How not to destroy your Playerbase with Microtransactions

Since the early 2000s, the gaming industry has gone through a great transformation, especially when it comes to the business model. Lots of game publishers have shifted from one-off game sales to the microtransaction model. Instead of parting with huge chunks of money to acquire a video game, gamers can now download their favorites for free or at significantly reduced prices. Eventually, nothing is truly free, so game publishers try to get them to make in-game purchases for particular virtual products to offer a better experience or in some cases give a competitive edge while helping their businesses remain profitable. Such purchases are referred to as microtransactions.

Gamers’ Point of View

As much as game publishers see microtransactions as a great way of keeping the buy-in prices low or non-existing, thus recruiting more players into a game, a significant section of the general public doesn’t see this as the ultimate solution. “I already bought the game. why would I need to pay more?” A player wonders.

Besides, many gamers see the “Pay to Win” model as an unfair approach that gives an advantage to rich kids. To progress to a certain level of a game, gamers have to grind for very long hours. Alternatively, they can opt to throw in some amount of money into the game by purchasing some in-game items to progress faster (hello Battlefront II). This gives players a disproportionate advantage over their opponents who can’t make the purchases or access the items freely.

On the Other Hand…

It takes millions of dollars and months of hard work for a game developer to come up with a revolutionary video game and release it to the market. The work doesn’t stop there; there are updates to be made on the game regularly or on an occasional basis, servers have to be maintained, bugs need immediate solutions, and cheats need to be kept at bay.

All those maintenance activities require game publishers to dig deeper into their pockets. Can all this be sustained without continuous revenue from a game? Definitely not. As such, the developers have two options to choose from to stay afloat: make substantial one-off game sales or generate sales revenue little by little through microtransactions.

When it comes to one-time-purchase = full-priced games, high acquisition costs are a turn-off to many gamers. A couple of bad reviews from the media and their sales numbers are doomed. Eventually, the publishers find themselves in a situation where they can’t even help their businesses break-even. So, what next? Close up shop? Perhaps there is a game you loved playing, but since it is no longer supported, the servers are shut down, you can’t play it anymore…officially! Now you can guess what might have been the cause.

Therefore, for the publishers to profit off of their games, they have to find a way to bring more players on board and maximize gameplay time. Now, this is why free-to-play games use microtransaction models. With such a model, gamers can try out games for free, even play through them without actually paying a dime. Of course, if they want the cool stuff and a less grindy experience, eventually they are going to have to reach into their pockets.

Since such purchases cost small amounts of money, they are a friendlier option to gamers as compared to full-priced game purchases. The aim of a microtransaction model is to attract as many players as possible in a game and provide them with the resources they need to actively participate in the game for the longest time possible. The longer they stay in the game, the more opportunities they have to basically bond with it, ultimately leading to better chances for made in-game purchases.

Microtransactions have had a very significant impact on the video game industry, with more game developers joining the microtransaction model bandwagon. Publishers are enjoying more profits from microtransactions as compared to what they (used to) get from one-off game sales. For instance, Riot recently revealed that in-game purchases account for nearly the entire revenue it generates from League of Legends. More money flowing into the video game industry creates more stability and allows developers and publishers to plan games for the foreseeable future.

The Balance Point

Microtransactions are very popular these days, no doubt about that. However, this model can do more harm than good when not used wisely. Customers shouldn’t feel like they are being overexploited. At the same time, a game business is expected to generate sufficient revenues for sustainability and profits, both of which are key motivators to a developer or a publisher. This calls for game developers and publishers to find a fine line, where both customers (the gamers) and the business side (the publishers and developers) stay happy. This is how they can hit that sweet spot:

1. Avoiding pay-to-win models

Some publishers push microtransactions extremely heavily, requiring a player to spend lots of real dollars for them to unlock progress in a game. This severe restriction conflicts the gameplay time maximization strategy, which is the cornerstone of profitability in modern-day gaming. Besides, such a pay-to-win model makes the game lose its intended entertainment purpose, leaving it feeling like a gambling thing. This is a turn-off for many gamers.

2. Proper proposition

As a game publisher or developer, you should time your proposition well. Do not disrupt the gaming experience. Randomly popping and irrelevant ads will only leave gamers annoyed and disgusted. Besides, you should ensure that gamers are able to access any help they may need to progress in the game without having to switch to another window or screen. This is where Fridai, the Gamer Assistant comes in the picture.

With the gaming assistant incorporated into your game, gamers don’t have to pause or exit as the voice assistant provides the necessary guides and information. The assistant also helps you to tailor the right commercial ad or sponsored content to keep every gamer engaged, depending on their motivation level. As such, they can simply enjoy the undisrupted gaming experience.

3. Providing every necessary information on time

As mentioned above, you should let your customers spend more time within the game by ensuring that any guidance or product they might need is available for them right within the game’s user interface and on time. Again, this is something that Fridai focuses on. With the gaming assistant, gamers are able to buy skins, credits or even conveniently from your swag store while still playing,soon as they need them!

4. Tailoring your proposition to the gamer

You should tailor your sponsored content to address the specific needs of every gamer who’s interacting with your game. The majority of the gamers who see ads that are personalized to their online behaviors are likely to respond positively to the respective calls to action. Fridai is a great tool for this targeted approach as well. For instance, when a gamer loses a game, through the gaming assistant, you (the publisher) can offer them the right tool from your store to help them succeed the next time. Or you can just simply reward success with rightly timed discounts on gamer specific items.

In a Nuthshell

Microtransactions can be a great source of revenue for publishers and developers, but only when it is used wisely. They should establish the right balance between maximizing in-game purchases and customer satisfaction. Fortunately, with Fridai, it is very easy for game publishers and developers to achieve this balance.

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Fridai - Project Ambitious case study

Our case study shows how the game “Revn” has been using Fridai as an integrated solution and the results generated.

It is a useful read if you want to understand more about how active game time, pre-, in- and post-game engagement affects revenues.