CNBC — Why The $183 Billion Video Game Industry Can't Quit Microtransactions

[Gamernyc78]

The video game industry cannot quit microtransactions.

In fact, two of the largest video game companies in the United States — Electronic Arts and Take-Two Interactive — now make the overwhelming majority of their money from live-service games, subscriptions and in-game purchases, according to their recent earnings reports.

Microtransactions are purchases that users make inside a game using real money. They show up as subscriptions, virtual currencies, and character customization options, among other examples.

Popular live-service titles such as Fortnite, Call of Duty: Warzone, and Clash Royale were built around this revenue model. Game publishers must provide updates throughout certain game life cycles to retain player attention, which is where the term "live service" comes from. Gamers pay for those updates through season passes or subscriptions.Gamer backlash from the early attempts at in-game purchases caused the video game industry to shift its approach to these subscriptions and bundling purchasable content.

"The industry is really moved to more of a what they call a battle pass system, or some kind of packaging of seasonal content," said Mat Piscatella, executive director of video games at Circana. "Those systems have found much warmer response because I think people are finding that they're getting more value, and more reliable value for their money."

In-game spending has become a high-stakes issue in addition to a lucrative business. Electronic Arts' live-services operations made the company $5.6 billion in its most recent quarter, according to the company's latest earnings report. Epic Games, which created the popular Fortnite franchise, took Apple to court over an in-game payment system that the developer released inside Fortnite in order to bypass Apple's App Store fees. In Europe, app stores and so-called loot boxes are a major focus of tech regulators.

Watch the video above to learn more about microtransactions, the backlash involved, and where the industry goes from here.

 

[Gamernyc78]

This shit is obvious, it some companies would collapse due to their greed and reliance on it. So much greed and companies relying on that extra income and budgets created around projections. We think layoffs are bad now it would be even worse.

 

[Nhomnhom]

I don't think I ever bought any microtransactions.

The biggest problem with games is the huge annount of suckers in the audience with no self control.

All people needed to do was to resist this stuff early on as it was obviously not a good direction.

This shit is obvious, it would collapse. So much greed and companies relying on that extra income and budgets created around projections. We think layoffs are bad now it would be even worse.

I would welcome the demise of any studio that depends on microtransactions to survive.

 

[J_Paganel]

This shit is obvious, it would collapse. So much greed and companies relying on that extra income and budgets created around projections. We think layoffs are bad now it would be even worse.

The problems began 12 years ago, when a number of high-quality projects, and even the entire RTS genre, were destroyed due to a number of negative factors.

Because without expensive marketing, a project may not reach the target audience (hardcore gamers are a minority) and be overshadowed by more high-profile releases.

There were also factors of the boom in online projects, F2P, and piracy.

Because when a player has a certain amount of money and a choice between a premium release, a donation to an MMO\F2P project, or another type of entertainment (cinemas, etc.), only one person will get their money. With the piracy factor, a player can get a premium release for free, and someone else will get the money, where this option is not available.

RTS, more than other genres, began to rely on multiplayer and e-sports, and they got burned. Because the main audience played the single player, they had to rely on DRM, not the part of the game that was interesting to a minority of the audience.

Therefore, a significant part of the blame lies with the audience, which made the wrong choice at the time, thereby building a world where most of the money is generated by F2P games and microtransaction projects protected by online integrations.

 

[Summer Nightmares]

The infinite and continuous growth mentality is cancer.

 

[J_Paganel]

The infinite and continuous growth mentality is cancer.

For many, the hunt for growth and quick profits has already ended with the loss of existing assets that they have been accumulating for decades.

But this has not taught other players a lesson, even Sony has entered this swamp, suffered negative consequences, but still continues to go deeper.

 

[Sircaw]

I don't think I ever bought any microtransactions.

The biggest problem with games is the huge annount of suckers in the audience with no self control.

All people needed to do was to resist this stuff early on as it was obviously not a good direction.



I would welcome the demise of any studio that depends on microtransactions to survive.

While I agree with you on the principle for games make you pay full price, but there is 100% a market for games that give you their content for free.

Poe, for example, offers a quality game server and without microtransactions, they would cease to exist with out them.

 

[Nhomnhom]

Poe, for example, offers a quality game server and without microtransactions, they would cease to exist with out them.

Anytime where I played a game and it transitioned to F2P or added microtransactions I hated it.

I don't even blame devs for taking advantage of all the suckers out there that play games, I blame these people for being so gullible. Every person that buys microtransactions will inevitable regret having done so in the future if they have any sense.

To me if you buy microtransactions you are the equivalent to someone that subscribes to OnlyFans. Why would I be ok being nickel and dimmed and being seen as equivalent to a lab rat?

 

[Sircaw]

Anytime where I played a game and it transitioned to F2P or added microtransactions I hated it.

I don't even blame devs for taking advantage of all the suckers out there that play games, I blame these people for being so gullible. Every person that buys microtransactions will inevitable regret having done so in the future if they have any sense.

To me if you buy microtransactions you are the equivalent to someone that subscribes to OnlyFans. Why would I be ok being nickel and dimmed and being seen as equivalent to a lab rat?

What do you mean good, what an asinine way to think of a company that offers you their base game completely for free, you can play the entire game with out paying a cent.

Its an extremely good business model that works for them and millions of people that enjoy the game, you need to see nuance in different situations and not tar all the companies as all being greedy bastards like Blizzard, who charge you full price for the game then have a ridiculous shop too.

 

[Gamernyc78]

The problems began 12 years ago, when a number of high-quality projects, and even the entire RTS genre, were destroyed due to a number of negative factors.

Because without expensive marketing, a project may not reach the target audience (hardcore gamers are a minority) and be overshadowed by more high-profile releases.

There were also factors of the boom in online projects, F2P, and piracy.

Because when a player has a certain amount of money and a choice between a premium release, a donation to an MMO\F2P project, or another type of entertainment (cinemas, etc.), only one person will get their money. With the piracy factor, a player can get a premium release for free, and someone else will get the money, where this option is not available.

RTS, more than other genres, began to rely on multiplayer and e-sports, and they got burned. Because the main audience played the single player, they had to rely on DRM, not the part of the game that was interesting to a minority of the audience.

Therefore, a significant part of the blame lies with the audience, which made the wrong choice at the time, thereby building a world where most of the money is generated by F2P games and microtransaction projects protected by online integrations.

Very true. Alot of things go into play with the reliance on mtx.

 

[Gediminas]

This shit is obvious, some companies would collapse due to their greed and reliance on it. So much greed and companies relying on that extra income and budgets created around projections. We think layoffs are bad now it would be even worse.

No it wouldn't.
Problem is that suits are in infinite loop of growth and trying milk it everyone and trying scaremongering.
Most games don't have mxt, nor indies, nor AA and many of AAA either and they are just fine.

 

[Gamernyc78]

No it wouldn't.
Problem is that suits are in infinite loop of growth and trying milk it everyone and trying scaremongering.
Most games don't have mxt, nor indies, nor AA and many of AAA either and they are just fine.

Whatever your analysis is. I know factually some companies are already taking mtx into account. This finite thinking some of you have of "no it wouldn't" is funny to me. Did companies need to rely on it? Of course not the same way they didn't have to raise games to $70 but here we are. Companies are making budgets beforehand and some are including mtx in tht budget, tht is factual. Do all companies do tht? Of course not, do they all take mtx into account no because some games aren't built around tht but bet your ass some are hence my comment about "collapsing". We already know the main motivator of all this is greed tht goes without saying.

 

[Gediminas]

Whatever your analysis is. I know factually some companies are already taking mtx into account. This finite thinking some of you have of "no it wouldn't" is funny to me. Companies are making budgets beforehand and some are including mtx in tht budget, tht is factual. Do all companies do tht? Of course not, do they all take mtx into account no because some games aren't built around tht but bet your ass some are hence my comment about "collapsing". We already know the main motivator of all this is greed tht goes without saying.

Some is not majority. Of course there are who takes into account mtx, but majority don't.
If CoD removes mtx tomorrow, you think it would collapse? Of course not, it made millions already, same goes with other games.
Just that shareholders would cry in their private planes.
Unless it is F2P, of course you need mtx, because it is their "70$" but not upfront.

 

[Nhomnhom]

What do you mean good, what an asinine way to think of a company that offers you their base game completely for free, you can play the entire game with out paying a cent.

Its an extremely good business model that works for them and millions of people that enjoy the game, you need to see nuance in different situations and not tar all the companies as all being greedy bastards like Blizzard, who charge you full price for the game then have a ridiculous shop too.

I don't care, I don't play it, why should I care? I don't play F2P games.

 

[Sircaw]

I don't care, I don't play it, why should I care? I don't play F2P games.

I expected a more nuanced thinking pattern from you, that's all.

 

[Nhomnhom]

I expected a more nuanced thinking pattern from you, that's all.

I don't like F2P, I never liked F2P, most of the time it ruins games and give devs all the wrong incentives.

 

[Sircaw]

I don't like F2P, I never liked F2P, most of the time it ruins games and give devs all the wrong incentives.

I think you have missed the point.

 

[Gediminas]

I think you have missed the point.

yeah, guy missed the plot.

 

[Yurinka]

They can't quit because it would be a suicide, it's what made the game industry revenue grow during many years.

It's the biggest and fastest growing revenue source for games. And the main one -almost its totality- for mobile, which produces the majority of the industry revenue:

The traditional main revenue source, game sales, is declining, particularly in physical. And it's being replaced by add-ons, which are mostly microtransactions for passes, virtual currency and in-game items.

Sure, there will be always space for games without microtransactions. But they have been becoming more and more important in the last decade or two as mobile, F2P and GaaS kept growing. And unless something rare happens, by projecting the trend of the previous years the industry expects that microtransactions will continue growing.

 

[voke]

Id rather be paying $100 per game if that meant mtx could be out, but the market doesn't want that, We decided our fate as far as the economics of the industry goes.