As we previously mentioned in our last article, video games are one of the most popular forms of media today, thanks to their interactivity and other reasons. As a direct result, they are excellent revenue generators that could make or break a video game company – simply ask CD Projekt Red and Electronic Arts (EA).
While it is expensive to develop one from scratch, knowing what the fans love and making it happen usually garners significant goodwill and a loyal following. However, going against it and adding what fans don’t want does nothing for the video game community; it could even lead to unintended consequences.
That is how microtransactions impacted the modern video game industry.
The Glorious Past Of Video Gaming
Back in the 80s to early-to mid-2010s, video games were more of a contained form of entertainment. Everything came in one package; usually, video game developers don’t have any hope of updating them or adding more content.
The technology of that time contributed to this contained form of entertainment. High-speed internet, let alone DSL internet (the fastest internet service at the time), wasn’t as accessible as before. Compact discs (CDs) can only store so much data before you need a second disc to continue playing a game, as in the case of the original Resident Evil 2.
As such, there was almost no way for video game developers to update their games in case players found a bug in their video game. To get the game updated. The only way to do it was t issue a recall and replace “defective” copies with updated ones.
Meanwhile, gamers have to put in the work to unlock skins, alternate costumes, and additional content like new guns, characters, scenarios, and game modes. All they had to do was put in the effort to unlock and earn them – it’s part of what they paid for, after all.
Most gamers don’t mind putting an effort to unlock everything back then – they’re getting their money’s worth, after all, and the more content they unlock, the more rewarding it feels. It also makes for a good excuse to replay and explore every single bit of the game to find more content to unlock.
The Dawn Of Microtransactions
While the public became aware of video game developers adding microtransactions by the early to mid-2010s, the practice of putting them in a video game first occurred when Bethesda, a video game company known for its RPGs like The Elder Scrolls V: Skyrim and Fallout 3, added a microtransaction to The Elder Scrolls IV: Oblivion, per USGamer. Bethesda’s addition to the game, which was widely referred to as the first video game microtransaction, came in the form of a set of horse armor, which players could buy, download, and use for their mount for $2.50.
At the time, people protested the armor’s asking price, saying that it was too much for a set of (digital) horse armor and a purely cosmetic one at that. However, Bethesda’s hands were tied at the time, as they were trying out Microsoft’s idea from the start, which insisted that Bethesda should price the horse armor at $2.50, despite Bethesda’s wishes to put a lower price tag on it, per Screen Rant.
Despite the protest, the horse armor was a popular add-on to Oblivion in terms of sales. Other video game developers, particularly mobile game developers took notice of the development.
(Photo : Allstair Berg/Getty Images)
The Microtransaction Boom
With the dawn of accessible smartphones, many video game developers sought to capitalize on a freshly opened market gap ripe for the taking. Unlike the cellphones of the 2000s, the smartphones of the early 2010s can handle games like PCs, albeit with some limits on graphics and complexity at the time.
Many of the mobile games back were free to play to test out the waters of the new market gap, but it wouldn’t stay as such for long. Soon, video game developers saw the opportunity to create a game that works well with the portability of a smartphone, easy enough to pick up but hard to put down by anyone from a kid to the elderly.
Taking a page from Bethesda, these video game developers also added the caveat that, while their game provides only a limited amount of attempts. Players can still continue for a token that could be bought in bulk for various prices or wait for a long period to replenish their number of attempts.
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That is how mobile gaming changed the game for microtransactions and the video game industry, as a result.
Other video game developers soon took notice of the success of mobile games and their microtransactions and attempted to replicate them with varying degrees of success. They took one or a combination of microtransactions for their marketing strategies and focused on them to maximize revenue: battle passes, gacha mechanics, or in-game stores.
Battle passes offer tons of exclusive content gamers can unlock as they progress through a game, but they have to fork over a certain amount of cash to unlock any of them, which could include game-breaking items that others wouldn’t have early on. In-game stores would offer these exclusive items much like a traditional store for the right price.
Meanwhile, gacha mechanics use a roulette style that gives you several items of varying quality/rarity based on their probability of appearing per pull/roll.
While these microtransactions aren’t prevalent in single-player games due to their nature, some games have them: Assassin’s Creed; Odyssey, Deus Ex: Mankind Divided, and Metal Gear Survive are examples of these. While the games are single-player in nature and they normally let players do what they wish, they could feel rindy at times just for the player to level up their player character and improve their equipment, forcing them to visit the in-game store and buy microtransactions.
On the other hand, multiplayer games like Blizzard Entertainment’s Overwatch and EA’s Star Wars: Battlefront II was the most egregious when it comes to one or all forms of microtransactions; they are infamous for their use of the gacha mechanics, which would take another in-depth article to fully comprehend.
One thing is for sure though, games with gacha mechanics tend to be grindy or difficult without characters or items that could only be bought through rolling the gacha/roulette, forcing players to spend money on the gacha/roulette to get what they want.
Greed Is Good
Thanks to these microtransactions, content that gamers would previously have to work for now became more accessible and available thanks to credit card digits or PayPal payments. Video game developers aren’t complaining, though: Activision Blizzard earned as much as $5.1 billion on microtransactions alone, per TweakTown.
EA, meanwhile, made $951 million in microtransactions from microtransaction-filled live service games in 2020, per Gamespot, while Ubisoft earned $360 million from microtransactions alone in 2022 year-to-year, per Seeking Alpha.
Microtransactions have indeed impacted video game design and the industry, but not in a positive way. Many gamers have pushed back against video game developers who want to add microtransactions to their video games despite paying full price.
Whether video game companies eventually stop considering such a marketing strategy despite the ongoing push against it is still up for debate.
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