that give you an XP bonus, or any type of advantage. You may find items that make the game a bit more convienient for you (Lower death penalty, auto looting) but there is very little feeling that only the cash users can “win”. And any type of item that has ever been offered that would give this type of advantage were offerend on a very limited basis.

My personal opinion is that the North American mentality is to sell players “What they want” and because North Americans want to be the best at everything, the items sold are geared in that direction.

Somewhere down the road, somebody saw how the asian market was using micro-transactions, and never bothered to read the whole story. They saw the money coming in and through the good ‘ol american spin on it.

Micro-transactions work, but if your only goal is to push it for all it’s worth, then you sinking your own boat. In short the american bastardizing of the system is where the problem lies.

Additionally, I think the reference to “Chibi style” and “Childish” is a bit off base due to the fact that most of these games came from the asian market. 25% of Korea has played or owns an account for Kart Rider.

I think labeling these as “childish” is only a result of the North American idea that games are for kids.
Morgan Ramsay said on November 30th, 2006 at 11:29 am:
Michael Chui wrote:

This is why we speak English: it’s okay to make up words as long as you can convince everyone else that it’s not gibberish.

Language is comprised of imagined words.

Microtransaction is a synonym for micropayment which was a term coined by Theodore “Ted” Nelson for use in e-commerce. If you’ve never heard of Ted Nelson, look him up. Although he also coined the term hypertext, he currently uses deep electronic literature. Nelson selected a different phrase because the meaning of the original word changed.

But I don’t think that’s necessary. The solution for business folk is to simply not use terminology when interfacing with customers, and opt for marketable concepts such as “games as digital service platforms for delivering personalized experiences”.

I need to get back to writing my article now.
Trucegore said on December 4th, 2006 at 11:20 am:
I thank you all for the discussion. But a few points I made that I wish to clear up before I tap out of this conversation.

I didn’t not blanket them a being childish, I said they are viewed as being childish. Maybe I did not explain that well enough. Weather you like it or not, this will happen. I just don’t associate that style with being “Mass market” or “accessible”. As the anime is a relatively new style to become popular in western culture, but do keep in mind, allot of anime is preteen bodies in there 20’s with over the top “equipment”. So, this association will most likely persist, (that representation in its self is an art form born of the culture it came from, and if there equivalent of “Sunday morning cartoons”)

Accessibility to me is user experience, not necessarily look, but having a questionable or, non-PC setting and look does affect Accessibility… But only in the fact you will be Nitch-ing yourself, but I believe that’s more penetration than accessibility, as accessibility of the game can be strong, such as game play, rules, and UI navigation, despite subject matter.

As for Furcadia, and habbo, what is it that leads the two companies to seek Venture capital? In fact, I do believe I read on your own website that Habbo was going under, or at least, not being profitable.And i read quite a few postings from the furcadia staff talking about how they were not turning a profit, and that the game had been basically kept a float by some ones inheritance. I was unaware that the deals you speak of were made, but they still owe someone money, and what were once self sufficient games, now require outside funding.

I do not know anyone in the industry who doesn’t consider some these “micro transactions.”

I think the key part to that statement is “in the industry”, outside of it, I do not think this is the case, and I feel this is the disconnect.

Again, we run into the issue of defining “serious games” here. What about the #1 game in Korea, which is basically a Counterstrike clone, but with micro transactions to buy ammo? Yes, it’s lopsided. Yes, it’s unfair. Yes, it’s #1.

I don’t think it’s a definition we are running into there, I think its a huge difference in cultural taste. You your self just said that would never fly in western culture. But, counter strike is hugely successful here, but it was bought as a full game, with a one time fee (not including the expansions and mods, which to themselves, were “whole” in the design)

All in all, i think that microtransaction have some good point, and some bad implmentations, and atleast in the western culture, it wont work.

And as far as ring tones, im sorry, but to me, that association is invalid as a support argument for micro transaction as they pertain to games. There are to many variables there, most of the ring tone market is pop culture songs, and “Celebrity Factor”, i do not think that games, or gaming has hit that apex yet, so you may be hard pressed to get the majority of that 100% of ring tone users to download your theme song for your F2P game to there phone, some, but not the majority, that domain belongs to the manufactured pop stars of our day.

But, then again, i guess everything hangs on a few things.

Your game design.
Your games popularity.
And they way you implement the micro transactions.

Truce.
Trucegore said on December 4th, 2006 at 11:30 am:
iTunes works because consumers had to choose between a “bundled” album with around 10 songs or purchase individual songs. The value is immediately compelling.

This is what i am talking about, why this was so successful is that , as most of us know, the most popular and downloaded songs are the “Hits”, the songs that are taken from an album and then marketed as the flagship song of the album.

The majority of the pop culture , really, really do not care about the other 9 tracks, they are not the ones in the trend, they are not part of the pop, they are the unheard. Before itunes and the like, people made compilations of the best songs from the albums they had to buy. This was really just and out for people to buy the pop song of the day, with out all the other “Un-cool” songs.

So, the value here is. “I can get all the songs that me, and my friends are exposed to, that are in the trend, and pop, with out all the crap and price tag of a full CD”.

And at every level of music, there is its own “pop”. So no, im not just talking about one genre.

So, if you still wish to use this association with gaming and micro transactions, you would need to have a ton of “crap” in your game, and
a bunch of good “Singles” that are all the rage.

lol.

Truce.

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