The Big Business of Micro-transactions

Published On February 11, 2013 | By Newton | Console, Features, Online & Mobile, PC & MMO

Dead Space 3 has been released and a general consensus has been reached – in choosing to rely on co-op and action it has torn up its methodically paced, survival-space-horror roots, and sadly it has suffered for it.

Dead Space 3 is the third (obviously) iteration of EA’s popular Dead Space (obviously) franchise. It’s not a title from a struggling new indie developer, nor is it a cheap iPad game subsidised by extra paid-for content. So the inclusion of micro-transactions (a purchase of only a few pence to a pound or two, for unessential items) has not exactly been greeted with overwhelming joy.

This is – or at least should be – a triple A title with all the hallmarks of an almost guaranteed money making success. So why include such a contentious mechanic like micro-transactions?

A Digital Generation

For many gamers, this – plus similar micro transactions in the likes of Mass Effect 3 – feel a lot like Mr EA taking our hard earned cash, popping it into his overflowing wallet, putting it away and asking for “just one more quid, please?” So why do it?

In the case of Dead Space 3, we can look to a recent interview with John Calhoun, producer for the game, for an answer. In it he said:

There are action game fans, and survival horror game fans, who are 19 and 20 and have only played games on their smartphones, and micro-transactions are to them a standard part of gaming. It’s a different generation.

To many though, this will seem a rather moot point. Why does the fact that there is a small percentage of people (almost certainly not Dead Space fans by his definition) who solely play games with micro-transactions, mean you are going attach this mode of generating revenue onto your AAA console game – a game that this “generation” may not even pick up and play? It seems unlikely that EA’s marketing department have been storyboarding adverts based on microtransactions as Dead Space 3′s USP:

Advert opens with a shot of two individuals from target demographic holding phones

Voiceover: “Hey, do you like playing games on your iPhone?”

Youth 1: “DO I!”

Voiceover: “Well then, you’ll love Dead Space 3! It has MICRO-TRANSACTIONS!!”

Youth 2: “NEAT!”

Ultimately, it works neither as an advertising campaign, nor as an excuse. The developers said there would never be point in the game that purchasing additional items is necessary. So why include it at all? Or, conversely, why make a fuss about them if gamers don’t have to use them?

It all started with armor. For a horse

This may be because there are games that one expects, or at least allows, to be backed up with the use of micro-transactions. Free to play, or “freemium” games spring to mind. Mainly found on tablets, phones or PCs (where the lack of console certification processes reduce development cost), freemium games entice you in with a good game and set of mechanics: build a farm or level up some heroes, for example.

These are then supported by the use of micro-transactions: skip time to harvest your crops or buff up your knights armor for a few pence. Of course, the game can be played without these transactions, and many do, but the remaining players may spend several pounds on the originally free game.

Other games allow players to buy things which have little or no impact on the gameplay mechanics at all. Remember the horse armor for Bethesda’s The Elder Scrolls IV: Oblivion? Toted as new DLC it caused quite the upset when we realised all we were getting was some armor textures – for our steed.

We seem to be born with an innate ability to calculate (correctly or not) the time and effort that went into producing something, and then estimate a price we’d pay for it. Digital horse armor, it seemed, did not go through this equation well. Many were not ammused.

Oblivion_horse_armorCosting a pretty penny. Gamers were not happy with paying for extra textures.

There are some games, however, that have embraced a micro-transaction model for frivolous items. Valve’s Team Fortress 2, a once (kind of) full-priced game and now a free-to-play with micro-transactions, has seen not only its popularity, but also its revenue, soar.

The inclusion of the Mann Co Store in 2009 came with a humorous post from the developers, speaking of “bean counters” who wanted the game to, after “120 free updates to a three-year-old-game… make some f$*&king money already.” We appreciated the transparency. After some old school TF2 fans adjusted to it, most now fully accept and enjoy the variety and creativity this has harboured. Gamers can even make their own weapons and hats for TF2 and reap a rather sizable chunk of profits from their sale, with Valve head Gabe Newell often referencing the time Valve broke paypal when paying some of its contributors.

Beyond this, a number of MMOs have begun to embrace the microtransaction world. It’s not always a successful approach, but shifting Bioware’s Star Wars MMO The Old Republic to a “freemium or subscribe” model has seen the game revitalised, without massively altering the balance of gameplay or angering those who prefer to up for a monthly subscription.

These examples show where micro-transactions not just work, but make sense. With a little honesty, a split of profits, or genuine time saving items; micro-transactions are a perfectly noble way for a game to make cash.

tf2_hatsMicro-transactions have allowed Team Fortress 2′s world to flourish.

Subjective Objectives

So what’s the difference between those games in which micro-transactions are accepted, and those games where they are not? To a certain extent it’s down to the objectives given to the game by its designers. Valve want TF2 to be a light hearted, fun shooter with over the top characters. Costumes and crazy weapons support this objective: Micro-transactions allow this objective to flourish and thus are accepted. Similarly, iPad games’ objectives are to soak up those scraps of free time you have and convert them into fun: Micro-transactions allow for quicker transition of levels or time, allowing for more “game” to be played – again, micro-transactions make sense.

This is by no means perfect, the iPad developers could make the time waiting to harvest crops so long that buying the time away seems the only way to play it. In that instance it though, it would be the developer at fault, and not the idea of micro-transactions themselves.

Dead Space 3 is (or at least should be) be an immersive horror game, pulling the player into a dark and scary atmosphere. One filled filled with undead monstrosities, character development and – oh hey, spend two quid for a bunch of guns…now what was my paypal password again?

Immersion should be Dead Space 3’s objective, not getting a 19 year-old iPhone addict to spend their pocket money on the game and Micro-transactions are almost completely incompatible with this as an objective. It seems a shame, then, that EA seemed to have focused on the former, at the cost of the latter. This is a 10 hour game, not a toilet break filler and skipping moments isn’t in the gamers’ interest. The game bypasses the protagonist Issac, and speaks directly to the user, obliterating any perception of being in another world. Issac becomes a vessel for monetary transactions – his character reduced to a sort of virtual cashier.

DS3_micro_transIn game purchases, referring to real world money, completely destroys the illusion of another world

Legally Grey

This practice of questionable micro-transactions has also created a new moral and legal grey area, when it goes wrong. Bugs were reported in Dead Space 3 that allowed users to find infinitely spawning items. This effectively allowed users to bypass the use of micro-transactions that were being used to buy crafting items. There was now an unlimited free supply of such items – there was no need to pay for additional items.

Some, however, are now arguing that this is theft, with Sara Ludlam (a solicitor) telling the BBC:

If you go into a baker’s to buy a bun and they give you the wrong change and you walk away knowing you have been given more change than you handed over in the first place, that’s theft.

So, arguably if you go into this game knowing you are supposed to be paying for these weapons and you notice a glitch allows you to accumulate them without paying, that’s theft as well.

But it is arguable because it’s a new area.

We’d argue that analogy isn’t quite accurate enough in it’s current (pun intended) state. For it to be more applicable, we’d have to say that the baker gives away free buns, and you are never forced to buy his buns as you can find them around for free. Which of course, is where the cloudy morality comes in. If the exploit allowed the user to hack into the micro-transaction platform and download goods you should be paying for, then yes, this would be theft. Although, ironically, having Issac (an engineer) hack such a device to avoid paying for items he needs to survive would actually made more sense in the world, and thus increase immersiveness. Maybe there is a place for micro-transactions in Dead Space 3 after all?

Cheap as Chipsets

But before we grab our pitchforks and torches and burn micro-transactions at the stake, lets take a quick look at the real world facts on games and their prices over the last decade or so. Probably gone up, right? Super complex graphics and programming vs old 16 bit side scrollers? Prices must have increased so that publishers can pass on the extra developmental costs.


Games have been dropping in price steadily. Go back to 1993 and grab a copy of F-Zero for the SNES and you’ll pay $50 (around £30), today that would be around $80 (£50).

Below is a list of games at retail price and the year they were on sale at that price. (All prices are in USD and are rounded to nearest USD).

Game Year of Sale Price at Year of Sale ($) 2013 Equivalent ($)
Streets of Rage 1993 65 105
Paperboy 2 1993 54 87
SNES w/Mario 1993 140 226
F-Zero (SNES) 1993 50 80
Super Mario Kart 1993 55 88
Super Mario Paint 1993 60 97
Lethal Weapon 1993 64 103
Super Mario 64 1995 70 107
Mega Man 3 1990 45 81
Sonic 2 1992 50 83

sources HugeJohnson, Machinima.

And that’s all without DLC!

Games are now made by a staff of hundreds, but in real terms they’re being sold for much less. Therefore publishers and developers are making less money on games that are more expensive to make. We can argue that the install base over the past 10 years has increased, but recent closures of big publishers like THQ show that developers need to tap into other revenue streams or face closure.

Larger DLC (or expansion packs for us older gamers) has been around for a while, and are fairly easy to accept: A few more pounds for a bit more game.

Micro-transactions, however, are yet to find 100% acceptance in the gaming world. Free-to-play and freemium games fit nicely into its time saving or community rewarding model, but developers need to craft it much more carefully if they wish to insert it into big AAA titles: They need to make sure immersion isn’t jeopardized, whilst avoid making it look like they are sneakily trying to take a few extra pounds from our wallets.

Not that they’ll find much in mine, anyway.

I spent it all on horse armor.

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About The Author

started his gaming life with the SNES back in ‘92 and for much too long, had N64 retail posters covering the walls of his bedroom. An avid PC gamer, Richard now prefers a mouse and keyboard with his games - and some style in his posters.

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