June 29, 2022

Yes, Microtransactions Are A Problem.


So with the outpouring of frustration over the addition of microtransactions in Shadow of War: Middle Earth, one line has kept cropping up.

Hell, it’s a line I myself have inadvertently reinforced despite the knowledge I am about to impart. It’s a line based on a fundamental truth but one with no logical outcome, an A+B=C situation where the calculation consists of the numbers 1, 2 and 74. The line is, “Video games cost a lot to make. With falling software sales, microtransactions make up the shortfall in profits.”

Whilst it may be true that video game production costs have been spiralling out of control for at least a decade now, one must point out that the genuinely logical outcome of that problem isn’t in reaming the consumer base for more of their money – but to make sensible, realistic judgements of sales and then to budget for those predictions accordingly. There are surprisingly few games which have the kind of long-term sales curve of the likes of Grand Theft Auto V or Pokémon, titles that regularly seem to creep back into the sales charts years after their actual release. In general, not always but as a whole, the majority of video games get a short window to make as many sales as they can before the next shiny disc or the next card-based flavour of the month drops in our laps and attentions shift to the new thing.

If a game goes dramatically over its allotted budget, you can’t just move the goalposts. As we’ve been learning, the market -is- smaller now than it was even a few short years ago. There are fewer people buying video games and the associated hardware, and the reasons for that are myriad and varied. If you have a market where the general sales average for a video game is two million units, predicting four million shows either an extreme confidence in the product or, more realistically, a complete misunderstanding of the prospective market. Knowing what your market is likely to buy up is critical; too little, and you have a drought. Too much, and you drown the market. It’s a tight-rope that requires a light touch and a deep, nuanced understanding of the state of the industry at any given moment in time.

If a company can’t keep within sensible boundaries – they lose money. If they keep losing money, they go bankrupt. Cold, harsh and unforgiving that might seem but there’s no greater truth that repeated failure comes at a high cost.

So why do I not believe that microtransactions are the solution?

Whilst it’s fair to say that people can, and do, buy into these loot boxes and pay-to-win potions and weapons – that has knock-on effects for other video games. If a game releases at a $60 price tag, and has a $30 season pass and additional content that adds up to an extra $30, that’s $120 from one consumer. Awesome, you’ve made money from one person. Good for you. The problem there, however, is by charging them $60 for the extra content – they can’t go out and buy another video game. Your projects gain, in a sense, is another projects loss. And in an industry which is seeing software sales drop year-on-year, the fact that more people are being encouraged to splash out the cost of at least one additional big-budget video game on in-game bonuses is starting to look and feel like cutting off the nose to spite the face.

The industry relies on video games sales to judge what they can get away with in terms of predicted sales, and therefore how much they can conceivably spend on a project or indeed, whether they can afford for a project to run over time in order to make sure it is a quality product. If the end cannot justify the means, you ship the game out and do your best to hope people buy the game to bring in the additional cash to fix the damn thing. This is the sort of thing that has been consistently and repeatedly biting big publishers in their bottom line. Some recent examples of this are No Man’s Sky, For Honor and even Resident Evil 7 – predicating that the free DLC featuring series original Chris Redfield could be developed and funded largely by sales of the game in question, a prediction that a near vertical drop in sales since the launch window has failed to materialise.

If people aren’t buying games, it throws the system off a bit. So what you have is a handful of games doing their damnedest to funnel increasingly large portions of money out of a shrinking market through microtransactions, which means a consumer has to choose; buy the additional content for a game they’ve bought and probably got to a point where they’re invested in it. Or to buy another video game.

Typically, the industry relies more on the former than the latter in their calculations – which is a wise move, as once a person is invested in a video game they are far more likely to invest more into said video game. As I’ve said before, there’s a reason that World of Warcraft was (and still sort of is) a giant, unmovable behemoth that strangled the MMORPG market. Once Blizzard had captured those people, they weren’t going anywhere else. Why would they? After hundreds of dollars spent on subscription costs, expansions, pets, mounts and not to mention the personal time investment in the game in question, why would they ever want to go somewhere else and start again from scratch? That hurt dozens of MMORPG projects, and it’s not a shock or a surprise that there are increasingly fewer attempts to shift the mountainous Blizzard-crafted behemoth now than there were a decade ago. Only a few found a niche in the shadow of Azeroth, but their success again only exacerbated the problem. Once those people had invested enough time and money… they weren’t going anywhere either.

People stick to what they know and love. It’s a terrible truth that many of us are so ‘conservative’ when it comes to our gaming tastes that we rarely venture outside already well-established walls (be that individually or overall as a franchise – heck, I am waiting to buy Story of Seasons: Trio of Towns, a MarvellousAQL product, rather than Natsume’s latest Harvest Moon because I got into the whole farming-sim thing under MarvellousAQL’s direction!), but it’s what makes microtransactions and season passes good business sense. A person who bought your game is likely to stick with it, and once you’ve got them through the initial $60 investment, chipping away with $5 here and $10 there isn’t going to drive them away. The first hurdle has been cleared, the largest hurdle – the initial purchase. After that, all you have to do is offer things that they might want, need or be tempted with in order to funnel the contents of their bank balance your way.

Long-term, this centralises expenditure on only a handful of video games. As the MMORPG space found, once Blizzard was taking almost all the money, billions of dollars in fact, it was hard to convince people already invested to throw away the money and time they’d spent to come on over to your snazzy new world. That strangled new games, driving the majority to freefall into the Free-to-Play model – and many since have even there failed to make any real money. Once a market is invested enough in one game, or a few games, new entries into the fray are surplus to requirement. They’re not necessary, because the player base is still largely invested both personally and monetarily in something else. They’re being catered for. What reason do they have to go and buy another game?

Think of it as a river – once you start diverting off the water for your own means and ends, there’s less water flowing down the rest of the river. Depending on the size of the diversion, this can slow the river down considerably. A few small diversions here and there may not have a major impact, but once those diversions become large and pronounced enough, or plentiful enough, the river downstream becomes smaller, dryer and it’s those downstream who end up suffering from the destruction of the ecosystem.

The industry has been greedily siphoning off huge chunks of money to shore up their egregiously bloated budgets, but they’ve failed to see the ruination that their actions have caused – a shrinking sales pool. Their answer, perhaps demonstrating how utterly clueless and blinkered they are, is to continue to do the same thing others have been doing that may be one of the reasons there is a sales decrease happening. Which further decreases sales figures. See the pattern emerging here? Once a company has your money, they don’t care about the ecosystem. At least, not until their own future games release into this space and they stand bewildered, wondering what happened. What happened? YOU HAPPENED, you moronic big-publishing oaf. You took money out of the market. This shrank the market. Then someone else did the same to try and make their costs back, and before long that big lake is reduced to little more than a freaking puddle.

Once, this wasn’t very common and the industry wasn’t too bothered, indeed, they might have thought because there were no effects at the time that hey, this is free money. But it’s not free money. It’s money that the industry would have otherwise seen used on other video games. The games industry is an ecosystem like any other market; the long-term damage caused by microtransactions and season passes is only now slowly and by degrees being seen.

There is no such thing as “free money” – that money is coming from somewhere. The games industry – driven by greed, hubris and desperation in equal measure – has constructed the tools in which I believe it will effectively engineer its own demise. So when down the road the likes of Capcom or EA or UbiSoft start to cry about games not meeting sales quotas, or generating enough money, remind them that this is the market they built. A place where more and more games have been allowed to divert a substantial portion of the cashflow their way because they’re more important than the overall health of the market, more important than the balance of the ecosystem. Their success must be guaranteed – their bottom line must be balanced, and to hell with the rest.

Yes, microtransactions can make up for huge budgets – that’s hardly a surprise. But there’s always a price to pay. All actions have their consequences. So when a publisher turns around and acts like they deserve the additional money because their big expensive game is so big and expensive that it deserves to have more money – we need to calmly, as a group, do what many are doing to WB Interactive right now. That is turn to them, nod a little and then extend our middle fingers in one gigantic show of flipping the bird, and then calmly lean in and whisper softly into their ears…

“Maybe you shouldn’t have spent so much money on this then.”


I'm the big cheese here. Comment, subscribe, direct waves of hate at me - all the same. Just hope you've had some partial enjoyment here!

View all posts by Kami →

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.