[As game developers grapple with making microtransactions more appealing to Western gamers, Daniel Kromand talks to core gamers to gauge the effectiveness -- and ineffectiveness -- of current microtransaction practices.]

This spring, I interviewed a group of gamers in free-to-play online games on the topic of microtransactions. The interviews were meant to identify how the gamers determined the value of microtransacted goods, what item designs they approved, and generally how they perceived microtransactions in their respective game. The ultimate goal of the interviews was to understand how to maximize the appeal of microtransactions and in turn hopefully finding the recipe for making a lot of money.

But first, a brief overview of microtransactions: The PC gaming market is often depicted as either entirely dead, or at least in a dire crisis. A major cause for this crisis is of course not that the PC is finished as a gaming platform, but rather that a high level of piracy is undermining the traditional retail model.

Microtransactions can help to revert this trend and revitalize this market segment, but its implementation is still relatively new -- at least in Western game development. While microtransactions have been tried in single-player games (Oblivion's horse-barding maybe being the most famous), they are most widely used in online, multiplayer games, and for sake of simplicity I will only look at the latter.

The business model is often to give the game itself away for free -- in order to render piracy superfluous -- and then sell these small upgrades at low prices. Each consumer might not spend the full amount of a traditional retailed game, but the total sum of revenue gained can surpass that of a traditional game, which encounters piracy.

The microtransaction itself is more transparent than when purchasing a regular game through retail: In a microtransaction the player can pick and choose between the different features, and the properties of each good can be compared to price, while a retail bought game comes completely packaged. Willingness to pay describes how much a given consumer is willing to pay for each separate feature, but of course the actual number varies according to personal preferences.

The Guinea Pigs

The people chosen for the interviews were all experienced gamers and ranged from early twenties to mid-thirties. They were all male too, which in no way was a predetermined discrimination on my part, but rather the result of being unable to recruit any women for the interviews.

The following analysis has a natural caveat of only applying to hardcore, male gamers, since they were the only ones who were being heard. This doesn't mean that the conclusions can't be used with other demographics, but please don't sue me if things go awry.

The interviews revealed some of the influences that affect the consumer willingness to buy in both positive and negative directions. By examining each influence it is possible to offer suggestions on how to exploit the effects better and create more engaging microtransactions. The recommendations are fitted into two categories for key points that relate to the assets themselves and to general game design that facilitates microtransactions.

Secondhand Lands

Value for Money

In a trade situation consumers look at the value proposition and compare expenses to gained utility. The utility of virtual assets is, however, usually confined to a single game, since it cannot be transferred from one game to another.

Most virtual assets in current games are actually rented, rather than bought, and this means that the consumer has to compare the expected gained utility within the time frame of the purchase. Because the future use within a set time limit is uncertain, this can cause some annoyance, as seen for example seen in this quote:

"I find it kind of annoying that when you rent items it is in real time, not in-game. So if you rent an item for a week and then only play twice a week then you only have the item for four or eight hours." (Peter)

Games encounter this very product-specific problem. Consumers obtain goods that have a physical presence in the game world, a sword for example, but also realize that the virtual reproduction of the item is costless: there is in fact no logical reason as to why the developer needs the sword back. The clash can easily produce annoyance if the players believe that they have to agree to unfavorable conditions that only serve to maximize the developer's revenue.

Consumption of Goods

Instead of enforcing a time-based rental period it is possible to instead have it be use-based. This could for example be a durability system -- as typically seen in hack-and-slash RPGs -- in which the player buys repair kits to fix his armor and weapons. This system could also include the option to buy premium items that deteriorate by use, instead of renting them.

A durability system could give the player a sense of controlling his investment, since the inevitable deterioration of the item is the player's responsibility rather than an arbitrary game rule. The durability system also makes it possible for the player to decide when to buy repairs, which is actually just an extension of the rental period.

The players who have experienced games with paid repairs are positive towards the increased feeling of self-control:

"In Secondhand Lands you can repair your items through tokens. If you don't the items [that the player has gathered] break. It seems fair enough because it is only a time-saver by paying for it [instead of finding a new item]." (Steen)

The notion of selling premium items for a fixed price can have a positive influence on the player, because he now feels that he owns something of value in the game. By giving the player a tangible asset for his investment, the game might be successful in keeping him longer.

Going for Cheap

Another topic that should be touched upon is transaction utility, which is the idea that consumers often buy unnecessary goods if they're good bargains.

However, microtransactions typically have low prices, and the discrete value saved on a single purchase, even at half price, is so small that it might not convince non-paying players to enter their credit card information. To remedy this effect, an investment model could be implemented, where the player invests in the in-game currency for a guaranteed return on investment.

The investment scheme could be framed within the fiction, for example that a local king needs funds for an ongoing war and will pay back the amount in one month at 20 percent interest. The logic behind this specific, hypothetical offer is described by Thaler in his research of purchasing habits of wine enthusiasts, who considered the initial payment for large quantities of expensive wine an investment that actually saved them money.

If a similar cognitive trick could be applied to microtransactions, then it is expected that the players sink larger amounts of money into the game, which is then captured by the company as revenue. How often this event should happen and at what discount, requires demographical knowledge for each individual game, but the model should increase financial investments.

There is presumably some lost revenue associated to this model since the regularly paying players will have to pay less for the same amount of coins, but the number of new paying players might outweigh this.

Furthermore the unavoidable attrition rate of players means that some consumers will stop playing before spending all of their sunk, in-game wealth. This sum of unspent wealth is expected to be bigger than usual when players are enticed to sink larger sums into the game. In other words: Players are expected to have larger sums of money in the bank when they eventually quit.

Improving the Player's Experience

The perceived value of an item is naturally important if you want players to engage in microtransactions, but other factors can facilitate the player's decision to pay, too. The following suggestions aim to build an overarching frame that facilitates microtransactions, while also increasing the perceived fairness of the trade.

This means that the suggestions do not touch upon the utility of the assets themselves, but rather look at other elements in the game that have an influence.

Some games have premium items for sale, but the interviewed players were largely skeptical towards these transactions. The reason is that they threaten to tilt the perceived fairness of the game, because established players fear that newcomers can buy their way to success:

"I don't think they would like [expensive, powerful items] very much. Because then it means that you can be better than me, [just] because you have a bigger wallet." (Peter)

It therefore seems sensible to include effort-related rank in the game and require a certain rank for the premium items, as also suggested in other design analyses (such as one by Oh & Ryu). The rank requirement means that a buyer has to play for a while before he can use the asset. This system both diminishes the influence of outside wealth on game balancing and also gives the player a tangible reward for advancing in the game.

Limitations to the player's purchases can thereby become a part of the game's reward structure or even the main rewards in themselves. To further increase the perceived fairness, the non-paying players should be able to obtain the premium items for free if they complete difficult tasks. It theoretically enables all players to compete equally, which is something that the players sought:

"I already felt that a small difference [between paying and non-paying players] was ridiculous, so if the benefit [to the paying player] was greater then I would see [the microtransactions] as even more of a scam." (Anders)

These free premium items could be extremely rare, and for example still require regular paid maintenance from the player. In this way paying and non-paying players can compete equally, and payments would only relieve the player for large time sinks, which is a benefit that is valued by the players:

"Grinding is really boring [in Silkroad Online], so [players] pay to avoid it." (Anker)

Restraining the Player

During my interviews it became apparent that all my respondents had experienced some degree of restraint or self-control issues where they had problems managing their own time consumption. This overconsumption might be beneficial in the short run, because players will be deeply fascinated by the game, but it also results in a high attrition rate of players:

"The game would consume too much time to me. I was in a pro guild in oGame. I quit because it was me or the game." (Dennis)

It was not unusual that the players had left the game cold turkey and deleted their accounts. These quotes reveal a general problem that often -- in the words of the respondents -- is equated to drug abuse, although with some ironic undertone. A large number of respondents had quit their player accounts solely due to restraint issues.

This is a serious loss as they actually enjoyed the game, but felt that they had to enforce this restraint on themselves. The importance of this factor is further underlined by the fact that the interview questions did not address restraint, but that the respondents did.

A good use of designed restraint is seen in the game Pardus, which is a browser-based sci-fi game. The player accumulates action points that are spent traveling and trading and can only accumulate up to 5000 action points. Additional points beyond this are wasted.

This limits the amount of interaction per day, and a premium account only allows the player to accumulate up to 5500 action points, which in effect just gives him more freedom to schedule the play sessions. This design forces a greater restraint on the player, while still enabling the player to get engaged with the game.

It is important not to employ excessively strong restraints either, for example limiting interactions to a few times per day, as they can limit the player's ability to get engaged in the game and have fun.

Silkroad Online

The Value of Friends

In the interviews the players assigned great weight to social bonds within a game, as for example:

"What keeps people playing is the obligation to other players." (Lars)

It is commonly accepted that having online friends motivates players to play more, but does this also cash out into a greater willingness to pay for microtransactions? Several of the interview respondents had in fact bought goods because of social obligations or peer pressure:

"It is pretty much like [in] my experience: If you want to play with the big boys, you have to pay." (Mads)

This makes it crucial to facilitate social connections between players, for example in the form of guilds, chat rooms, or short-term groups. However, some games, such as Evony for example, require the player to pay a small fee for posting a message in the chat room.

This reduces the player's ability to produce social connections and even though it might produce some revenue for the company, the method seems counterproductive. To motivate the production of social obligations, the players should gain benefits from socializing with other players, and not be punished financially for trying to.

Conclusion

Microtransactions are becoming more prevalent in the business models for games, either as the exclusive or a partial source of revenue, but the transition is not without problems. The goods must be designed to both offer a strong value proposition for the potential consumer, while not alienating the player that does not purchase the goods.

I hope to have shed some light on the methods that can be employed to secure more satisfied consumers, who are presumed to be more willing to continue engaging in microtransactions.

The key lessons are 1) to balance the relationship between paying and non-paying players, 2) balancing the transaction conditions that are expected from a virtual good and a real-life good, for example rental terms for in-game items. Furthermore it is important to create a good game where players can have fun with other people, but that is in no way exclusively tied to microtransactions, of course.

Sources

Thaler, Richard: "Mental Accounting Matters" pp. 183-206 in Journal of Behavioral Decision Making, vol. 12, 1999

Oh, Gyuhwan and Taiyoung Ryu: "Game Design on Item-selling Based Payment Model in Korean Online Games" pp. 650-657 in Situated Play, Proceedings of DiGRA 2007 Conference, University of Tokyo, 2007