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Are Micro-Transactions the Future of Online Game Business Models?
Last week we discussed news of Sony Online Entertainment's unveiling of a store that would allow players to purchase in-game Everquest items for real money. Massively spoke with John Smedley, SOE's CEO, about the system and what their goals were. He made the point that they were limiting sales to things that wouldn't unbalance the game. "They're fun and they're convenient. That's all they are. We're not selling power. There are a lot of respectable viewpoints on this, and a lot of reasonable people can disagree on them. Our view is that nothing here is gamebreaking." Edge Magazine has a related piece about Mytheon, an upcoming action-strategy game that will rely on micro-transactions to support its otherwise free-to-play business model. The game's producer suggests that micro-transactions are "a model that really gets us closer to the end user, and that's the way things need to be in the future, online."
Small fees for one-time things are showing up in a lot of online games these days, no question. Guild Wars, City of Heroes, World of Warcraft, all support one-time fees for things like extra character slots, server transfers, and cosmetic (or complete) respecs. These are things that don't affect gameplay, are uncommon purchases for any individual player, but do improve player enjoyment (they also enhance revenue something fierce). Should they be free? Sometimes yes, sometimes no. It makes sense for Warhammer Online to offer free server transfers right now to help balance populations, but in general players are closely tied to the community on their individual servers - so it makes a certain amount of sense to regard it as a value-added feature. Likewise, City of Heroes hands out free respecs like candy, but if you still can't get enough of them... sure, it makes sense to charge.
And then there are games that are free to play... they have to have some revenue model. Games like Puzzle Pirates demonstrate that a game can be fun, balanced, and robust, while still selling all manner of things that affect game play. The key with that approach, I think, is to use a dual currency model (as Puzzle Pirates does, as Iron Realms pioneered back in the '90s) that allows players - who never pay a cent - to trade with other players for all the benefits of spending money.
Of course there's also the Korean free to play model, or the model common for Facebook games where it is "free to play" but you have to pay in order to really enjoy the game (or worse, there is a subscription but you still have to engage in microtransactions in order to really enjoy the game) - I think this is the model players don't like, and fear every developer is planning on when they say free-to-play or microtransactions. I think developers and publishers know players hate this model, and are aware of the backlash they'll see if they use it; that doesn't mean they won't ever try it, but it does mean they'll tend to tread carefully and consider other models first.
On the other hand, that doesn't mean subscriptions are going away, because clearly a lot of players like to just pay a subscription, know how much they need to budget on a game, and know they don't risk a fevered drunken night of transactions running up their credit card bill. It's unlikely to go away, but it is going to have to start sharing the limelight with other models that address the needs of different segments of the population.
--Matthew