What started as an idea passed on from Microsoft in 2005 has become a widespread problem for today's gaming industry. The birth and evolution of microtransactions are among the most controversial aspects of this video games today, with more and more developers taking advantage of the business model. Nowadays, seeing certain developers not take advantage of this money-making strategy is more shocking than when they do. While the criticism towards this model has been exceedingly negative, it seems microtransactions continue to loom over the gaming industry.
The concept of purchasing a full-price video game only for players to notice they haven't received the complete product hasn't fared well with most people. Yet, the engagement with microtransactions suggests consumers enabled this method. So, who's to blame for the boom of monetization in video games?
Microtransactions have become a large part of the gaming space in recent years and have evolved continuously into something bigger than they were originally. Through battle passes, loot boxes, or just old-fashioned microtransactions, the success that developers hoped would come out of this method is undeniable. Nowadays, even the simple task of navigating video game menus entices players into purchasing in-game items with real money.
Microtransactions: Problematic History
Microsoft launched Xbox Live in 2002, an online platform that enabled players to purchase DLC released by game developers. In early 2005, Microsoft had created the concept of microtransactions for developers across the industry to use. In 2006, Bethesda releases the first-ever form of microtransaction in the history of the gaming industry on that platform. The developer released two horse armors in Elder Scrolls IV: Oblivion for $2.50, which were deemed too expensive for an in-game cosmetic item. While consumers were okay with the concept of microtransactions at first, the idea of paying anywhere between 3-4% of the full price of the game they purchased didn't sit right with them.
The cosmetic item was released as a test to see how players would react to the market; however, Bethesda would continue releasing new content in the form of microtransactions despite the negative backlash. "We're not going to make any knee-jerk decisions based on it [the armor] being available for five hours. We'll see what folks think and put out a few others we have planned and figure out where to go from there", at the time-VP of PR and Marketing Pete Hines stated. Nevertheless, the horse armor would become the ninth best-selling DLC in Oblivion and was purchased continually for more than two years after release. Other developers took notice of this shift in the industry and begun moving in the same direction.
Game franchises like Assassin's Creed would emphasize heavily on monetizing later on, and it's not the only one. The next significant shift for monetization was in 2008; the iOS store was instituted with apps and games using microtransactions as their primary funding source. Three years into this evolution phase, iOS apps made over $3.6 billion in revenue, over 15 billion downloads, and 80% of that revenue was due to mobile games. The iOS store continues to grow with xCloud coming this year. Suddenly, developers from the gaming industry succumbed to the same method to capture the same success.
A game worth noting in the discussion of microtransactions in today's gaming climate is Grand Theft Auto 5, specifically the online aspect GTA Online. In 2018, MarketWatch reported that GTA 5 earned Take-Two Interactive $6 billion in revenue so far. Understandably, a chunk of that making was based on game sales, but GTA Online's microtransactions contributed to the remarkable sum. After all, Shark Cards have become a crucial part of the online experience, with almost every single item being locked by in-game prices. Most notably, vehicles and businesses are costly, and players must grind endlessly only to get the bare minimum. The alternative is spending USD 99.99 to get $8 million GTA dollars. While that sounds like a lot, it isn't, as GTA Online's high-end vehicles, businesses, nightclubs, and aircraft can cost between $2 million to $10 million. Keeping in mind, that's only the base model of said items.
Another example of a controversial game was Middle-Earth: Shadow of War, as the game featured a predominant problem of microtransactions and loot boxes at launch. As the protagonist, players are able to recruit an army of Orcs. Orcs were purchasable with real money via loot boxes, and while they weren't required at the start, towards the end is when they become integral. After the main story, players had the choice of either forming and leveling up a powerful army of ridiculously high-level Orcs by foregoing a method of grind that put players into an endless loop, or pay real money and retrieve the Orcs that way. After this, the game was criticized and accused of being a "Pay to Win", especially since it locked the endgame behind a paywall. Several months later, developer Monolith Productions announced it would drop its real-world money microtransactions due to the negative impact the game received.
Loot Boxes: Widespread In-Game Problem
Loot boxes offer a mystery box containing a randomized gift that players can earn through game progress, in-game currency, or real money. These boxes can range from costumes, gear, or game-specific loot. In most cases, the gifts that players receive can only be obtained through loot boxes, but in some cases, alternative methods of purchase are available. Many developers separate loot boxes by rarity, the rarer being more expensive, but ensures players a high-end item as an incentive to spending more. An example of this can be found in Tom Clancy's Rainbow Six Siege, which sells players alpha packs but doesn't specify each pack's rarity. Instead, the more players pay, the more packs they receive, but there's also a big chance of receiving standard items or duplicates.
Loot boxes generated more than $30 billion in revenue in 2018 but have become far more controversial not just for gamers but also for governments worldwide. The issue of loot boxes has been closely surveyed by governing bodies in many countries now, as the line between gambling and loot boxes continues to get thinner. The primary issue is that a connection between loot boxes and youth gambling addiction has been determined, according to the U.K's National Health Service (NHS). NHS mental health director Claire Murdoch demanded that loot boxes come to an end as they are "setting kids up for addiction by teaching them to gamble."
The U.S. also acted when the issue of monetization continued its predatory hunt on young audiences. United States Senator Josh Hawley created a bill that protected young audiences from anti-consumerism. The bill saw loot boxes and pay-to-win microtransactions banned in games played by minors altogether. In 2018, the Federal Trade Commission (FTC) began its investigation into video game loot boxes, which immediately resulted in many developers shying away from the practice.
Perhaps one of the most controversial acts of anti-consumerism came from EA in 2020. EA had begun advertising FIFA microtransactions in a toy catalog targeting young players, an act that sent waves across the gaming industry. It's worth noting that EA did pull the advertisement, but it was only after players and media unified to voice their opinions on the matter. To make matters worse, the ad wasn't simply showcasing microtransactions but detailed, for kids, how to purchase FIFA Ultimate Team card packs. In 2020, EA unveiled its financial reports, which revealed record numbers. EA's sports franchise titles had generated a total of $1.49 billion through the Ultimate Team platform, which saw a $120 million increase in 2019's revenue.
In-Game Microtransactions Moving Forward
To say that monetization is going anywhere, at least for the foreseeable future, would be fiction. There's little hope for the abolishment of monetization altogether. Still, seeing governments, media, and the consumers unify to tackle a serious problem means there's hope for a better future. While certain gaming companies will take advantage of this method every step of the way, it's important to note that consumers hold a lot of power to counter this issue.
Monetization has accelerated in the gaming industry, which means that as the industry advances, especially with a new console generation, consumers need to be more careful than ever with how they spend their money. It's not to say that supporting indie developers isn't right; that's perfectly okay. However, when a Triple-A developer compromises their game quality but prioritizes monetization, that's a clear breach of trust between the consumer and the developer.