How microtransactions are changing the video game business

24 million dollars in profit and more than ten million downloads in three weeks: the video game Diablo Immortal is a resounding success. At least in appearance. Because on the Metacritic site, where Internet users evaluate the quality of cultural products, the blockbuster from Blizzard Entertainment studios and NetEase displays the pitiful score of 0.3/10. The low score is explained by the impressive number of microtransactions to be carried out to advance in the game, at the origin of an outcry from the players. Coats of arms to buy, upgrades to acquire or even powers to unlock… The game is free to download, but can be very expensive afterwards. According to the YouTube channel Bellular News, it would cost 110,000 dollars to play the best character possible. A sign of the crushing new weight of microtransactions on the business Video games.

“Without microtransactions, the video game industry is dead,” said Julien Pillot, economist at Inseec. Why such a development? “We are in a universe where the industry has become mature, explains the teacher-researcher. It is concentrating, there have been a lot of mergers and acquisitions in recent years.” Industrial groups are getting stronger, and the costs of blockbusters multiply -up to 200 million dollars for a game, excluding costs marketing, according to the economist. “The business model of these big budget games ties up work time and capital for years. This is a huge business risk. Today, with two consecutive business failures, you are going out of business. To be able to continue to feed this model, we need games that take less time to develop and that are based on microtransactions. These games will bring you recurring income and will not be very expensive.” Something to reassure investors.

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In 2020, the giant EA made 29% of its revenue via in-game microtransactions FIFA Ultimate Team. Julien Pillot explains this success: “The players are ready to pay several times small sums, so that it is as painless as possible. And in the end, we obtain a ticket which is much higher than what they would have spent in one time.”

Different practices on phone and console

Guillaume Jamet, publishing director at Plug In Digital and Dear Villagers, produces 10% free games to download but financed by microtransactions, on a model freemium. These are the ones on mobile; those on PC and consoles remain paying for purchase: “On mobile, people are used to not buying their game. On PC, it’s the opposite. From one platform to another, players have different practices.

The publishing director does not plan to introduce microtransactions in its paid-for-purchase games on PC and consoles, and is proud of it. “The big players make games sold for 60 euros or more, and the player then has to go back to the checkout for microtransactions, he gets annoyed. This crystallizes the anger of the players.” The French giant Ubisoft has thus integrated microtransactions into its game Assassin’s Creed Valhalla, attracting the wrath of some players. Contacted, Ubisoft did not wish to respond to Challengesbut recalled the internal implementation of a “fair monetization” model, which aims not to alter the experience of the player who does not wish to pay additional money during the game.

The loot boxes at the center of controversy

Criticized, microtransactions cover a wide variety of practices. The economist Julien Pillot details them. ‘There are the microtransactions’pay to win. The best items in the game can be found in microtransaction stores.” Therefore, the more you pay, the better you perform in the game. Next comes the model “pay to skip” which reduces the construction time of a building for example. Guillaume Jamet, who uses it in his mobile games, notes: “There is a point of frustration where the player will want to resort to the microtransaction. The challenge is to place it well. If you put it on too soon, the player leaves. If you put it too late, it does not need to pay.” Other microtransactions consist of paying to customize the appearance of the character that one embodies. “These are the microtransactions best accepted by players, justifies Julien Pillot. They don’t like that other players can get the better of them with the pay-to-win where the pay to skip, which are the equivalent of doping.”

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Conversely, the most criticized microtransactions are the loot boxes. The player buys a virtual lucky bag at a certain price, without knowing what he will find there. Similar to games of chance, these practices have even been banned in the Netherlands and Belgium. The game Diablo Immortal is therefore not marketed there. Contacted, Blizzard Entertainment and NetEase, the studios behind this game, did not respond to Challenges.

“Intervening would contribute to demonizing publishers”

In June 2022, UFC-Que Choisir gave EA Sports formal notice and arrested ten other video game publishers on the loot boxes, with 19 other European consumer associations. Raphaël Bartlomé, legal manager at the association, explains: “If it was a system where we paid a lot to have the best character, everything would be fine. But there, we don’t know what will come out of the box“. He denounces a system that is based on the attention economy: “Cognitive biases are exploited. You must not use the player’s desire for pleasure to make him spend”. UFC-Que Choisir calls for the banning of these boxes under the age of thirteen, the end of the exploitation of these cognitive biases, and asks publishers to display the price in euros when buying a loot box – and not the price in the game currency, bought itself in euros.

Socialist Senator Jérôme Durain challenged the government and the Online Gaming Regulatory Authority on this subject in 2017. He says: “I had a minor son who was playing, I was looking at my bank account, it was scrolling!” However, the senator remains wary of possible regulation: “I think that self-regulation is preferable to regulation imposed by law. The community of gamers expresses its hostility to these practices via social networks or debates on forums. Intervening would contribute to demonizing publishers”. A point of view shared by economist Julien Pillot, who is annoyed: “If you prohibit loot boxescollectible card sleeves, is it over?”. He does, however, launch a line of thought: publishers being aware of the transactions made by each player could suspend microtransactions for players who overspend by addiction.

With microtransactions, financial benefits “out of proportion”

Despite the criticism, microtransaction games continue to abound. At the end of June 2022, the 343 Industries studio announced that it was studying the possibility of implementing microtransactions in Halo: The Master Chief Collection. The game was released in 2014 but still has thousands of players online. A jackpot for the industry? “A game with microtransactions that becomes a hit worldwide will bring in more than a classic model game, recognizes Guillaume Jamet. If you sell a million games at 60 euros, you earn 60 million and that’s it. The microtransaction game will continue to rake in revenue for years to come.” But the publishing director at Plug In Digital and Dear Villagers remains skeptical of its indispensability: “The games freemium require a lot of investment. For example, advertising expenditure is necessary. It is not such a virtuous model, because there are enormous risks.” A calculated risk for some – it seems – who do not hesitate to abuse this practice even if it means offending gamers.