Bleeding Dry - Microtransactions in Video Games
Originally published December 2017This is a topic I've hinted at multiple times in the past during my lengthy rambling posts. At last, I'd like to expand my thoughts a little bit more on the subject of micro-transactions, before the year is up. I will not provide any solutions to this issue, nor will I provide any information you may not already know about the subject. It's really just a post to voice my thoughts on this scourge against the video game media and how it has further cemented in my mind the point at which video games are no longer fun.
How did we get here?
Video games as an entertainment medium are very unique in terms of the product they can provide. Unlike films or TV shows, the fact that there is this interactive dimension to them allows for a great deal of flexibility in how we achieve our entertainment from them. Over the decades that video games have existed, their methods of entertaining us and providing us with rewarding experiences have greatly changed with significant strides in technology. There are various moments where the technological shift in our culture drastically changed the culture around gaming and the overall purpose of most video games. In the 80's arcades, it was all about lasting as long as possible and getting a high score. Home consoles introduced the concept of playing a game to completion and finishing a story. When the internet became a part of the average household, it drastically changed the experience of games by giving people a method of playing games with each other without having to be on the same couch anymore. As internet speeds increased, suddenly online multiplayer became a huge selling point and an integral part of the experience with games like World of Warcraft and Call of Duty. Eventually, the internet also provided the ability for developers to sell downloadable content, updates, and expansions for their products to renew interest in the product and provide new content to the experience.
So, where do micro-transactions come in? It has a lot to do with the next big shift in video games: the mobile market and social media. Around the time the previous generation of games was gaining momentum, smartphones became a thing. Suddenly, everyone had a tiny computer in their pocket that allowed them to do dozens of different tasks, so it only made sense for games to work their way onto that platform. However, traditional video games did not really control very well on the smart devices. With only a touch screen and gyroscopic sensors, it was going to be difficult to play most game genres on the little device. A few made it work, and there were plenty of decent games that found a home on mobile devices, like Angry Birds or Jetpack Joyride. There were certain game types that managed to thrive on these devices, though, that has more to do with today's subject.
I am, of course, talking about the social media games like Farmville. These games were of a different breed in how they worked. The developers discovered that you didn't need to make a game that was fun to play, just rewarding. Having taken some pages out of games like The Sims and Viva Piñata, social games started sprouting up all over the place, using a specific gameplay style to get people hooked. They weren't all the same, but many of them focused on mechanics like building structures or collecting resources that would make numbers go up so you could get more structures or resources. The point was to get players stuck in this loop of perpetual investment of time and resource management, where the only thing keeping you from "winning" was time in the day and money in your pocket.
Unlike the traditional method of acquiring a game by buying it to play on your own time later, these social games were free to play. Free-to-play games didn't start exclusively on phones, but the phone game market is probably responsible for making it so popular in the US. Why is it so popular? You didn't have to pay a cent to play the game, you just needed an internet connection and space on your device for the installation. Seems pretty nice, right? But how would these things make their money back for all the development costs if they're free?
It doesn't take long after starting one of these games to find out. A majority of how free-to-play games make money and continue to exist is through micro-transactions: digital purchases in the game of minute value that provide a particular reward for players. These in-game transactions have gotten bigger than "micro" in the past few years, but they were originally just purchases of cents at a time. The types of rewards and services these sales provide to the players differ from game to game, but they could include:
Cosmetic items to customize the look of your digital avatars
Consumable items to make mundane and tedious tasks within the game complete faster
Functional items that change the balance and challenge of a game
Lottery boxes that contain rare digital items that perform many of the functions already mentioned
Farmville wasn't the first game to use the format, but it was one of the most successful. In fact, free-to-play games existed before the mobile market took off, they just found a new home there, for a little while. When free-to-play games took off, game publishers and developers paid attention. They looked at the monetary structure and realized that you could make the same amount of money off one poor addicted soul who kept buying digital items, as you would from dozens of sales of a full-priced game to the masses. What's more, with the power of the internet, developers could constantly update and add to their in-game marketplace, giving players new incentives and rewards to purchase and stay interested. This would keep their customers active in the game for a lot longer than the traditional video game, thus keeping them susceptible to more sale opportunities.
One of the most successful free-to-play games out there, and it's all cosmetic
Over the course of a decade, the way video games fulfill their role as a finished product of entertainment media has changed alongside this new monetary format. Most games launch with in-game marketplaces where players can buy digital items to "improve" their experience in a game they've already purchased. As I mentioned in another rambling post, games are never really "finished" anymore when they are released, as they are constantly updated over time. With these updates, new items are added to the in-game stores, and the junkies get access to new content they can buy on a regular basis. The common argument in favor of this format of monetization has been: "The game is free, so they have to make their money back somehow." Alas, this argument, bad as it was, didn't matter for long.
As I mentioned in my rambling about Visceral Games, the method of adding in-game items for sale in games that you already bought arrived in no time, starting with Dead Space 3. It was a big deal at the time and people were livid about the very concept of buying a game that demanded more money in exchange for items that would "improve" the experience. Downloadable content was already a thing by then, and games certainly were already advertising expansion packs in menus, but the in-game marketplace with micro-transactions was a new and horrific idea that most people didn't accept, that is until everyone did. Since then, it's become the norm, in one way or another.
The Latest Version of this Blight
Seemingly every game from a big publisher this past year has had some form of micro-transactions in it, excluding Bethesda which was surprisingly less malicious this year if you don't mention their Fallout mod thing. There were, of course, plenty of games that came out in 2017 without micro-transactions, but the ones that were big and newsworthy often sported some method for players to pay extra money. There was one method in particular that seemed to take hold in 2017.
Lottery boxes, or loot crates as they're sometimes called, are the new standard when it comes to in-game purchases. They're not really new, though. I've known about these types of items that have existed in the free-to-play MMO games for years. I also knew that these items were big money-makers. It was inevitable that this sort of digital item would make its way in to mainstream games once they started putting micro-transactions in games you had to buy to play.
Image: Activision Blizzard
Why are they so successful? You could probably figure that out on your own just from the name, but I'll point it out anyway. The rewards of each box differ, drastically. In all forms of loot crates, there is a chance you could win an item that has something extremely, rare, powerful, or cool-looking that you can use to "enhance" your experience or make your character better in some way. The rest of it is trash. Loot crates create their own economy with how much in-game trash they generate. It causes a supply/demand scenario and inflates the value of the "rare" items by actually making them rare in comparison to all the junk items that come with it. This false sense of value from the possible reward is then projected onto the box itself, which can be quickly and easily purchased for a very small fee.
What does this sound like to you? To me, it sounds like Economics 101 from the perspective of a nickel slot machine, where you pay a very small fee for the chance to win big, however, most of what you get back is just more incentive to keep playing as you slowly pump change into the machine. Except here, the rewards are not money, just in-game items that can't be used in any other game or anywhere else. The items themselves can range from collectibles to small cosmetic details, to more impactful cosmetic details like full costumes, to gameplay-changing gear that adjusts the abilities of your character in the game. Though loot crates were in dozens of games this year, the rewards they offer and the methods in which this loot is obtained differ from game to game.
Image: Warner Bros
Most frequently, you cannot buy these loot crates directly. Instead, each game has its own in-game currency that you need to use to get before you can begin buying items and boxes. Some games even have multiple types of currency you can buy. Injustice 2, for instance, had 3 different types of currency in the game that you could get by buying it in the game console's store or earning it over time by playing the game. One currency, specifically for buying new color shaders for characters, was extremely hard to come by through gameplay alone, so you were expected to buy more of it. The other, less-rare currencies were easier to get by playing the game, or by simply opening the loot crates that were relentlessly awarded to you. These less-rare currencies could then be used to buy more loot boxes and continue the cycle. There's a reason it's done this way, so I have to ask: What does this all sound like to you?
Why Does it Matter?
As I've been indiscreetly hinting, this all sounds a lot like gambling, doesn't it? You have to buy the in-game currency (casino chips) in order to pay into this game of chance that may reward you with a big win or just give you enough spare change to keep playing and make you think the next big win is around the corner. The argument against the gambling theory that has been used by the game publishers has often resorted to pointing out the fact that you can't actually win real money in any of these circumstances, only loot. I don't agree with that argument because it seems to be redefining the term "gambling" to mean that real money has to be a possible reward in order for it to truly be gambling. The problem is, they're somewhat right, as far as the law is concerned. In states like California, where gambling is illegal, there are still casinos and online gambling sites. How does this work? By having a weird currency exchange loophole where you aren't able to gamble with real money, you can gamble with fake Monopoly money you purchase from the casino, which you can then cash out later from someone else for something else, which can then be exchanged for cash.
Some games have even gone so far as to mimic this very scenario by allowing players to buy and sell items from each other. For example, Player Unknown's Battlegrounds, arguably one of the biggest games of 2017, sells loot crates that contain cosmetic items like costumes for characters. These items vary in their rarity and can be sold to players through Steam, the game platform. Steam is not the one selling these items, so they're not affiliated in that way, but they can manage the exchange of in-game goods and real money. So, ostensibly, a person could buy some in-game currency to purchase a few loot crates for under $10, get a rare outfit, put that rare outfit on sale for $70 on Steam, and sell it for a huge profit. This has happened already and for a lot more money in some situations. That possibility for a big reward, though not necessarily endorsed by a game's developer, is certainly a motivator for someone to go and buy a bunch of lottery boxes in the hopes of getting something of value to sell for a profit.
So, it's gambling. It may not be the legal definition of gambling in every state, country, or province, but it's gambling. The developers and publishers of the games using this monetization method want to discourage you from calling it gambling and try to defend it as something else by pointing out technicalities and minor differences in the definition. Outside parties who also sell loot boxes that can be opened and used in games want you to think it's not gambling. Even the ERSB, the organization that determines the content ratings for games, doesn't consider it gambling. But due to a recent controversy regarding some popular personalities on YouTube, who played the game Counter Strike: Go and boasted of special skins they would win from a third-party vendor, that definition has been brought into question—these guys also failed to disclose the fact that they were deeply affiliated with (owned) this vendor and were making rather disingenuous videos to convince people to buy loot crates from their site. Whether recognized as gambling or not by whomever, the negative attention towards this method of digital sales garnered in the court case didn't help. This has conjured a storm that has been on the horizon for a while and many of us have seen it coming. The storm also happens to be just hitting the shores of Hawaii now.
Thanks to Electronic Arts, who once again managed to draw as much negative attention as possible for their attempts at sucking as much money out of these trends as they can, the US government (the eye of the storm) has gotten involved. EA's party-foul release of Star Wars: Battlefront II drew a TON of public ire due to its absurd methods of incentivizing players to pay more money and get loot crates. I don't have the specifics, but you can simply look through the infamous Reddit thread (the most down-voted Reddit thread of all time!) for the numerous changes the developers made to the drop rates and reward percentages before the game was even fully released to the public, due to the negative blowback. Unfortunately for them, and for every other developer hoping to utilize this monetary system, representatives in the state of Hawaii caught wind of this fiasco and have gone so far as to suggest legislation to prevent minors from purchasing games with these types of loot crate rewards in them. Whoops!
I don't want the government regulating my entertainment, much like anyone else, but the way this was going, the government's involvement was an inevitable consequence. This is especially true when you consider the fact that EA's main competitor, Activision, had a document leaked detailing how they monitor the purchasing trends of players and were designing games to exploit them on an individual level. Not to mention, there are analytics companies out there whose sole purpose is to recognize markets in different regions of the world and suggest the appropriate prices for in-game items or methods of marketing to the public in these areas. I don't just mean the regional public, but identifying and targeting people who may be susceptible to addictions and exploiting that with their marketing strategies. The video game industry has become a massive money-maker, and now that they're relying on such manipulative methods to make more money, the sinister nature of these systems is starting to take a toll and draw more attention from the government than anyone wanted.
It was a lot easier to defend video games as a legitimate source of entertainment when it was just a matter of content censorship. Studies could back up the argument about violence in video games having little to no negative effects on its players, and people were still willing to concede to a rating system similar to the movies anyway, just to appease the concerned parties. Now, video games are so much more than what they were; they're exploitative gateway drugs to far more harmful addictions. There are still plenty of games being made by big and small companies that do not employ these methods of monetization, but like every social issue, it's the ones that make the most noise that draw the most attention. EA's party foul is going to cause a lot of problems for them and their competitors, and it may cause more problems for everyone else if the companies don't wise up their act. As much as I'd like to see the whole loot crate concept go away, my pessimistic expectation is that this is going to get worse before it gets better.
If you made it all the way to the end of this long post, congratulations and thanks for reading the whole thing! It was a long rant with a lot of talking points. There's plenty more I had to say, but I didn't want to stretch this out into another multi-part series that runs into next year. If you have any comments, I'd love to hear them. Happy holidays and have a happy new year!
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