Yesterday, I had a conversation with a friend who wanted to understand the nature of online game purchases a little bit better. While I understand the general processes in my head without much trouble, explaining online games and microtransactions to a non-gamer is actually rather difficult.
That doesn’t mean I’m going to leave a friend without the requisite knowledge, of course. To that end, I’ve created this primer of sorts on microtransactions, using some of my own terminologies, for the sort of person who doesn’t really play games.
When we refer to commerce in this day and age, we usually think of the exchange of money or credit for good and services. In games, there is also commerce on numerous levels, with each sort of transaction allowing for different goods and services to those playing the game.
There are two sorts of transactions one would typically think of when it comes to games: the purchase transaction and the in-game transaction.
In a purchase transaction, a consumer who wishes to play a game, either through ownership of the game or acquisition of a license to use the game software, pays a fee (in cash or credit, online or in the real world) before he can acquire the means necessary to play that game.
With in-game transactions, we refer to the transactions within a game that allow a user to acquire items, equipment and services specific to that game. This necessitates paying a fee comprised of that game’s particular currency in order to complete the transaction. Whether it comes in the form of in-game gold, gil, zenny, or megabucks, these are simply virtual goods that, under specific circumstances, are not actually traded for any form of real-world currency.
Examples of purchase transactions include the use of Philippine Pesos or US Dollars to purchase a game like Diablo II. Using the currency within Diablo II, namely gold, to purchase weapons, armor, and potions is an example of an in-game transaction.
So far, this is all easy to understand, but complexity arises when we realize that there are other ways by which companies can earn revenue from games. There are a variety of ways in which games in this Internet-connected reality we live in can foster additional revenue, and that is mostly done through a set of transactions that are commonly known as microtransactions.
Unlike purchase transactions or in-game transactions, the word “microtransactions” is a blanket terminology referring to the use of real-world currency (again, either through cash or credit, though usually credit) to acquire goods, services, or additional game content for a game one is already playing, The term is known a microtransaction due to the current trend for microtransactions to generally, though not always, cost less than the price one would pay to acquire the game or continue to gain access to it.
If you remember the example earlier about using in-game gold to purchase weapons and armor in Diablo II, you’d expect in-game gold to have no real-world value. The truth, however, as a result of games growing increasingly more connected to the internet is that currency, goods, and services within a game can have a real-world monetary value assigned to them that can also be affected by market forces.
Many types of microtransactions exist at present due to the nature of games in this day and age, but for non-gamers (and probably concerned parents who don’t know how microtransactions work), an introduction on some of the broad types of microtransactions would be in order.
First off, there are direct microtransactions. These microtransactions are basically an exchange of real-world currency for a specific good or service within a game, or for additional content that is either locked away as a result of the game’s code (thus meaning you’ve paid real money for a key to unlock the additional content) or added to a game after that game’s release.
Direct microtransactions is really a broad term I’m using to refer to a wide-range of potential microtransaction types, but it simplifies the process simply because this sort of microtransaction describes the means by which one acquires a specific good or service while (usually) supporting the developers of a game or an entity connected to the company that developed the game being played.
An online role-playing game like World of Warcraft allows for the purchase of in-game pets, flying mounts, or character renaming services for a fee: this is a direct microtransaction. Most games on mobile devices such as the iPad that do not require a purchase transaction (and are thus touted as being free to download and begin playing) use direct microtransactions to unlock the full game and all its capabilities. Some games on personal computers and consoles (such as the Xbox 360 or PlayStation 3) which have purchase transactions also get additional game content delivered through the console or computer’s connection to the Internet after launch, and these require the use of one-time credit card transactions (which are direct microtransactions) to download and play.
There is a second type of microtransaction that is a little easier to define, but a bit more difficult to peg in terms of its overall legitimacy as a microtransaction. These are what I’d define as currency microtransactions.These types of microtransactions are microtransactions in which a player would use real-world money to purchase the currency required to create an in-game transaction. Now, while in-game currency is also a form of virtual good, I’ve set it aside as its own microtransaction type due to how this particular form of virtual good can be used legitimately by certain game developers and unethically by certain companies.
Let me give an example of a both currency microtransaction types. Legitimate currency microtransactions occur in a free iOS game called Tiny Tower. While the game itself is free, the game allows players to use the credit cards connected to their iTunes account to purchase an in-game currency known as Tower Bux, which can be used to speed up the construction of an amenity in-game.These legitimate currency microtransactions are the main means by which the developer gains revenue from their game, allowing them to continue developing more games.
Unethical (a loaded word, but I lack a better word to replace it with) currency microtransactions are commonplace in certain massively multiplayer online role-playing games such as, again, World of Warcraft. Certain companies employ people to acquire the virtual currency of a game like World of Warcraft in order to sell the currency to players for real-world money. In some cases, these companies will try and gain access into people’s game accounts to take virtual currency away from other players in order to sell it online. Very little of this real-world money goes back into funding the development of the game, and the experience of play is somewhat diminished by the encroachment of gold sellers into the virtual space.
Non-gamers, including those responsible for children who are gamers, would do well to reflect upon the implications of microtransactions on real-world wallets. Younger gamers who do not pay attention or who do not understand what microtransactions are can fall prey to unintended purchasing sprees, often on the parental dime.
One well-known report among gaming circles is the story of one Brendan Jordan, who racked up a 1000-pound bill on the console service known as Xbox Live. There was nothing illegal about the purchases, and while the mother of Jordan wants the game companies to bear some responsibility for the mess, it can be argued that game consoles have protections in place to prevent minors from accessing purchase-based microtransaction services.
In any event, non-gamers and parents should be more mindful of what games these days can and can’t do, and what capabilities the technologies of today allow. Ultimately, this will keep misunderstanding at a minimum and proper parenting at the ready.