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The Almighty Buck Entertainment Games

Are Micro-Transactions the Future of Online Game Business Models? 68

Last week we discussed news of Sony Online Entertainment's unveiling of a store that would allow players to purchase in-game Everquest items for real money. Massively spoke with John Smedley, SOE's CEO, about the system and what their goals were. He made the point that they were limiting sales to things that wouldn't unbalance the game. "They're fun and they're convenient. That's all they are. We're not selling power. There are a lot of respectable viewpoints on this, and a lot of reasonable people can disagree on them. Our view is that nothing here is gamebreaking." Edge Magazine has a related piece about Mytheon, an upcoming action-strategy game that will rely on micro-transactions to support its otherwise free-to-play business model. The game's producer suggests that micro-transactions are "a model that really gets us closer to the end user, and that's the way things need to be in the future, online."
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Are Micro-Transactions the Future of Online Game Business Models?

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  • Hooray! (Score:5, Insightful)

    by Godman ( 767682 ) on Thursday December 18, 2008 @03:53AM (#26156947) Homepage Journal

    I love being nickeled and dimed to death by everyone.

    • Re: (Score:3, Insightful)

      by IBBoard ( 1128019 )

      Exactly (except for in the equivalent British denominations). I don't get much chance to play games any more, but I don't want to feel that I've got to keep paying to play the games I do have.

      Buying a game and playing feels like you're getting great entertainment. Buying a game (including this one, since it appears to be "buy and then free play") and then having to keep buying things seems more like a situation where you'd feel like you were an entertained piggy bank.

      What's wrong with just making decently e

      • Re:Hooray! (Score:5, Insightful)

        by philspear ( 1142299 ) on Thursday December 18, 2008 @04:48AM (#26157215)

        What's wrong with just making decently entertaining games that people are actually willing to go out and buy?

        That's not exactly the thinking of course. The thinking is more "what gets me more money? Maybe microtransactions do." Microtransactions and good games aren't mutually exclusive, but a lot of the people making these decisions are just looking for the easiest way to maximize their profit. The old joke actually fits here:

        1. Make a game
        2. Put microtransactions into it
        3. ???
        4. Profit!!!

        The 3rd step doesn't really need to be identified for the microtransaction plan to dominate. If it gets them to step 4, step 3 could be "Go back to step one and make the game good so it will sell more" or it could just be "allow gamers to think 'It's only $3, who cares if it's good' to get you a lot of microtransactions with minimal investment."

        • Re: (Score:2, Informative)

          Microtransaction isn't just about making a profit. It can also allow a new company/game to grab a sizable player base quickly. "How?" you may ask. Many of the microtransaction mmos I have played offers a standard set of content free to sign up and free to play. This allows players to demo the game play as well as some of the content. Further more, free account players may choose to play for free indefinitely. Granted, they may have a limited experience, but they also create communities that draws others in.

          • Re:Hooray! (Score:5, Insightful)

            by vux984 ( 928602 ) on Thursday December 18, 2008 @02:34PM (#26162909)

            Microtransaction isn't just about making a profit. It can also allow a new company/game to grab a sizable player base quickly. "How?" you may ask. Many of the microtransaction mmos I have played offers a standard set of content free to sign up and free to play.

            Those aren't microtransaction mmos, those are simply pay-as-you-go mmos (vs subscription mmos). And pay-as-you mmos are a great idea. I'd play a lot more MMOs if I didn't have to subscribe -- because I have only x hours to play, and if I add a 2nd mmo my costs double but I don't have any more time to play... lousy value proposition.

            A microtransaction mmo is when you get the game, and then after you login you choose a class... warrior or cleric are there... or you can pay $2.00 to unlock ranger.

            And then you walk into town... the inn is open and the blacksmith is open... but $2.00 to unlock the artisans guild hall which is lets you dye your armor. So you walk into the blacksmith... ooh, a shiny +1 shield is available but its got a picture of a pink butterfly on it. But for $2.00 you can unlock the +1 shield-pack with a pictures of dragons, unicorns, bears, and lions -- still pink unfortunately, but you can dye them in the artisans hall!

            Then you head out into the wilderness to hunt and explore... You approach a hut in the woods, enter it, kill the 2 gobblins inside and find a trap door to a cellar. You reach down to open the trap door... $2.00 to unlock the goblin tunnels instance. Maybe later...

            Then you form a group with some other newbie... and an hour later he's gained levels 3 times, and your barely half way through your level... and you started out at the same point... so you ask him about it... and he tells you that for $1/potion you can boost your xp/kill by 50% for 30 minutes -- he found the potion vendor inside a cool goblin tunnels instance...

            Mark my words. That's where things are heading.

            • While some of the parent posts have potentially sensible uses, I can see this as being the real use (even if it has been modded Funny instead of Insightful). My wife bought some of the extra content for Oblivion, and that seemed interesting and of a decent quality, but once you get people used to "and you've got to pay another couple of GB£/US$/etc to unlock X" then the sales areas will milk it for all it's worth. Just look at some of the crap people are paying for already on things like the iTunes sh

      • > What's wrong with just making decently entertaining games that people are actually willing to go out and buy?

        It's simply harder and more expensive.

        They follow the thief line of thought: "Why work if I can just steal?"

        That's what happens when the objective is not to make a good product but a good profit. It happens everywhere, it's just sadder in the entertainment industry.

    • Sorry, but in this context that doesn't make sense.

      Most of the games they're talking about here are free games, where the stuff you can buy doesn't offer a mayor advantage over the people who don't buy it.

      Whereas I can see where you're coming from since there are quite some games these days that release extra content (that most likely was already done once the game shipped) for a small fee, I don't think one should complaint about a business-model where the initial fee is nothing.

      And sortof on topic,
    • Most, if not all, of the microtransaction games I've seen have been totally free with optional payments in lieu of playing a few hours. You'd only be nickel and diming yourself.
    • Re:Hooray! (Score:4, Funny)

      by CR0 ( 22574 ) on Thursday December 18, 2008 @11:19AM (#26160109)

      You know, a capitalist society would say, "let me pay for what I want to use", and a socialist society would say, "bill everyone the same and give everyone the same opportunity."

      I'm surprised American's so dislike free play with micro-transactions and prefer to pay a large monthly fee.

      You know, universal health care might work for you guys.

      Boring conference call? Try Fable Island []

      • This analogy doesn't work at all- Paying the same amount per month for access to the game in no way amounts to socialism. People have different items and different abilities in games based on how much/how well they play them. Some sort of marxist model of gaming would give everyone the same items and abilities and tell them to have at it.

        The current model of pay monthly and play actually has way more in common with capitalism. People who put time in and succeed tend to get better items and abilities, and
      • Well, in my day, we unlocked items according to our skills, not our pocketbooks. That was a meritocracy. Buying your way to cool items makes it a plutocracy.

  • Nope.

    If they want me as a customer, they'll still cater to the single player, linear but good experience, much like a good book or movie, that's how I see the majority of games I play.

    I will not pay for installments or addons and they will never see my money, period - I don't like being nickel and dimed.
    I won't buy a mobile phone for ZERO DOLLARS!!! with a 45$ a month plan.
    I won't get an internet account with ZERO DOLLARS!!! signup but 99$ a month access.

    If they want me, they have me buying stuff now, i

    • Nope.

      If they want me as a customer, they'll still cater to the single player, linear but good experience, much like a good book or movie, that's how I see the majority of games I play.

      I will not pay for installments or addons and they will never see my money, period - I don't like being nickel and dimed.
      I won't buy a mobile phone for ZERO DOLLARS!!! with a 45$ a month plan.
      I won't get an internet account with ZERO DOLLARS!!! signup but 99$ a month access.

      If they want me, they have me buying stuff now, if they want more from me, tough luck.

      $45/month for a cell phone isn't bad, assuming it includes enough minutes to get you through a month and that they actually have decent coverage. My main complaint about cell carriers isn't the monthly fee, its the 2-3 year contracts they make you sign in order to get service.

      • It was a completely theoretical figure I pulled out of my...... ear.

        In Australia I believe cell prices are cheaper than over there too, I pay 0$ a month and only pay for calls,... and no - we don't pay for incoming calls or SMS, the entire concept is insulting and alien, you poor bastards :(

      • I pay $10 a month. I mean 10 cents per minute I ACTUALLY USE.

        Fuck you phone companies for making everything monthly.

    • by Nursie ( 632944 ) on Thursday December 18, 2008 @08:56AM (#26158669)

      I got really pissed off with this recently.

      "Beautiful Katamari" for the Xbox 360 was a must-buy game, I love the Katamari games. Unfortunately it was really, seriously short. Then I thought "Hmm, looks like there are spaces on all the islands for extra levels....

      Lo and behold, there were about 6 more levels available as DLC on xbox live. I bought them, but I hated them and myself for doing it. it had obviously been the plan right from the start. Deliver half a game and then squeeze more money out of people for the rest. And I can't even re-sell the game with those levels because they're not part of the physical media, just some stuff tied to my user account.

      It sucks.

      • by ldierk ( 1270930 )

        I bought them, but I hated them and myself for doing it.

        That's exactly how you show 'em you don't like what they are doing! Very smart!

        • by Nursie ( 632944 )

          That's exactly how you show 'em you don't like what they are doing! Very smart!

          Perhaps I ought to send a strongly worded letter too?

          Yeah, I know, I'm usually pretty good at refusing to buy into things I disagree with, but I failed miserably this time.

      • by Jarnin ( 925269 )
        Your description reminds me of SPORE. In development, SPORE was like neapolitan ice cream, in that it had something for everyone. When it went gold, the devs took a knife and removed the chocolate and strawberry ice cream, so what actually shipped was just plain ol' vanilla.
        When players asked "Where is the chocolate and strawberry?", EA and Maxis responded with "Silly consumers, we're going to sell those to you at a later time!".

        MMORPGs have been doing this for years with expansions. Everquest II even ha
      • And I can't even re-sell the game with those levels because they're not part of the physical media

        Ironically, these levels are part of the physical media []. You didn't download them, you purchased the right to *unlock* them. I was furious when I found this out. I can't believe that NAMCO (and Microsoft) got away with this. I think you would have a legitimate case if you wanted to take them to court: nowhere on the packaging does it mention that disc you are purchasing contains data that is encrypted u

      • by Sentry21 ( 8183 )

        The concept, however, is a clever one.

        Look at books as an example. An author may write a book of a reasonable length (not a Wheel of Time 900-page mammoth). People buy it and like it. He writes another one, they buy that too. And another. As long as he keeps putting together a compelling narrative, people keep buying them and enjoying them.

        Why can't games makers do the same? I could buy the Harry Potter box set for $200 and sit down and read them all, but that's not how they were written. They're a series o

    • by Damvan ( 824570 )

      Just curious as to how you access the internet since I have never seen a company offer internet access without a monthly fee. Pay as you go? Somehow pay up front?

      • The example was more of a 99$ a month vs 50$ a month - small initial fees and high ongoing fees absoloutely drive me insane, I like keeping my overall expenditure down, incase of emergencies.

  • I was hoping the next gen was here for Christmas. Come on man, where is my Xbox 720?
  • Does anybody play EQ anymore anyway? And if they do, aren't they in their 40's and living in their mom's basement? So... they don't have any money to spend anyway...
    • Does anybody play EQ anymore anyway? And if they do, aren't they in their 40's and living in their mom's basement? So... they don't have any money to spend anyway...

      Well, they have enough money for microtransactions, which may be a driving force behind this. Anyway, even if they do have their own house, they don't have any money anymore.

    • You are kidding, right?

      This is exactly the nerdy demography that has a hell lot of free cash to spend on frivolous expenses.

  • week 1: I need your credit card to buy x week 2: I need your credit card to buy y week 3: z? Game gets uninstalled by mom.
  • Convenience wins, every time. Hence subscription models are likely to be far more popular.

    • Re: (Score:3, Insightful)

      The sad part is that we've always had micropayments: it's called a meter. You buy gasoline (or petrol) not in integer gallons (or litres), but rather you get a price rounded to the nearest cent for your purchase. Long distance calls? Another micropayment, lumped into a monthly bill.

      That's what made micropayments feasible in the past: instead of having to buy each increment, you only made one payment at the end of your consumption. You don't have to prepay every long distance call. You don't have to second-g

  • So far everything is Fluff except for the 3 potions (Xp, Tradeskill, and Acheivement buffs, 3 tiers each). The fluff armor and stupid house pets aren't worth any concern, but the potions can open a door. The 3 tiers of pots (10%/4h $2, 25%/4h $3.50? and 50%/2h $10) are really the only way to get to cap on achievements, so it's not too hard to see it coming. As long as it's fluff, no one should be too worried. However ... it's SOE and that should worry everyone.
  • This is becoming a very common theme for PS3 on the Playstation Network, Little Big planet, for example has lots of extra costumes, that you can get for a small(ish) fee.. For what I've seen tho, most people just download the free stuff and leave the pay stuff behind. Im not sure what the figures are, but there was uproar about having to pay £4GBP for a 1st week t-shirt for your sackboy. So far the only Micropayments that do work, are from extra tracks for games like SingStar and Guit
  • by Jack9 ( 11421 ) on Thursday December 18, 2008 @06:45AM (#26157883)

    I am speaking generally about the US MMO market when I say the MMO market. I don't read foreign game sites or forums.

    RMT - Real Money Transaction vs Microtransaction

    I don't see much difference between these concepts, although some ( [] ) may disagree. Both terms describe paying real money (for an effect that cannot be obtained any other way) BEYOND your subscription fee. The surviving niche and aging MMOs have switched to RMT added value (if you will), because it's an easy revenue model to implement, that works. There isn't more justification needed for controllers (of the purse strings). For most cases, the number of people who would give up on a game SWITCHING to RMT are usually pacified by making the RMT benefits cosmetic. Changing appearance is seen by gamers as an acceptable vanity issue. How many MMO player groups find a member bidding for a relatively weaker or even inappropriate (strategic) item for appearance's sake? (healing staff on a fire wizard) I dare say, it's commonplace.

    While Asian based MMOs take RMT for granted, America has a similar mentality toward obtaining possessions. There is a market for players who are accepting of RMT for stronger items (+90 sword only available for 30$). I would say the demand is much lower than the casual MMO base and is antithetical of the shared beliefs of aging players who "walked through the lizard temple both ways for a year to get this Fungal Vest". Currently, most MMOs are about aquiring personal power, at whatever cost the game has set up.

    From the context of the overall habits of gamers, it's very apparent to Comic and Game shops that CCGs have fallen out of favor in the light of the MMORPG phenom. Now players cam compete in the abstract against a wider variety of people, with almost no effort. They don't even have to travel anywhere. It's a larger playing field, yet they can still feel equal in terms of capability, for an overall lower cost (now that you don't have to save to buy 4 of the clutch cards for tournament decks every X months, see M:TG who rotates what sets are allowed). There are number of CCGs which are played almost exclusively online.*

    In the Asian MMO market, if you put in purchasable power items and you will lose some audience. The balance seems to always favor including RMT for Power items. To what degree would it affect MMOs in the US? Americans seem very tolerant of Collector's (or Pre-order) Edition bonus items that are low or medium on the gamewide scale of power. Buying gold with real money or characters with real money has been going on since gold farming was coined. This gold is used for "twinked" alternate characters or even the individual "best" items, through a communal player's market. It's part of the accepted MMO landscape. To that extent, isn't RMT already in every game? It's in iTunes. What's more, RMT can eliminate gold farming, when it happens that you can buy gold from the MMO itself (some claim many gold farmers ARE from the game makers, running a masquerade). Other than perceived tradition (see no RMT, hear no RMT), there doesn't seem to be a compelling bias against it. Overwhelmingly, it's the visibility of the RMT that seems to cause players to complain. Perhaps a fear of raising the bar for games that may already seem like a chore.

    I agree RMT is the future. Is it really that hard to accept a tradeoff? Some of the die-hard idealists will outright quit, a subset of those, permanently. In exchange, the game (and some people's careers) will receive a longer lifespan. I think it's just a metagame about player expectations at this point.

    *I use forums to monitor the closing of shops, which are all but extinct in Southern California.

  • It seems like every year or two this old idea gets dusted off and applied to one or another business. Remember when micropayments were discussed as being the way to pay for online newspapers? How about blogs? Now it's games; too bad it's a lame idea - but nobody seems willing to put it out of its misery.
  • Like just about everything in life Micropayments are not inherently good or evil (though probably Lawful rather than Chaotic ;) ). I've tried a couple of MMORPGs though never for more than a month.
    1. Guildwars: Buy the game, possibly buy expansions but pay no subscription.
    2. WoW: Buy the game, possibly buy expansions and then pay subscription.
    3. Warhammer Online: Buy game, possibly buy expansions and then pay subscription.

    I am quite happy with all the above payment methods as long as the cost is balanced to the

  • The idea seems great to the business sharks. Unfortunately what's going to happen is there will be a burst period where every development studio jumps on the pay for content bandwagon in a frenzy, then the whole model collapses when consumer faith craters due to wasting money on worthless content. Like levels that are already included on a disk. Or requiring players to spend roughly $150 to get less game than if they paid $60 on the exact same game years before.

    The era will happen, but it will be short, and

  • by WCMI92 ( 592436 ) on Thursday December 18, 2008 @09:02AM (#26158699) Homepage

    SOE has been foundering now for years. In a time when the MMO industry has been growing, SOE has shrunk. If you look at or mmoprgchart, you see that they've lost more than half their subscribers since 2005 across all their games.

    Of course most of the wounds to SOE are self inflicted. Such as the Star Wars Galaxies NGE which cost them by some estimates 80-90% of their player base and a HELL of a lot of reputation, this when SOE didn't have that great of one to begin with, what with being caught doing things like releasing EQ expansions unfinished and gating content, etc.

    Fact of the matter is, people flee SOE games because the company lacks any sort of ethics or integrity. John Smedley is a pathological liar who will promise that things won't happen that the player bases don't want, then turn right around and do them, usually sprung on players overnight with no warning.

    For example, he flatly denied that RMT would be coming to the EQ2 servers that weren't part of "station exchange". The new pay for items system that is the subject of this article was literally sprung on everyone overnight, one day it wasn't there, next day it was IN THE GAME, no warning, just an obscure reference in the patch notes. Of course this has caused massive outrage.

    BTW, this new "macrotranscam" system isn't SOE's ONLY RMT scheme they have going. Their card games are even worse. In the card game, there are now loot cards that grant exclusive in game items, some of which are superior to anything available in game. They won't publish the odds, so buying the "card" decks amounts to gambling. There has been discussion that this may in fact be illegal under the US online gambling ban...

    SOE being SOE, you know that they won't be able to resist the temptation to make even more things RMT exclusive, and where they aren't, to not tinker with loot drop rates to tempt people to pay for things that they could earn.

    Fact is, I believe that RMT the way SOE is doing it is destined to fail. It's unproven first off whether this sort of scheme will work in the first place, and it's definitely going to be rejected when tied to games that charge a FULL PRICE subscription fee. People simply aren't going to fall for that. The only place, IMHO, RMT might work is in a game where there is no sub fee, or as an alternative to a sub fee, to "pay as you go" up to and stopping at the price of a full sub fee.

    In the past, Smed has pimped RMT as a way to get people past the "barrier" of the full price sub fee. To no one's surprise he's using it as a way to get people past the "barrier" of thinking that $14.99 a month plus paying extra for expansions is enough money to play his mediocre buggy games.

    No thanks.

  • Simple.
    Easy to Use.
    Unlimited Replay Value.

    No level grinding.
    No exp tread mill.

    Limitless creativity.

  • Many Chinese online game company this 2-3 years ago.
  • by Matthew Weigel ( 888 ) on Thursday December 18, 2008 @12:39PM (#26161239) Homepage Journal

    Small fees for one-time things are showing up in a lot of online games these days, no question. Guild Wars, City of Heroes, World of Warcraft, all support one-time fees for things like extra character slots, server transfers, and cosmetic (or complete) respecs. These are things that don't affect gameplay, are uncommon purchases for any individual player, but do improve player enjoyment (they also enhance revenue something fierce). Should they be free? Sometimes yes, sometimes no. It makes sense for Warhammer Online to offer free server transfers right now to help balance populations, but in general players are closely tied to the community on their individual servers - so it makes a certain amount of sense to regard it as a value-added feature. Likewise, City of Heroes hands out free respecs like candy, but if you still can't get enough of them... sure, it makes sense to charge.

    And then there are games that are free to play... they have to have some revenue model. Games like Puzzle Pirates demonstrate that a game can be fun, balanced, and robust, while still selling all manner of things that affect game play. The key with that approach, I think, is to use a dual currency model (as Puzzle Pirates does, as Iron Realms pioneered back in the '90s) that allows players - who never pay a cent - to trade with other players for all the benefits of spending money.

    Of course there's also the Korean free to play model, or the model common for Facebook games where it is "free to play" but you have to pay in order to really enjoy the game (or worse, there is a subscription but you still have to engage in microtransactions in order to really enjoy the game) - I think this is the model players don't like, and fear every developer is planning on when they say free-to-play or microtransactions. I think developers and publishers know players hate this model, and are aware of the backlash they'll see if they use it; that doesn't mean they won't ever try it, but it does mean they'll tend to tread carefully and consider other models first.

    On the other hand, that doesn't mean subscriptions are going away, because clearly a lot of players like to just pay a subscription, know how much they need to budget on a game, and know they don't risk a fevered drunken night of transactions running up their credit card bill. It's unlikely to go away, but it is going to have to start sharing the limelight with other models that address the needs of different segments of the population.

  • As publishers try to find more ways to increase profit while decreasing expenses we're going to see them try many new and sometimes creative ways to screw the player.

    First, they release games in an unfinished state to see how crappy a game they can release before consumers won't buy it anymore. You get things like HGL and TR. Then they try to sell you the other half of the game later until it becomes acceptable practice, as Blizzard is doing with Starcraft 2. Finally, the publishers will just sell you a mo

Each new user of a new system uncovers a new class of bugs. -- Kernighan