On Microtransactions

The Elephant in the Room

Let’s get this out of the way first: video games are getting increasingly expensive to make. And MMORPGs never were cheap to begin with. And going back to the old method of just mandatory subscriptions and nothing else, does not work anymore. Any game that tries doing that today, eventually has to face the decision of either going free to play - or shutting down. The only games that can successfully do that, are the biggest, largest most dominant ones. The kings of the hill.

Explaining that is it’s own - very lengthy topic - so I’m just gonna drop a few links here, if you want to learn more:

The cost of games (Raph Koster)

Some current game economics (Raph Koster)

On “Pay To Play” Or, MMORPG Business Models 101 (Raph Koster)

The Second Best Thing

Now that mandatory subscriptions are just out of the window for 99% of games - what other options are there? I mean assuming, you don’t want to go full loot-box gacha skin-gambling pay-to-win exploitation.

I think, the second best thing after mandatory subscriptions, are probably optional subscriptions - and a microtransaction cosmetics shop for the free players. When done right, of course.

Any monetization can be done wrong. But some monetization strategies like free-to-play with microtransactions do get messed up significantly more often than subscriptions. And there’s a very strong reason for that.

Free to play is often quite bad from a player’s point of view - and it’s easy to see why. If the game makes most of it’s money from item sales, it has to sell those items. And that often means that the item shop gets shoved in your face, hard. It also often means that the game is intentionally designed to be annoying or unfun in certain aspects - so it can then sell you something to remove that pain point. That’s how they increase sales - but it’s also how the game becomes worse, because of being f2p. F2p could be a lot better if they skipped that… but there are very strong financial incentives to do these bad things, to make more money. It’s like a vicious circle that you can’t escape of.

But with subscriptions, there is a strong financial incentive to make the players happy and keep them happy. Because what you don’t want, is to for them to cancel their subscriptions. The incentive is not to monetize harder to make more money - but to attract more people into becoming subscribers. And that’s like a virtuous circle - the incentives push the opposite directions. To developers, subscriptions are more desirable than microtransactions. The subscription happens every month. It’s more reliable, more calculable. Item sales on the other hand are far less predictable - and require constantly adding new, better, more desirable items.

So, if a game has both - optional subscriptions and an item store - in order to keep their subscribers happy and to attract as many subscribers as they can, they have to excempt those subscribers from all the free-to-play downsides. And that means, all of the pushiness and annoyance and unfun that you often see designed into free-to-play games, has to not apply to subscribers at all. Subscribers should just get a few free credits to spend in the item store each month - and otherwise be able to completely ignore it, and anything else that f2p brings.

Being skipable like that, also means that these f2p mechanics cannot made as central to your game design, as you often see in the bad kind of f2p games. Thus the bad effects f2p has on the game, have to be limited. If they aren’t, then you’re not doing it right!

So, to a player that means, if a game offers both a premium subscription and a free option - if you just get the subscription, the game will feel like a full subscription game to you. If you don’t want the f2p stuff, you can just skip it that way.