Micro-transactions, DLC and IAP – a primer.

Recently I saw a facebook post about a friend mentioning that he was seeing people complain about MicroTransactions in Dead Space 3 – people were complaining that this is a full price game, so why should they have to spend more $ on stuff in game?

And it’s a valid point – why should they?

Before we get to that though, I’d like to talk a little about what MicroTransactions, DLC and IAP actually mean from a developer point of view, and how they are used to generate cash for the developer.

So, MicroTransactions is a catchall term for any in game purchase the game offers you – required or not. The idea is that the game offers you a really easy way to spend very little to gain some item or experience, or potentially to just buy a virtual currency (there’s a long post about virtual currencies coming up at another time).

IAP is In App Purchase – generally this is where you buy an item (E.g. Binoculars, a new weapon, extra shields etc) that aids / enhances your game playing experience. The concept here though is that you are buying something that the game already has within it – all you are really doing is just unlocking something that is already there. The game may allow you to earn it through game play, but is offering you a way to purchase it early, so it’s there for your use before you have enough game time to earn it.

DLC is, by definition,extra content. This is content created posted the game shipping – and almost always requires you to actually download something new. New levels, a new skin, new sounds, an new mission etc. Usually games that offer this are designed so that new content can be created later. DLC is purchased in the same way that items are – either by direct money purchase (where you go through the Apple IOS purchasing system / google IAP purchasing system) or by in game currency (e.g. XBox Live Points). If a virtual currency is used, some of that virtual currency may have been earned in game or been awarded – it means that there is a cut out between the item you are getting for the game and the means by which it is paid for.

So the whole concept of MicroTransactions is that the actual cost, to you, the player is minimal and it appeals to the impulse purchase. The idea being “It’s only $.99 and I can build castles almost instantly, instead of waiting an hour. A dollar – my time is worth that”. Now this only works if the purchasing method is what we call frictionless – ie extremely easy and as close to one click as is possible. Both Apple and Google have spent a lot of time getting their purchasing systems down to as little interaction as possible, although to some degree some is necessary just in order to stop people accidentally buying $99.99 worth of items.

Ok, so we’ve defined it. Now we need to talk about how it’s used, because that has practical bearing on the point under contention – ie is Dead Space bad for including this?

Generally, MicroTransactions are used in one of three ways. Friction, blocking and enhancement.

Blocking is the term used when you hit something in the game that requires a purchase in order for you to proceed. The most obvious the case is “You’ve finished levels 1 & 2, now you have to pay to play level 3″ or “You’ve played free for 4 hours, now you have to pay for another 4 hours” or “Now you have to buy a paid account to continue”. Lots of websites take this route – where you get 10 free emails before having to pay for a full account in order to continue. Blocking can be indirect and less obvious though – for example, I am playing a hunting game. I am given 50 bullets up front, but once they are gone, I cannot shoot the gun any more. I may, perhaps, have been awarded another 10 by the game for marksmanship, but effectively it’s cost me 50 free bullets to buy me 10 more. Once those are gone, there is no way to play this game except by buying more bullets. That’s a blocker, because there is simply no way around it. No matter how well you play, you will run into this wall.

Friction is where the game employs either completely artificial or inherent systems that slow down game play and progress. For example, waiting for your crops to grow in Farmville, or putting down Tiny Towers while you wait for the building to earn enough to add another floor. Both of these employ time as a friction – you are barred from progressing until the time goes past. But you can pay to remove that restriction and progress instantly. Time is not the only way that games employ friction – another, more sneaky, way is to limit equipment usage by count – you get to use the scope on the sniper rifle 5 times before it’s useless and you have to buy another one. The whole point here is to impede player progress – while still giving them enough game play that they just pay to continue the experience.

Now I mentioned Artificial or Inherent systems – there is a difference between the two. An inherent system is one that is part of the game world, is understandable and obvious to all. Running out of ammo in a shooting game is an inherent part of game play. Running out of gas in a driving game is another. Its understandable and obvious and a natural part of the game. Even, to a certain extent, some of the time friction is understandable – it does take time to build a building or to grow crops.

Artificial friction is restrictions and restraints that are 100% imposed by the game developer for no other reason that to make people pay. The example of the sniper scope is such – sniper scopes do not only work 5 times then break. You buy one once and it should work forever. But since this is a high value item, the developer chooses to limit usage and effectively put a tax on.

Enhancement is where you offer an item for sale that enhances the experience, but that is strictly speaking not required for game play. It may add purely visual enhancement (“I have gold armor! You do not!) or it may add actual game value (“My gold armor blocks 2x more attacks than yours does”). This is where you are buying a physical usage item that other people do not have. It’s different from friction in that friction is about the act of playing the game; enhancement items are about changing the event of playing. Friction is “I have overcome progress inhibitors” – enhancement is “When I _do_ play, my playing is either more effective than yours, or I am visually more unique than you are.” Friction is “I don’t have to wait for my crops to harvest” – enhancement is “I used a fertilizer that is not generally available, so when my crops harvest, I get 2x the return.”

It’s a definite but subtle difference – it’s possible to play the entire game with purely enhancement but no bypassing friction methods, for example.

So, we’ve defined the terminology. What of it?

Well, this is really where the rubber meets the road. The definition and balancing of MicroTransactions is where most games fail, and why IAP has such a bad rap with so many gamers – and it’s why people are genuinely upset over MicroTransactions in Dead Space 3.

The problem is this – the mobile market has taught many gamers that games should either be free or cost $2.99. The trouble is that this is not economically viable in terms of production costs. Games are not free to make and build. They cost time and effort and skills, and you need to sell a lot of $2.99 games to make up the often tens (if not hundreds) of thousands of dollars sunk into the development (for example, the IOS darling Infinity Blade, from Epic, has over half a million dollars worth of assets in it. Think about that. Half a million dollars. Who has that amount to invest in a game selling for $2.99?).

Plus, this kind of sale is a once in a lifetime sale. You sell that game exactly once – the player gets to give you money once. Even if they think the game should have sold for $10, they can only give you $2.99, and only once. Obviously there needs to be a mechanism whereby the player can continue to contribute.

What makes this even more imperative is the Android Piracy problem. The fact is that, because the platform is so open by design, it’s incredibly easy to pirate apps and games. Unless your game uses an external game server to run the game, chances are you WILL be pirated on Android. The better the game, the more the piracy will occur. It’s just too easy. So again, what is needed here is a way to avoid single point of sale and bring in $ from players over time. Make your game free in the first place and the whole piracy issue suddenly works for you, getting the game into more players hands, instead of against you.

But the problem with all this, as I mentioned, is balance. So many developers are resentful of the fact that they are out on a limb for tens if not hundreds of thousands of dollar, and can’t charge for it. So what they do is make way too many blocking MicroTransaction requirements, or employ too many friction systems, or make those friction systems way too punishing.

Players don’t react well to constantly being asked for money – even if it is in dribs and drabs of $1 and $2 – in order to continue their playing. They also do not appreciate being constantly gouged – as they see it – based on wholly artificial restrictions in the first place.

The best games do it incrementally and have very few, if any blocking systems. Now, friction systems can _become_ blocking systems if the player isn’t skillful enough – the example of ammo replenishment is a case in point. Lets say that the game awards bullets based on marksmanship, and as long as you are over 50% on target, it’s awarding you enough bullets to keep playing. The moment you drop below 50%, it stops awarding you. Too long at a sub 50% level and you’ll run out. Suddenly the friction of being required to be better than 50% has now become a blocking MicroTransactional requirement. This is generally ok, because the player will recognise that it’s is his deficiency as a player that is causing this.However, if it becomes obvious that the game has changed it’s ability for the player to become accurate (suddenly targets are further away, or wind starts moving the bullet trajectory), then all bets are off, since the players ability to make the 50% rate is now affected in ways he cannot compensate for. So while, ostensibly, this is still a friction system, it’s really become a blocking system quietly, behind the scenes.

If this happens too early, players can get disheartened, and they Will Complain. It’s a very tough balancing act.

What’s more, having several friction systems operating at once makes it difficult to ensure that they are balanced. You don’t want 10 of them all hitting at the same time and requiring 10 different IAP buy in’s to continue playing.

Then there’s the aspect of full price games – which is where we get back into the original point under question. Is it ok for a full price game to ask for MicroTransactions? They’ve already taken a full price – $60 – for the game – why am I being asked for more $? Well, in the case of games like SkyRim and the ilk, generally MicroTransactions are for either DLC (in which case this is extra content, so it’s not covered by the original $60) or it’s for enhancements – usually of the purely cosmetic variety. The moment the enhancements make any significant difference to game play – particularly if multiplayer is involved – then it becomes more of a issue to players. I don’t want to buy a game, then get on a Multi-player game and have my ass handed to me by another player with a gun I cannot have in my game because I haven’t spent another $50 buying it.

Personally, as long as the MicroTransactions are for purely cosmetic or DLC, or for small items that aid in single play, I could careless. More power to the developers, frankly.

The moment you introduce something that unbalances the game – particularly in Multi-player modes,- I think someone needs to sit and have a good think.

Destroying an IP’s long term value for a quick buck now is not strategic thinking, but unfortunately, for a lot of hand to mouth developers, this is how they survive. And it sucks.

Anyway, next up is a review of Virtual Currencies – how they work and what the issues with them are, from a developers point of view.

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