Alternatives to Microtransactions in Games and Apps

Cell phones are ubiquitous these days, as are phone-based games and apps. These activities are colorful, fun, and addictive – if you have the money for an addiction, that is. Most, if not all, cell phone games, as well as some apps such as Lumosity or adult coloring books, are free but have in-app purchases. The in-app purchases are usually tied to premium content or the ability to play the “full” game.

For instance, in Jeopardy World Tour, you can play rounds for “free,” as long as you have virtual cash. To increase virtual cash, you can wait more than 24 hours for your bank to build, or you can purchase virtual premium currency with actual money. Even the best-intentioned game/app users end up engaging in microtransactions more than they mean to.

Microtransactions can be leveraged for cosmetic makeovers (no performance improvement), performance improvements (like critical upgrades or boosts), or for disabling ads.

Note that in-app or in-game purchases, like the ones shown below, don’t classify as microtransactions. Microtransactions are smaller amounts, usually in cents. Some games, however, blur this line by allowing users to do both, microtransactions and larger transactions.

In many online worlds, people who spend a lot of real money actually have a nickname; they’re called “whales.” Whales or not, most players complain about microtransactions, but admit they don’t know an alternative.

Could there, or should there, be alternatives to microtransactions?

P2W vs. F2P

There are two terms used in smartphone gaming: pay-to-win or P2W and free-to-play or F2P. The gaming industry has came to realize that they can make more profits if they don’t charge money for their game (upfront) and instead, rely on microtransactions.

Sometimes, these are just cosmetic improvements like character skins, in which case the game is still reasonably competitive and fair. But in other cases, such as the notoriously P2W Rise of Kingdoms, you can purchase anything, from more troops, more commanders, and more resources to newer technologies, shorter upgrade times, faster troop healing, and so on, via the in-game currency of “Gems”, which you have to buy with real money.

The latter is an example of a P2W game.

Note that a game that has microtransactions doesn’t become P2W. When it starts rewarding players with competitive advantages for real money via those microtransactions (like buying gems and using them to get an upper hand), it becomes P2W.

A pure F2P game is free and has no microtransactions. But barely any popular game is F2P today. The reason is that implementing microtransactions is extremely easy. It’s almost like a subscription service. As even the titans of the IT world like Adobe and Microsoft have moved from one-time costs to purchase their software to a subscription model, it’s hard to imagine why games shouldn’t.

Perpetual money, in smaller amounts, is better for a company in the long term than larger amounts paid only once.

Disadvantages of P2W

P2W games favor whales

P2W games aren’t a level playing field. Some games are so tilted in favor of the whales, for example, that a new player only stands a small chance to succeed or even enjoy the game thoroughly.

I have played games where people used to spend $3,000 on a daily basis during peak events or action, such as kingdom-level war in Rise of Kingdoms that could go on for weeks or during a war league in Clash of Clans, which goes on for seven days.

When whales get an upper hand it starts to look like cheating. It also overshadows true skill and kills enjoyment.

Paying just to keep up

The worst part is that pay-to-win can quickly degenerate into pay-to-keep-up. Perhaps the best example of this is the Activision patent. Activision, a leading game studio, got a patent for microtransactions. The system, technically, is one where the game engine can suggest gear upgrades if you are match-made with players of higher skill. Instead of making matchmaking fairer, now you get suggested the items you can purchase to make up for the lack of the system’s integrity.

Nobody knows the true cost

The true cost of playing a P2W game cannot be determined. It might be easier with certain titles and all you would need is a bit of research, but for the large part, you never truly know what will your ultimate contribution be to the developer’s bank account. Games also become harder as you progress, meaning you need to invest substantially bigger amounts just to keep up with your progress rate.

Unrealistic pricing structures

Mobile games have become too adept at designing the perfect sales tactics to lure players into buying more packs, gems, chests, passes, and so on. The prices can be unrealistically high as a result. Spending $100 for a pack of gems that will last you less than a week in a mobile game isn’t really economical from any point of view. The same amount can go towards actually supporting your favorite developers in a better way.

Can there be a balanced P2W?

Game developers definitely try to balance things because if they only prioritize the whales then they will stop getting new players, in turn stagnating the progress of the game itself and stopping the creation of new whales.

That’s why the example of Clash of Clans is a good one. Supercell, the developer, balances things quite well. Though you can invest money and get an upper hand, there’s still a lot to do if you are a non-paying user. This balance differs from developer to developer and sometimes, the investors in the game decide the level of performance improvement P2W players will receive.

The dishonesty associated with microtransactions

Most, if not all, microtransactions are a sales ploy. More often than not, they tease you a little by giving a free item first. In other cases, they are just psychological tricks designed to dupe you into spending your money, such as an intermediate form of currency (let’s say gems) which dissociates real money from the equation, making you more prone to falling prey to such tactics.

Dishonesty is quite abundant in the case of microtransactions. Developers come up with innovative and genius ideas to force you to buy something, not help you in buying something.

A pandemic of its own, you can find tons of literature on the topic. One particularly scathing review of the “loot boxes phenomenon” is a well-articulated opinion piece by Paste Magazine writer Garrett Martin. He argues,

Loot boxes are a symbol of a larger problem at the core of the games industry, one that will continue to undermine the whole business until systemic change is enacted.

It’s also easy to see how loot boxes and similar phenomena in games can prey on people or children with addictive personalities. As the winning is not monetary, no gambling law is applied to them, but when you think about it, loot boxes or chests are truly a type of gambling.

Games can make the non-transactional route to gaining certain items, upgrades, or gear extremely time-consuming, boring, and repetitive (collectively called “grinding”). When seen as an alternative to endless grinding, microtransactions make even more sense to get a headstart on your competitors or friends.

Are there any alternatives?

Though there are games that are devoid of any microtransactions, most of the popular ones are realizing the potential earnings and moving away from a completely-free model to a microtransactions model. This means all classic games like PUBG Mobile, Mobile Legends, Pokemon Go, Call of Duty: Mobile, and even single-player ones like Subway Surfer and Angry Birds are loaded with microtransactions.

A F2P game is not really an alternative anymore. Games must make money in one way or the other in this increasingly competitive segment. So, what can be a good way out? As it turns out, there are two ways.

Cosmetic microtransactions

Microtransactions that are purely decorative or cosmetic are one of the best things. You spend to improve the look and feel, and perhaps to make other players jealous, but you gain no competitive advantage. This is truly the most holistic approach to making money from a game.

In fact, a Qutee report notes that 69% of gamers find cosmetic microtransactions acceptable.

Blockchain games

With the rising popularity of blockchain, we are seeing a newfound interest in the gaming sphere. Games built on blockchain allow users to invest their time, in-game resources, or other resources while playing the game in order to generate a currency (can be a listed cryptocurrency in some cases, for example). This currency can then be used to purchase upgrades. In this case, the user is both, making money and spending it within the game environment.

Note that the key distinction here is that although all games have an in-game currency, blockchain games have currencies or assets with value.

Given the fact that most casual gamers are generally uninitiated towards computing-related technologies, this topic will require a fair bit of background to make sense.

Many such games exist where you are rewarded with currency simply for playing more. A more optimistic aim of these games is to create a multi-game or multi-asset environment where this currency can be used interchangeably across platforms, such as other games from the same developer. In many cases, you can also trade or liquidate the currency or asset generated out of your work.

One of the downsides of these games (apart from blockchain being significantly more difficult to wrap your head around) is that they require an upfront investment to get started.

A piece of land on Sandbox, for example, costs you an upfront investment. This land (denoted by the token ticker LAND) is then tradable as an NFT (non-fungible token), which users can sell to earn money.

Similarly, in Axie Infinity, you can collect and sell collectible creatures that are a direct result of your investment of time into the game. $3.6 billion worth of trade has already happened in the Axie Infinity marketplace with the most expensive sale being of an Axie that was sold for $820,000 (rarity and stats are among the factors that decide the price).

Side note: In blockchain games, all transactions are publicly broadcast and things are remarkably more transparent about who is getting paid and how much.

It’s safe to say that if everyone can generate the money, then it’s a level playing field, as compared to games with microtransactions, which create an environment that only rewards high-spenders or whales.

Should there be alternatives to microtransactions?

Let’s conclude with the meat of the discussion. A game developer creates a game in hope of financial profits. Even free games start off free because they understand that once players are hooked, they will be willing to pay, even if it’s just a few bucks for a cool skin of their favorite character.

Consequently, it’s safe to assume that alternatives can be expected only if they still allow the developer to make profits. Purchases that don’t make the game unfair or blockchain games where you generate the money you spend are both good alternatives. The developer still makes money without tilting the game in the favor of whales in both these cases.

Apart from these alternatives and F2P games, what else do you think is a good alternative to whale-infested P2W games?

What do you think? Leave a comment.