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How Micro-Transactions Will Shake Up iPhone

Spanner Spencer writes "Talk to iPhone games developers, and the feature they're most excited about in the new iPhone 3.0 software is the ability to do in-game micro-transactions. And while you might wonder if this is just an excuse to get iPhone gamers to dip into their wallets even more often, it's actually a hugely positive thing for several reasons. Downloadable content, virtual items, subscription billing and fast-track social advancement are some of them, so Pocket Gamer looks into a bit more depth about what you can expect on the micro-payments side once iPhone 3.0 debuts."

46 of 148 comments (clear)

  1. Re:Looks like attack of the shill by Culture20 · · Score: 5, Funny

    Fuck iphone.

    There's an app for that!

  2. Huh. by fuzzyfuzzyfungus · · Score: 5, Insightful

    Why do none of those "hugely positive things" sound hugely positive, or even positive at all? Am I a bad, bad failure of a consumer, whose mere existence is dragging our economy down, or are the writers of TFA a bunch of koolaid-drinking frigtards who are cheerleading the advance of some of the worst aspects of traditional phone service into the realm of applications?

    Probably no need to answer that.

    1. Re:Huh. by eln · · Score: 4, Insightful

      It's hugely positive for the business types who keep pushing micropayments as the thing that will save the Internet, despite the fact that they've been tried several times before and have been a dismal failure. Since iPhone users tend to be used to shelling out small amounts of money frequently anyway with iTunes and the App store, it might be more successful there than it ever could be on the Internet at large, but it's not a positive development for the consumer no matter how you slice it.

    2. Re:Huh. by EastCoastSurfer · · Score: 3, Insightful

      It's positive for a couple reasons. First, the consumer gets more choice about the premium content they want to buy. Sorta like buying individual cable channels as opposed to packages. Second, the developer now has more options on how to sell said content. They may be able to take more chances offering small pieces of content to determine a market prior to offering a full package. In general, I think more choice is always a good thing.

      Don't think of the free apps going away, but instead you having more options on potentially buying some of the paid for apps.

    3. Re:Huh. by internerdj · · Score: 4, Insightful

      So long as I'm getting reasonable stuff for my $X that is fine but when they realize that people will pay $0.0x for little bits there are a handful of things that will charge $X for the initial app with $0.0x * 20 to actually do anything useful with the app. While I don't have an iPhone, I dread the day when I have to wander around Tamriel stark naked because I refuse to pay real money for a suit of virtual armor.

    4. Re:Huh. by ionix5891 · · Score: 4, Insightful

      positive, choice, premium, packages, options ,content, offering, market

        wow did that just read like a marketing spiel

    5. Re:Huh. by Renderer+of+Evil · · Score: 5, Insightful

      ...but it's not a positive development for the consumer no matter how you slice it.

      I disagree, and here's why.

      In-game, in-app transactions free up developers to provide applications which are modular and go beyond widgetizing the phone with bunch of buttons. For example, instead of releasing 10 different apps for language instruction and ranking somewhere in the 10,000's on the list of downloaded apps, you could just make one well-designed app and then provide language packs for a fee. Currently there are lots of single-purpose apps from the same company localized to fit a specific language. This is bad for the developers because they don't have a chance to reach critical mass on the platform since their offerings are balkanized - Spanish, French, and German versions are all competing against one another and other similar apps. Their combined total downloads would propel them to the top but since these are treated and sold as separate apps you lose exposure.

      This would also do away with "LITE" applications and get you the real thing where you could purchase the full game after playing the demo level. It's really a redundant step to download iFighter Lite (an awesome game!) and then go back and purchase the full iFighter game. The in-game transaction saves you the step of going through delete > re-download > sync steps and puts you back into action.

      Will some developers abuse this by releasing shitty content? Absolutely. But the market will sort these out in time.

    6. Re:Huh. by mattwarden · · Score: 2, Interesting

      > but it's not a positive development for the consumer no matter how you slice it.

      Hey, you said that very definitively, so it must be true. And I agree with you. I'm tired of the "business types" trying to make money off me. Just give me everything I want for free, already. Is it that hard???

      Well, just playing devil's advocate here, let's consider whether micropayments really a logical step to make the Internet better for consumers. Contrary to popular belief on the left side of things, the payment of goods is not a way for rich people to become richer, it's a way for consumers to get what they want. Without payment for goods, there is no signal to business about what items consumers demand and what items consumers don't want, and by how much consumers demand A over B, and how much producers should be willing to spend on the creation of both A and B.

      Micropayments are difficult to pull off logistically, but the bottom line is that eventually content will be price-differentiated. You will pay for better content. There will be plenty of content for free. Surprisingly to many people, this is not a new model... see radio, television, books, magazines, newsletters, and pretty much everything else.

    7. Re:Huh. by forand · · Score: 2, Insightful

      I was under the impression that your "LITE" application example was banned by the in App purchasing methods offered through Apple. That is if an App is free then it is always free, if an App is paid for THEN it can charge you more.

    8. Re:Huh. by keytoe · · Score: 2, Informative

      This is currently true. While nobody can publicly discuss the exact terms of the 3.0 payment model without breaking the NDA, you can draw some conclusions by looking at the spirit of the current contracts. In short, the 'free means free' part of the payment model is to keep you from making a free app and then charging for it in some way other than the app store. In effect, they're saying that you must Give Unto Caesar or GTFO (or go free). Trying to get around giving Apple their cut is a good way to be stuck in the 'unexpected delays' black hole.

      With 3.0 offering in-app micro payments, you can now Give Unto Caesar with every transaction - so why NOT offer a lite->pro upgrade path? Apple still gets their tax, you get a cleaner process, the user is a lot less confused, and you can modularize your app like a good little developer. Everybody wins.

  3. I hope it's clearly marked and confirmed by Paul+Carver · · Score: 3, Insightful

    I like my iPhone and I have 70+ apps installed but most of them are free apps that I'd live without if I had to pay for them. Only a dozen or so are paid apps that I actively tell people "you should get this, it's outstanding". I've paid for a couple of games but I would be really upset if I "accidentally" purchased something even if it's only a couple of dollars.

    I hope Apple makes very sure that "micro-transactions" don't let developers try to keep slipping their fingers into my wallet quietly.

    1. Re:I hope it's clearly marked and confirmed by fuzzyfuzzyfungus · · Score: 5, Funny

      It isn't "slipping their fingers into my wallet quietly" it's "Enabling premium content acquisition seamlessly"...

    2. Re:I hope it's clearly marked and confirmed by tepples · · Score: 5, Informative

      I hope Apple makes very sure that "micro-transactions" don't let developers try to keep slipping their fingers into my wallet quietly.

      As I understand it, $0.00 apps can't call the microtransaction API. That's why you can't buy new books in Amazon's Kindle app; you have to close it and open Safari.

    3. Re:I hope it's clearly marked and confirmed by alvinrod · · Score: 3, Interesting

      It would be fairly trivial to get around this restriction. Just sell at $10 version of the Kindle app that gives you $10 store credit towards your first purchase. Of course people might balk at the $10 initial cost, so it may be more effective to sell it for $1, or whatever Apple has set as the minimum cost.

      If you're going to be making a considerable amount of micro-transactions, the initial cost is probably worth the added convenience. Of course, Apple could always make exceptions as it may have done in the past.

    4. Re:I hope it's clearly marked and confirmed by davester666 · · Score: 2, Interesting

      "That's why you can't buy new books in Amazon's Kindle app; you have to close it and open Safari."

      Um, no. The current TOS doesn't permit Amazon to include purchasing functionality in their application (that and there currently is no microtransaction API for Amazon to call).

      Going forward, Amazon is also more likely to want the whole pie, instead of having to share 30% of it with Apple, particularly if another article I read is true, where Amazon is paying the publisher a percentage of the MSRP while charging the customer a lower price...

      --
      Sleep your way to a whiter smile...date a dentist!
    5. Re:I hope it's clearly marked and confirmed by tattood · · Score: 5, Informative

      I hope Apple makes very sure that "micro-transactions" don't let developers try to keep slipping their fingers into my wallet quietly.

      Yes, it is very clearly marked with a popup window that asks you "Do you want to purchase (insert item here) for (insert price here)" window that you have to confirm or deny. They showed an example of this in the 3.0 press conference when they announced it.

      --
      WTB [sig], PST!!!
  4. Social Pyramid Games by Culture20 · · Score: 4, Insightful

    So now all those Pyramid Scheme style games (Mafias, Ninjas, Vampires, Knights) can be real Pyramid schemes, with Microtransactions filling in the $$$ glue?

    1. Re:Social Pyramid Games by Krneki · · Score: 5, Funny

      Hmm, that gives me an idea.
      How about a Nigerian adventure game, where you have to pay every time you make some progress toward your 10M$ reward.

      --
      Love many, trust a few, do harm to none.
  5. Re:Looks like attack of the shill by Anonymous Coward · · Score: 4, Funny

    Yeah, but it was never approved by Apple...

  6. Positive? by Millennium · · Score: 4, Insightful

    And while you might wonder if this is just an excuse to get iPhone gamers to dip into their wallets even more often, it's actually a hugely positive thing for several reasons. Downloadable content, virtual items, subscription billing and fast-track social advancement are some of them...

    Um, in what way are any of these things positive? I look at these things and see only scams: more ways to nickel-and-dime gamers to death.

    1. Re:Positive? by TinBromide · · Score: 2, Interesting

      why are you withholding it from my 'Motherboard' which I purchased?

      Because its a motherboard, not ram, and I don't ever remember ram coming standard with individual motherboards from ASUS, DFI, or Gigabyte (or other makers), ever. Bad analogy, try again.

      Here I was thinking that because games had a fixed price ($50 or $60USD) and gamers had a fixed amount of money to spend, they might try to get the most value for their buck. If a sizable portion of a game's design budget goes into content that isn't part of the release or cost of the game, why pay full price for that game? (Yes, most console games that release DLC still cost $60, and the budget that goes into the making of that DLC comes from the pool of sales, its not like they set aside the marketplace profits soley for the creation of paid DLC).

      While yes, I am aware that expecting a company to try to please its consumers can be construed as entitlement, once upon a time, if something was developed for a game by the devs and they could fit it in, they tried to put it in, or released it later with a patch (Like multiplayer maps for quake 2). Unlike your bad Mobo/ram analogy, once upon a time, the $50 cost of admission was (and in some cases, like the orange box, still is) enough to cover everything that was created for a game that was polished, rather than having to charge for simply because someone says they have to.

      If the devs say that they've moved on after release and don't want to release anything new, that's cool too, I'm not expecting companies to better their product after release, just not knee-cap it prior to release.

      By the way, I know that nobody is forcing me to buy DLC, and in a lot of cases, I don't, but in halo 3, its getting harder to play online because I don't have all the new paid content, so the value of my game is decreasing because I refuse to pay its upkeep (being the flashing name in a party with the text "The following players do not have the content required" gets old). So while they're not "forcing" me to pay more, it would be nice if they didn't rub my nose in it and heavily imply that if I wanted to continue to enjoy the game fully and not be a party pariah, I should fork out more money.

      --
      Is it sad that I am more likely to recognize you and your posts by your sig than your name or UID?
  7. Re:Looks like attack of the shill by ionix5891 · · Score: 4, Funny

    iFuck?

  8. This will end badly by MacAnkka · · Score: 4, Insightful

    These micro transactions have some ok poential uses, but some of the uses are just down-right silly. Like that FPS game Apple demoed, where you can pay some tens of cents to get a rocket launcher to get an advantage. I, personally, can't wait to see the Slashdot story about a kid who racked up tens of thousands of dollars of debt with his parents credit card by trying to be the best on a silly FPS server.

    1. Re:This will end badly by tattood · · Score: 4, Insightful

      That's why the parent doesn't give the kid the full access to the credit card. They buy him the iTunes gift cards in pre-determined amounts. The kid gets $20 worth of music/apps/in-game-credits, and once they have been spent, there are no more until the next birthday/etc. You hear the same story about kids racking up thousand dollar cell phone bills from sending 500 text messages a day. If you give your kid a toy that requires payment to use, YOU, the parent, need to control how much can be spent on it.

      --
      WTB [sig], PST!!!
    2. Re:This will end badly by harryandthehenderson · · Score: 2, Insightful

      If a parent is dumb enough to give their kid full, unsupervised access to use their credit card then they deserve all the charges that get racked up.

  9. Takes me back by Norsefire · · Score: 4, Interesting

    You are out of lives.

    Pay 20c to continue.

  10. Abuse? by TinBromide · · Score: 3, Interesting

    How long until we start seeing "lite" apps with all the buttons, but there's a tiny bit of text at the bottom "If you would like to click this button, you agree to pay $.25". /tinfoilhat

    Back to reality though, I really like that the iphone app store was once a place where dev's could make a halfway decent program based on a really cool idea and make money as a reward. It also felt like the golden days of the old shareware scene before it got stale and people started depending on it and expecting it to pay their bills. While I have yet to pay for an app on the itouch, there are a few I might have if I had an iphone with it's mobile connection and gps (the geocaching app would be the first on my list).

    However, I really don't like the idea of a microtransaction for iphone gaming. I think that the microtransaction system in gaming implies that someone has a heavy emotional attachment to the game and the majority of microtransaction items are prestige items. In order for those two criteria to work, you need two criteria: A game that someone will play for more than a few hours before buying another $1.00 game and persistent multiplayer. I.E. Why buy a coat for a character that you will play on a plane flight and never again? Especially if the only way that people will see it is if you show them the character on your iphone. ("Oh, that's nice, you paid extra for him to be lime green!"). By the way, if you're thinking of buying extra levels, how many labyrinth lite instances have you seen on iphones? How many full versions? The only difference is more levels, but I haven't met anybody that felt the need to buy more levels for a novelty game.

    That and the other major types of apps that i've seen IT and casual people use are information access type apps (urban spoon, website readers like for fmylife, directories, directions, recipes, etc) and resource access type apps (ssh, remote login, and other IT based monitoring/remote tools), nobody is going to pay a quarter every time they want to look up directions or login to thier server, and they'll probably just buy the full app and expense it or eat the cost for making their lives "easier". So the only thing I can see is a feature list a la carte, i.e. if you look at the list of features that differentiate a lite and full version of an app, and you only charge a small amount per feature, you might get more money in the long run due to people not wanting everything, but only picking out what suits them.

    --
    Is it sad that I am more likely to recognize you and your posts by your sig than your name or UID?
    1. Re:Abuse? by Tokerat · · Score: 3, Interesting

      I.E. Why buy a coat for a character that you will play on a plane flight and never again? Especially if the only way that people will see it is if you show them the character on your iphone. ("Oh, that's nice, you paid extra for him to be lime green!").

      One of two things will happen. Either people are dumb enough to do it and make it profitable, or game companies will find out quickly that it's the Apple App Store, not the PS3 Network where 12 year olds kick and scream until their parents let them download the MGS1 DLC Pack for LittleBigPlanet for $1.99.

      If you hear DLC and you think "Oh, that must mean they're going to sell minimal games and then charge for every little piece of the full game and that's it" then it's a good thing you're not a game developer, because your customers would buy your games exactly once and be done with you. Now, I'm sure we'll see this happen to SOME extent, but people aren't stupid - we don't like screens littered with advertisements, we don't like paying by the minute (even though you can't DO that very well with micropayments - it's not auto-pay you know) if there is a similar application that is a one-time purchase, and if you want us to subscribe to something it better be freakin' phenomenal.

      --
      CAn'T CompreHend SARcaSm?
  11. The case for micropayments by SuperKendall · · Score: 5, Insightful

    A lot of people here can see no good from micropayments.

    However, it allows the developer to make the initial game much cheaper, and thus gives you more of an ability to try a game for less - essentially you could replace the lite/full version with a single version that let you buy more levels.

    Then as a gamer, if you liked it you could buy the rest of the game... or perhaps mid game you could decide the level design had gone to pot and buy no more.

    in-game payments is just a tool, and like any tool it can be abused - but that does not mean the tool should not exist and cannot be helpful. In the end the companies that treat the consumer with respect will make the most of it.

    --
    "There is more worth loving than we have strength to love." - Brian Jay Stanley
    1. Re:The case for micropayments by TinBromide · · Score: 2, Informative

      I don't think that the slashdotters are afraid of individual dev's abusing the power, but instead when apple (which is a company with shareholders and a responsibiltiy to share holders and has a history of wishing to turn a profit) decides that they want to follow other content market administrators and limit what dev's can give away for free.

      --
      Is it sad that I am more likely to recognize you and your posts by your sig than your name or UID?
    2. Re:The case for micropayments by Dracil · · Score: 2, Insightful

      I remember the good old days when that was simply called a free demo.

    3. Re:The case for micropayments by Red+Flayer · · Score: 2, Interesting

      Then as a gamer, if you liked it you could buy the rest of the game... or perhaps mid game you could decide the level design had gone to pot and buy no more.

      Sounds great in theory... but in practice, I'd hate it. Nothing like ruining a sense of accomplishment by forcing the player to add cash to continue. Paying $X for extra lives makes more sense... just like most coin-op videogames.

      If micropayments HAVE to be done, then they need to be done gracefully. For games, I'd love to hear from some Korean gamers who have been getting hit by the micropayment hammer for a while now... what is their take on it?

      I think, so far, most people have gotten used to paying for access to content (via ISP), but not actually paying for the content online. This is a recurring issue re: micropayments, re: paywalls, etc. At some point we all have to realize that all this content is not free to produce, and we might have to start paying for it, like it or not.

      I know that I, personally, will change my browsing/app habits to minimize cost... and the web as we know it will go the way of the dodo.

      --
      "Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
    4. Re:The case for micropayments by TinBromide · · Score: 2, Informative

      I apologize for that. Here's the proper link.

      --
      Is it sad that I am more likely to recognize you and your posts by your sig than your name or UID?
  12. More like by liquiddark · · Score: 4, Funny

    iDontFuckPleaseHelpMe

  13. This is NOT a bad thing. by Tokerat · · Score: 5, Insightful

    1. You are warned everytime an App charges you. I don't understand the people acting like "micropayments" means "happens automatically without your knowledge".

    2. If you don't like the payment model a certain App uses, vote with your wallet. Stop using it. Developers are only going to make money nickel-and-diming you all if you LET THEM.

    3. Free Apps will not go away. It isn't like people said "Oh gee, I wish we could only charge $0.50 for this. I guess we'll give it away instead of making any money". Those Apps are free because whoever made them had the ability and desire to release them that way.

    So, calm the fuck down.

    --
    CAn'T CompreHend SARcaSm?
  14. Isn't this going backwards? by webdog314 · · Score: 3, Informative

    I thought the whole point about the App Store was that you could BUY an app (as in, ONCE). This is very different than services such as Verizon's Get It Now, which allows you to get a SUBSCRIPTION to an app that you will pay for again and again each month for as long as you own the phone (or cancel the subscription). I understand about being able to "try" something to see if it's worth sticking with, but come on, most apps for the iPhone are a buck or two. You pick up a dozen for the cost of lunch. And how long is it going to be before the average "micropayment" starts creeping up to near what the greater percentage of apps cost now (.99)? Poof! You're Verizon again.

  15. Re:The more things change... by Norsefire · · Score: 3, Interesting

    MMOs make you pay regardless of if you die or not.

  16. I like microtransactions. by Sowelu · · Score: 2, Interesting

    I was really pissed when Bitpass went down. Sure, I only ended up using it for a few webcomics passes, but it sure was worth it, and I wish I'd had more to spend it on. I like the system. I like being able to buy things for a quarter. I don't think that this is going to unleash a horrible torrent of games that need micropayments, IE "Want an extra life? That'll be five cents". However I sure wouldn't mind returning to the old shareware model where the next three episodes of Wolfenstein or whatever costs a small amount.

    As long as my micropayments go toward something semi-permanent (more levels) instead of something transient (an extra life), I'm totally cool with it--and I'm also cool with other people liking the transient stuff. There's not enough ways to pay small amounts of money for things that are worth small amounts of money, so this sounds good to me. I'll always have my choice to play games that just don't use that feature anyway.

    ...Of course, I don't even HAVE an iPhone, but I like this on principle...

  17. Microtransactions lead to macrotransactions by bickle · · Score: 2, Informative

    Mircotransactions would be fine if they didn't morph into macrotransactions. Xbox Live is a great example. Games and add-ons were routinely priced at $5. A little pricey, but doable. Then a few started charging $10. But these were just larger, premium items (sure...). These days, a $5 item is a rarity, most are $10, with a few reaching to $20. We will get to the same situation as we are with full price games (if we aren't there already), where you can pay $69-79 for a special edition game, and still not have all of the content (Resident Evil 5, Street Fighter IV). Micropayment, blech. Mine are going to be so micro that the publishers will never see them.

  18. Chill Out - you just like to complain. by Anonymous Coward · · Score: 2, Insightful

    Wow, I have noticed it for a while here on Slashdot, but the only reason that people seem to comment is to complain (this too may be considered a complaint). Cheer up basement dwellers, as an iPhone developer writing games aimed at young children I can assure you that its not as easy as people are making it out to be to profit off of little fingers making little mistakes. ...If it were so, people would abuse that and apple does a ton to make sure that no one gives them a bad name, many times even at the cost of not allowing very innovative and cool games to the market, or even very legit charity applications.

    Apple plays a mean game of 'cover you ass' folks.

    later,
    -MG

  19. Re:Looks like attack of the shill by ben0207 · · Score: 2, Funny

    Right, I'm going to need a fleshlight, a dock connector, the SDK and a few days.

    --
    cmd-q.co.uk - some sort of stupid fucking internet bullshit
  20. Re:The more things change... by stefanlasiewski · · Score: 2, Interesting

    MMOs make you pay regardless of if you play or not, after you sign up.

    --
    "Can of worms? The can is open... the worms are everywhere."
  21. a rose by any other name by AnAdventurer · · Score: 3, Insightful

    Suppliers call it "micro payments", Savy consumers call it being "nickle and dimed".

    --
    6.8SPC TR of 550, l xwind at 6, drift rt at 26" drops 77". AT has 503 ft-lbs at 1403 fps. FT 0.86
  22. Re:The more things change... by redJag · · Score: 2, Interesting

    On the flip side, they don't usually charge you when you DO die :) Other than in-game penalties, that is (which could be argued to translate to real life dollars, time is money, blah blah freakin' blah!).

  23. Everyone is missing the scam by Elwood+P+Dowd · · Score: 2, Insightful
    1. make a game with decent content
    2. market it successfully
    3. sell a bunch of copies
    4. neglect marketing
    5. update app, locking users out of previously accessible content
    6. reap microtransactions
    --

    There are no trails. There are no trees out here.
  24. Re:Looks like attack of the shill by mdwh2 · · Score: 2, Interesting

    Not sure why you were modded troll - it's got worse than daily now, in that there are two Iphone stories on the front page today that are nothing more than rumour or speculation, and a third story that probably wouldn't have been worth covering if it wasn't for the Iphone connection.

    sLashdot - iPhone rUmours fOr nErds, sTuff tHat dOesn't mAtter?

    Incidentally, I recently used my Motorola V980 to access a website - I'll have to submit a news story, as that's obviously news worthy, right.