Microtransactions in Mobile Games: The Growing Variety of Revenue Models Transforms the Industry

Just paying for a game right away is not a way for a player anymore. The reasons can be various, from not wanting to pay for content before trying it out, to just wanting to play for free a bit and then switch to the next game.

Microtransactions, also known as IAPs (In-App Purchases), as part of numerous revenue models are a phenomenon that changes the gaming industry today. It works for the studios and also for the players, to a certain extent, and because of that, the whole niche experiences the impact of this innovative approach to revenue generation.

Several types of IAPs can be found in games, including casual mobile games, video games, and other gaming products. These IAPs can be, but not limited to:  

• Loot boxes 
• Skins  
• Power-ups  
• In-game currency 

It must be said that IAPs can be used for some serious level-ups in games, but most of the time, these are only cosmetic enhancements. These enhancements are unfunctional or only partially functional. 

From the point of view of a marketer, there are several pros and cons of microtransactions.

The advantages are:  

• Microtransactions create additional revenue streams and these streams can be very versatile  
• Players often feel more engaged in games as a result of interaction via microtransactions  
• Microtransactions allow a high level of customization and personalization of in-game products and services. Customizations can be more generic, or very personalized based on the player’s preferences and behavior tracked by the game  
• Upselling to players and stimulating impulse buying increase sales even more 

The disadvantages are:  

• Players report negative impressions more often than positive ones based on their experiences with microtransactions  
• Publishers create different experiences for paying and non-paying players  
• There are virtually no regulations to check the fairness of the microtransaction offer, let alone their adequacy  
• The games put a bigger emphasis on monetization over user experience, thus monetization overshadows other aspects like quality storytelling, unique mechanics, and even visuals

Due to a lack of regulations and the publishers’ trend of over focusing on monetization instead of all other aspects, the players mostly get negative experiences and their perception of IAPs constantly grows more negative.  

The Conflict of Interests: Studios vs Players  

Most of the time, IAPs offer visual enhancements like skins, armor, or character upgrades. Some games, on the contrary, offer IAPs that influence the gameplay and allow the player to level their gaming experience up.

To be honest, both options are not good for the players.

Cosmetic upgrades are pretty useless, while efficient upgrades create a competitive edge for players who want or can pay, compared to players who can’t or don’t want to pay.  

Both options make IAPs unwanted unless the players are only after entertainment and fun and they don’t mind spending their money on that. The point is, however, that IAPs make players spend uncontrollably without clear or predictable benefits.

The next nuance is that publishers like to overprice all their extra content and the price does not reflect the value. As a result, even players who are willing to pay and can afford it face the consequence of their investments not matching the value of what they get. Even without very high expectations, this is a disappointing and frustrating experience.

Researchers say that IAPs that include loot boxes are even less fair and transparent than online casino bonuses because $10 deposit casinos on CasinosHunter at least write down all their terms and limitations while games don’t.

Publishers’ main argument about microtransactions is that they are not obligatory in the games and players can choose not to pay and still enjoy the game. However, the reality is that these paid updates create unfair benefits for the paying players. As a result, the difference is real and the players who don’t pay feel that some perks of the game stay unreachable or new levels of the game can’t be unlocked.

This situation of studios clearly benefiting from microtransactions and players being frustrated by the unmet expectations creates a conflict of interest that is not easy to solve. While the industry experiences a considerable boost due to this new approach to revenue generation, the growing conflict and a lack of regulations even in regulated jurisdictions can give the situation an unexpected turn.  

What Can Fail the Industry  

So there are two interesting processes unfolding in the gaming industry at the same time. On the one hand, IAPs boost the industry and stimulate growth in all meanings. 

On the other hand, in this landscape, some studios literally focus on monetization and start to build not only their revenue strategy but also their games’ mechanics around the user experience of IAPs. As soon as the publisher adopts this approach to the game design heavily, their focus shifts from “positive player experience” to “studio experience”. The game becomes challenging for all players unwilling - or not able - to pay extra.

While the studios claim they are willing to find a balance between revenue and positive user experience, the reality is that players get more frustrated by their interactions with the games’ mechanics based on monetization. Experiencing poor gaming systems, primitive mechanics with a lack of development, and even poor visuals, players get more conflicted about the whole approach.

This situation undermines the player’s loyalty to these publishers and also disrupts the connections in the players’ community. While this situation can unfold really slowly, the negative outcomes of it can have some interesting effects on the seemingly boosted industry.