Rules for Games: No Micro-Transactions
My #1 Commandment for Kids Games
Well, summer got away from me a bit there, but I’m back! I’ve been having a lot of conversations with other parents, who really want to do best by their kids, but are looking for clear instructions. How exactly can you tell if a game is problematic or not?
To start, I’m going with my absolute, top rule, to which there are basically no exceptions: No Micro-transactions.
What is a micro-transaction?
You probably have some idea of what you think what a micro-transaction is. In it’s most simple form, it’s a small payment you make to play, or to receive some sort of benefit in, a game. Many publishers have been moving towards micro-transaction models for quite a while, but the shift really occurred with the adoption of mobile gaming. There had been micro-transaction games for earlier platforms, especially Facebook games, but the widespread adoption of smart phones really created the foundation for what micro-transactions are today.
Why do publishers use them?
The goal of a game publisher is to make money, that’s really their only obligation.
When a publisher is looking to create a game, how they make money is an important detail, which will greatly impact the fundamental decisions about how the game is designed. Generally speaking, you have two options for monetization: sell access to the game itself, or incentivize spending money for services in the game… some games do both!
When you’re selling game access, specifically selling physical or digital copies (subscriptions are a whole other can of worms), you need to convince your customers that your game is worth the money you’re asking for. This means good reviews, virality, using a familiar IP, etc. Furthermore, the customer will often want to be sure that they’re going to enjoy playing the game, or that they’ll get some amount of time of enjoyment from it. Because of this, the value of the game needs to be evident before the customer buys it. It makes sense that if a game is going to cost $50-70, the customer is going to want to get their moneys worth. To ensure it’s a good purchase, customers may rely on reviews (from friends or other trusted sources), the reputation of the studio, enticing game trailers, and so on. All of this means a lot of money needs to be spent by the publisher promoting their game, getting it in front of reviewers, and importantly, it needs to be a good game to get good reviews. What a ton of work!
Well, what if there was a way around all of that?
How micro-transactions really work
Micro-transactions are a perfect tool for publishers to monetize reluctant customers, while allowing willing customers to spend many times more than they normally would. This makes perfect sense, a $1 investment is a lot easier to commit to than $60, but spending $1 on a micro-transaction isn’t the same as spending $1 on a game. The issue with micro-transactions is that one is never enough.
When I worked in the industry, one of our most important metrics was the time until first payment. This is basically asking, how quickly can we get someone to start buying into a game. Once a customer makes their first purchase, the time until their second and subsequent payments would typically continue to get shorter. There was also a calculated value called the average revenue per paying user, or ARPPU, and like the name says, this is how much money the average paying user is worth over their lifetime. The goal of the publisher is to decrease the time until first payment, and increase the ARPPU. At the end of the day, it’s all about numbers and graphs, players are reduced to aggregate numbers, and as long as those numbers are performing in total how they want, individual players behaviors aren’t really important.
So in addition to your average user, micro-transaction based games have what we called “whales.” These are customers that get so hooked on the micro-transactions that they spend many times more than what someone would on a typical game. When I worked at Big Point, we had a game called DarkOrbit, and an item was added to the game that cost over $1000 worth of their premium in-game currency… and it generated over $2m in just a few days. Our biggest whale at the time was a soccer player who would spend over $100,000 in a year. These whales pay far more than their share, and are only able to do so, thanks to the monetization model. Unless you’re going out to buy 15+ copies of Zelda, you can’t really spend that kind of money on a single game otherwise.
Tools use to monetize
To get customers into the paying user pipeline, publishers will use all kinds of tools, and they know that children are particularly susceptible to them. Scarcity or FOMO are obvious tools, for a short time you can get double the amount of energy crystals, or this special hat is only going to be available for the holliday! There is no actual scarciiy in games, it is entirely artificial, game publishers create artificial scarcity to entice players into paying. It’s incredibly effective, which is why you see it pretty much everywhere.
Another way to encourage conversion is through rewarding players with instant gratification. Buy paying some amount of money (almost certainly obfuscated through a different in-game currency), you can have something now! You see this in farming and civilization buidling games, where it takes a certain amount of real time to complete some task, or you can use some of their premium currency to speed up the process. In these game you almost always will be shown exactly how to spend this currency during the tutorial at the beginning. This is an immediate pipeline to dopamine, by allowing players to spend money to get whatever they were waiting for, now.
Perhaps the most infamous is the loot crate… but I feel like this needs it’s own article, due to it growing as a sales tool outside of video games as well. That said, it’s basically adding a gambling element to their games, by letting customers spend money for a random reward.
So why are they bad for kids?
The very concept of a micro-transaction is the antethesis to developing healthy habits with electronic devices. Children are explicitly targeted by the techniques used, and are less well equipped to resist them. Games convert the real-world currency, into some special currency in the game, which helps obfuscate the spending of real-world money. It’s easy to know what a dollar is, but once you’ve converted that into 120 Crystals, it starts to get a lot trickier. The change of form and language separates the money, from the game, and it just becomes another abstract concept.
Since these games are hoping that someone will monetize multiple times, it’s pretty safe to assume that they’re going to continue to target the player (your kids) with notifications, and other hooks to get them playing. The more they play, the more conversion opportunities they are presented with.
What if I never pay?
As an adult, we may think that we have the willpower to never pay. That is certain true for some of us, but these games are constantly going to test your defenses. Don’t worry though, the publishers have a plan for you too! Depending on the game, you may simply just be bombarded with advertisements, of which you have little to no control over what content you (or your kids) will be exposed to.
If that’s not bad enough, in many multi-player games, it’s important that a large portion of players don’t convert to paying players. This may seem counter intuitive at first, but it’s the un-paid players that provide the value to the paid players. In these games, paying gives you an in-game advantage, and you need un-paid players to use this advantage against (or at least to compare to) to feel like you’ve got your money’s worth.
What isn’t a micro-transaction?
Alright, not every in-game transaction is a micro-transaction. Plenty of games offer one-off purchases for more content (such as additional levels), turning off ads, or tipping the developer. These are generally fine, and in fact, if you, or your kids, like a game, and can pay to turn off the ads, I say do it! It takes a lot of work to develop games, and game developers who add this kind of feature are actively giving you a way out!
Well if you made it this far, I hope that wasn’t too much of a ramble! Micro-transactions are really just about the worst thing, and many other tools used to get kids (and their parents) hooked on games, can be traced back to them. It’s really amazing how pervasive they are, and how brutally effective they can be. I hope that this helps you understand a bit of why they exist, and why they seem to be everywhere. If you do play a game that has them… delete it!