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    Contents Copyright 2009-2010 Arnold Hendrick

Selling MMOs

Posted by Arnold Hendrick on September 18, 2009

Outline

This is a long article on a complex topic. An outline may help you skip to the “good parts.”

  • Big Launch Fever – Why boxed game marketing is inappropriate for download MMOs.
  • Product & Pricing Strategy – The F2P model and its essential components.
  • Customer Management – The centerpiece of MMO marketing, and how it starts with CRM.
  • Customer Acquisition – Customer segments and targeting, promotional approaches, social network strategies and continual acquisition.
  • Customer Development – Understanding customer types, meeting their needs, promoting community, eliminating community-breakers and professionalism.
  • Churn Analysis – The importance of analyzing customer departures.
  • Retrospective – Additional thoughts and references.

 

            Big Launch Fever

I recently spent a few days with a startup online studio working toward their first product. The president, who had no prior experience in MMOs, arranged for a consultant who marketed some famous console hits. The consultant discussed planning for launch, how to promote launch, meshing the game schedule with print media timetables, etc. They even described a strategy for maximizing launch volume for a weak game. Great stuff if your company is trying to sell a boxed game. However, this startup’s game would be distributed by download (no box) and monetized via F2P (free to play), freemium or subscription. Furthermore, time and budget constrained the product to modest launch features, after which online revenues would fund additional growth.

What is wrong with using a big launch? Industry veterans will immediately recognize the problems. Spending most of the marketing budget on a big launch means the game will get a burst of initial customers with little or no continuing acquisition effort. A single big launch allows no “feedback loop” for tuning the marketing message, no ability to experiment with alternate messages or audiences. A big launch strategy also requires a large investment in download and login infrastructure to support the new-user activity on launch day and launch week. A month later that capacity will be collecting dust and burning money. Most of all, the plan failed to understand that MMO customer acquisition is not a one-time event. Actually, MMO customer acquisition is continual, and but one aspect of a customer management strategy.

The Success of F2P: Today the world of download-and-play MMOs is dominated by F2P (Free to Play) games supported by microtransactions. True, boxed titles with subscription plans still exist (for example Champions Online, Aion and Fallen Earth, all launching this fall). However, in the download-to-play world the F2P is so common that alternatives can’t get traction. “The Chronicles of Spellborn” is a salutary example. This highly original MMO launched in spring 2009 using Runscape’s “freemium” business model (low level play areas are free, a subscription is needed to access higher level play). Player response was so under whelming that the development group went bankrupt and the North American publisher hopes to change the business model to F2P (see “Chronicles of Spellborn redeveloped as F2P”). Even mainstream operators are using F2P to revitalize flagging products. Turbine just converted its 2006 release of DDO (Dungeons & Dragons Online) to F2P.

What better ways exist to sell MMOs? Companies like Aeria, K2, Acclaim, Frogster and Gala-Net clearly have a formula that they tweak and reuse for game after game. What are these strategies, and how can they incorporate the best from new communication platforms such as Facebook and MySpace?

A Marketing Plan for No-box MMOs: Any marketing professional will tell you that each marketing plan is different, depending on variables like corporate strategic goals, situational and SWOT analysis, and the specific product to be marketed. For the sake of argument, assume a small startup has a single MMO well into development. The plan for financial success envisions a download-only product with no boxed product on brick-and-mortar store shelves. What are the salient ingredients of a marketing plan for this product?

 

Product & Pricing Strategy

I believe a diligent marketing situational analysis covering the last half decade of download-only MMOs will demonstrate that F2P is the correct approach in most situations. The F2P model can be enhanced by a subscription offering for high-end customers. I suggested this in “Subscriptions vs Microtransactions.” Coincidentally three months later Turbine’s F2P program for DDO included a subscription-style VIP level almost exactly matching what I theorized.

Given a F2P approach, the next step is a product and pricing strategy. The tried and proven technique is to build a system that allows paying customers to (a) advance faster, (b) shortcut tedious gameplay, (c) have a wider selection of appearance and equipment, and (d) have faster access to the best game items. In general, successful games avoid giving any obvious advantages to paying customers. A good F2P game design incorporates item sales opportunities throughout the game. Below are common examples of item sales.

(1) Faster advancement: A player could buy an item that increases their experience point gain for the next day, week or month. A 1.5x or 2.0x multiplier is common. This means the player levels-up 50% or 100% faster during the time period.

(2) Tedium shortcuts: A player could buy “instant resurrection” items to avoid the normal death penalty, or a “fast transport” ability that moves them quickly between “base camp” towns and an adventuring spot.

(3) Appearance Selection: When a player gains an in-game reward (from a quest, defeating a boss, etc.), let them select not only the specific award, but also its appearance. Simple systems offer “vanity clothing” or the ability to adjust clothing colors.  A more advanced systems exists in “Runes of Magic.” Here players can  “transfer” stats of a newly acquired weapon or armor into any other weapon or armor. For example, if a player’s bikini-clad elf acquires +99 Plate Armor, the player can move the +99 armor stat onto the bikini, giving them the benefits of the new item while allowing them to continue dancing around in a skimpy bikini.

(4) Item Access: In many games the very best equipment is acquired in stages, first by advancing to a high level, then by acquiring the armor or weapon, and finally by getting various objects that upgrade the item to its “ultimate” status. In many F2P games the objects for this ultimate upgrade are available only through purchase. In other cases upgrade objects can be acquired via game play, but only through long and very tedious activities.

The difficult part of pricing is computing play time and purchase scenarios against disposable income of the expected player base. Some F2P games use low price points and try to maximize volume (such as Joymax’s “Silk Road Online”), but most select higher price points to maximize gains from the minority of players able to spend somewhat larger sums. Larger list prices also set the stage for monthly “special offers” and “bargain discounts.”

Virtual Currency Systems: Most F2P MMOs, as well as Social Network RPGs, use a second “virtual currency” (VC) of “game points” (actual names vary).  The playermust spend real-world money (typically through a credit card transaction) to acquire VC, whose sole purpose is to purchase monetized items. This allows the game operator to sell a wide variety of items, some at very low prices, without suffering exorbitant per-item transaction fees.

Virtual currencies are entirely separate from in-game currency. Most games also have an in-game currency, which players earn through gameplay and spend on non-monetized game items. Only a few games (such as EVE) support using real-world money to purchase in-game currency. Obvioiusly games that do support purchase of in-game currency have no need for virtual currency.

To my knowledge no MMOs* support redeemable VC, and few permit VC transfers. In other words, players cannot sell back VC to the game operator for real-world cash, nor can they transfer their VC to another player. These limitations are deliberate: they give game operations greater control and flexibility over the issue and use virtual currency.  (*Note: Virtual worlds often do support redeemable and transferable currencies, such as Second Life, Entropia Universe, etc. Some consider this a distinguishing feature between virtual worlds and MMO games.)

An additional benefit of a virtual currency is that the game operator can reward players with this currency for third party transactions and in special promotions. Companies like Offerpal Media and Playspan can provide links to companies who pay for qualified web referrals. To see an example of this, start up the Facebook game “Mafia Wars” and click on “Godfather.” That page demonstrates how a player can get in-game “reward points” for everything from signing up for the Netflix service to answering an online survey about which Pepsi they prefer.

 

            Customer Management

A traditional marketing plan has a “promotion strategy” that deals with advertising reach, frequency, flights, themes and media, publicity, PR, media visibility, etc. Online products are slightly different: marketing isn’t just promoting the product to customers, it’s about managing the entire customer lifecycle. This lifecycle starts with acquisition, continues with customer development, and concludes with customer churn analysis. This is because the longer a customer remains involved with a game, the more that game can earn. Once a player leaves a game, enticing them back for a second try is extremely difficult. With so many new MMOs arriving each year, it’s very easy for a disaffected customer to experiment in dozens of potentially greener pastures.

CRM

The software system used by MMOs to support this effort is generically known as CRM (customer relationship management). An MMO CRM has four central characteristics.

(1) Front Office: This is the website supporting customer activities. This allows customers to see information about the product, download the client software, create an account, sign in for play, spend money for the virtual currency, and see what that currency will buy (and sometimes buy the item on the website, rather than within the game). Access is often provided to outside-of-game community features, often including forums and occasionally a wiki.

(2) Back Office: This billing and operations system maintains customer accounts, including game login, “second currency” holdings, game character data, in-game customer status, and customer financial status. Financial status is helps support fraud detection and prevention. This is vital because fraudulent credit card use is a major threat to online commerce, including MMOs. Maintaining customer status data is also important to proper management of the game community (see “Eliminating Community Breaks” below).

(3) Customer Analysis: Customer analysis tools track numbers of new accounts, active accounts, paying accounts, etc. Cross-referencing this data with in-game status reveals things like number of active accounts at each level, percentage of paying accounts at each level, purchase amount distribution over player history, perhaps annotated by level, etc. This builds a picture of who spends money, when, and in what amounts. Daniel James offers some useful advice about building or buying CRM analytics for games in “Metrics for a Brave New Whirled.”

(4) Business-to-Business Support: A good CRM system interacts with other companies for additional income and business relationships. Turnkey systems like Offerpal Media and Playspan provide a package of such relationships and the software infrastructure to monetize it via the game’s virtual currency.

An MMO operator need not build their own CRM system from scratch. I do not know of a one-stop provider of all CRM needs for MMOs (with the limited exception of Metaplace), but many key needs are available through service companies. Billing providers can handle the payment part of the front office and back office (Aria Systems and Vindicia are leading game-oriented services). Providers that offer virtual item management include FatFoogoo, PlaySpan, Offerpal Media, Live Gamer, and Aria’s Velocity system. These systems include some very useful pieces of customer support and analysis, typically related to customer financial activity and monetized items rather than game activity. For details about the economic side of CRM operations, I highly recommend a stroll through the thoughts of Jamy Nigri.

 

            Customer Acquisition

The first step in running an MMO business is acquiring customers. Customer acquisition starts by recognizing the desired goal: customers visit the game website, create an account, download the client and begin play. Therefore, it is critical that the website inform and invite players into the game quickly and easily, with minimum fuss and confusion. Client download and installation must be quick, easy and painless. This is why new MMO developers are trying to turn away from big multi-gigabyte downloads to seamless web launchers (as in SOE’s Free Realms), or as software completely within the browser (as in Jagex’s Runescape).

Customer Segments: How to get customers to the game’s website? Traditional marketing thinks in terms of age, gender and socio-economic demographics. Those were the dividing lines for offline media advertising such as print, radio and TV. Unfortunately, MMO gamers have peculiar age distributions that make age-based promotion difficult (see “Gender and Age Distribution“). The only “traditional” categorization that really matters is gender. About 80% of MMO gamers are male, and fully 2/3rds of the females are there because they followed a partner into the game (see “Playing With Someone“). This is the reason why male-oriented sexual imagery is used to sell online games (see Sanya Weather’s “Booby Prize”). Although I don’t have data to confirm it, I believe that more and more females have sufficient MMO experience that they select games for reasons other than being with a partner. The “Booby Prize” era in marketing may be waning.

Targeting Gamers: The most relevant customer segment to approach is existing online gamers. Is the game similar to previous games? If so, promote the game to players of those games. Is the game generally similar to a certain category or style of MMO? If so, promote the game to that category. Most games are about a specific topic: fantasy, science fiction, military, horror, etc. Promote the game to players of that topic. What are the hardware requirements for the game, especially the graphical requirements? Titles with older graphics can be advertised to gamers whose systems can’t handle the latest high-end whiz-bang products.

These examples illustrate that promoting to people who already play games has more many possibilities. The least productive audience is people who have never played online games. Even if a new game is the first on the planet to truly inspire a non-gamer’s interest, their lack of experience will make product comprehension, downloading, installing and learning to play large obstacles. Inevitably a larger percentage of customers will be lost during this process.

Once the game begins beta or “early live” (see “Customer Development Strategy”), current customers become an excellent source of information. The next round of acquisition can target similar potential customers.

Promotion Isn’t Just Ads: Promotion itself can take many forms. Web ads on targeted sites, or site categories, is just the start. A good public relations consultant or firm can suggest a variety of additional campaigns. Supporting one or more professional fansites (such as Ten Ton Hammer) can be very helpful. Even more helpful is a viral marketing campaign that encourages players bring in friends as players. Promotion to guild leaders can encourage entire groups to try the game. These viral campaigns can be reinforced by giving participants in-game rewards and/or virtual currency.

Promotion via Social Networks: To date no MMO has fully exploited the power of social network sites likes Facebook or MySpace to promote their product. Building a simple “app” that displays a player’s current character name(s), stats, server(s), and currency status is not difficult. Next enable players to display one or more of their characters and/or accomplishments on their “wall.”  This is just the start of a good social network viral campaign. A friend referral system can be set up. Virtual currency purchases and related offers can occur at the social networking site.

Continual Acquisition: Customer acquisition is not a one-time event. It is a continual process that adapts to the customer landscape and the game’s position within the competitive landscape. The overall lifespan of an online game depends on customer acquisition, customer lifespan and earning power. When customers churn out faster than they can be cost-effectively acquired, the game is headed toward a sunset.

 

            Customer Development

This is the art of converting a newly acquired customer into a devoted player, a proportion of which are spending money to enhance their enjoyment. Obviously great gameplay really helps. However, even a modest “B” title translated from Korean or Chinese into English can be a solid money-earner, a fact proven by multiple MMO operators in North America.

The first step is to analyze the players, in aggregate, to determine who is providing the majority of a game’s income. The CRM’s analysis tools are critical to discovering the patterns in player spending. Here are some potential patterns to look for:

  1. King-of-the-Hillers: These players push to reach max level as quickly as possible, then acquire the very best gear to be “king of the hill.” A strong PvP component encourages these players. They expect their top-level, top-gear status will advantage them in fights with other players. It is important to compare, at various instants in time, the number “king of the hill” players to the number of players churning out. It may be that existing king-of-the-hillers are discouraging future king-of-the-hillers, who drop out rather than make the increasingly large investments to reach “king of the hill” themselves. 
  2. Status Seekers: These players want to be seen as successful within the game’s community. They happily spend to have the latest outfits, gear and other signs of successes. They are easily distinguished by their high level and consistently high spending. They are every game operator’s dream because they willingly spend large sums to maintain their status within the community. Many of these players also have non-monetized status positions within the community, such as being a guild leader or officer.
  3. Casual Players: These customers advance more slowly through the game. As they play, they make minor purchases that cost-effectively support their gameplay. Individually they spend less than the above categories, but collectively they may provide a significant source of income.

Matching Customer Development to the Customers: Any vibrant MMO continually offers new deals, play opportunities, and game-related events to engage its players. Game expansions are costly and infrequent. Game item additions are much easier, as they are just appearance and/or data variations on existing items. Game events can recognize player accomplishments, individually or in aggregate. The exact nature of new offerings, item additions, and special events are tailored first to existing customers. A more daring marketing strategy may include attempting to acquire different types of paying customers with offers catering to their needs.

For example, if the game is dominated by “king-of-the-hill” players, a steady stream of new “top gear” items gives them something to acquire every few weeks. If fewer and fewer king-of-the-hillers are entering the game, the website needs to prominently display links to advancement guides that make it easier for new players to reach top level status. “Leader boards” of top players and guilds are very important.

If the game has numerous “status seeker” players, then “vanity item” outfits in new colors or appearance, new pets, etc., can be offered to encourage them. Players can be encouraged to send in screenshots, the “best” of which are displayed on the website to give the senders additional status.

If the game receives significant income from “casual players,”  events and items can be offered that reward players who level-up. This encourages general advancement regardless of a player’s ultimate goal. Guilds can be rewarded for adding new players, or having low-level players steadily advancing upward. Community managers are especially aware that policies which support “casual players” may be considered unfair by “king-of-the-hillers,” and vice versa.

Promoting A Positive Community: A significant proportion of MMO players like to share their knowledge, experience and opinions with other players. A game’s forums are the mainstay of this activity. Vibrant forums allow players to advise and help each other, and incidentally reduce customer service costs. Forums can be mined for player insights into the game (but see “Churn Analysis” below for important caveats).

Game operator posts on the read-only “official pronouncement” forum thread are the primary “official” communication channel to players. Each new update, item release, pricing change, or game event must have an accompanying official post, explaining the action in detail. Maintaining a policy of “prompt, full information” is extremely difficult. Nevertheless, no update or patch, no matter how small, should go live until an approved announcement is ready for simultaneous posting.

Eliminating Community-Breakers: Every game has trouble-makers. What constitutes “trouble” varies with the nature of the paying audience. For example, PvP bullies who make life difficult for lower level players can badly hurt a game supported by “casual players.” However, in a game supported by “king of the hillers” they become part of the gameplay. Conversely, software hacks will enrage and drive away “king of the hillers” rapidly, but have far less impact on “casual players.” Finally, all MMOs that permit free chat must deal with hate-mongering, sexual stalking and similar egregious behaviors.

The “back office” CRM system must include a method for adding “trouble reports” to a player’s account. In addition to manual notes by customer service staff, better systems include an automated reporting mechanism tied to an in-game complaint system. Advanced trouble report systems weigh complaints based on complainer characteristics (such as how much they spend and/or how long they actively played) to give valuable customers a greater voice. Server-side “red flags” reveal signs of client hacking or excessive financial activity. Trouble resolution of problem player accounts is normally done manually, with senior customer service staff working through the complaint queue by dealing with the most serious cases first.

Professional Staff: Community management is a special skill somewhat different from game development. Sanya Weather’s column “MMO Underbelly” provides many useful perspectives. It is valuable to remember that her past experience was in subscription games that most maximize long-term play experience for the broadest possible customer group. Her comments about announcements (“The Evolution of a Patch Note”) and organizing customer service (“Inside the Pit”) are universally valuable.

 

            Churn Analysis

No game can expect all their players to play forever. In fact, all customers have a spending curve over time. After a certain point both play time and spending decline. For example, “king-the-hill” players may have a lifespan of three to six months. However, those months may be very profitable, as the player spends heavily to achieve and maintain top status. Trying to develop more game content, giving them another hill to climb, is a losing proposition. Even if development funds are unlimited, it takes 6-12 months to build a balanced expansion to any game. King-of-the-hillers will consume it in just a few weeks. Only an open-ended “sandbox” MMO like EVE might satisfy such customers.

Analyzing the departure patterns of players can be very instructive. Exactly what are players doing, and not doing, when they quit? Character data mining can provide some answers. However, probing deeper is valuable. An apparently logical decision can have unexpected consequences only visible when community management truly digs for the answer. Eric Ries’ IMVU only discovered a major blunder when “…we finally had one of our community managers start talking with real customers on the phone. Then the reality of our problem hit us.” (See “The cardinal sin of community management.”)

Churn Mitigation: After the reasons for player departure are understood, community managers and game operators can implement mitigation strategies targeted at specific causes. If players frequently churn out at specific levels, there probably exist gameplay obstacles that discourage them. Game-play changes or player aids can help mitigate this.

Secondary factors may also affect gameplay. For example, the game might force players to group at higher levels, but goldseller ads so deluge chat channels that player-to-player communication has all but stopped (as happened in “Rappelz” a couple years ago). Prohiting all but local chat to low-level characters, automatically blocking certain types of messages, and immediately banning higher-level chat spammers is a common mitigation strategy. An additional option is to make a profitable business deal with one preferred gold-seller (EA/Mythic almost certainly did this with Hugecheap.com). Another option is for the game operator to sell in-game currency (“gold”) themselves, as CCP does in EVE.

Sometimes causes of churn can be immediate. For example, a certain hacker tool might give some players unreasonable advantages. The game may hemorrhage valuable customers faster than a software fix can be implemented. Community management must deal with the problem immediately. Choices include working to identify and ban hack-users immediately (i.e., within 24 hours), transferring all detected hack-users to special “hacker servers,” and/or making the hack known to the entire player community along with the risks of using it (i.e., the potential of installing worms, keyloggers and other malware often found within the hacker tools).

Positive Experiences & Customer Longevity: The Eric Ries IMVU example (above) makes a larger point about community management. Gamers, just like IMVU’s virtual worlders, become personally involved in the product. They need to believe that the “game company” listens to their needs. It is the job of community management to listen and separate the chaff of typical complaints from the wheat of important issues. Community management then helps prioritize the response and communicate it to the community. This is not easy, as Sanya Weathers points out in “The Customer Is Not Always Right.” Nevertheless, when expert community management maximizes a positive game experience, customers remain involved for longer periods and the game often earns more money.

 

            Retrospective

One of the big questions regarding F2P MMOs is income expectations. Calculations are available for the casual end of the market. Jeremy Liew of Lightspeed suggests $1-$2/month/customer (see “Successful MMOGs can see$102 in monthly ARPU”). His analysis was based on Second Life, Club Penguin, Habbo Hotel and Runescape. Puzzle Pirates volunteered that its income was also in the $1-2 range.

Virality has been a hot topic and concept in marketing for the last year. Andrew Chen explains it well in “What’s your viral loop? Understanding the engine of adoption.” His Web 2.0 background also results in very interesting insights on web-based marketing (see “5 steps towards building a metrics-driven business”).

I am still looking for in-depth information from the leaders in the F2P MMOs, such as Aeria, Acclaim, K2, Gala-Net (Gpotato), IGG, Frogster and Perfect World International. A great many MMO products launching in the next year or two will use the F2P model. I look forward to hearing from MMO marketing professionals, especially those working with Freemium or F2P products.

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6 Responses to “Selling MMOs”

  1. Frank P. Williamson said

    So .. you are saying the World of Warcraft model is obsolete as a subscription based MMO?
    *I* would enjoy being in their position with an MMO I developed, obsolete with all those millions of players.

    I rarely try any of the F2P games
    .. IMHO a price point has to be there for entry into ‘my’ game.
    Yes..if I log on, it’s ‘my’ game.
    I don’t mind the gating issue that keeps the ‘something for nothing’ crowd at bay.

    I also feel that a subscription based game allows the developer to build content
    ..if it is succesfull of course.
    ‘Invite a Friend’ ideas work, provided the initial player enjoys the game.
    If the game is not drawing customers in and keeping them, no ‘model’ will help it.
    There’s the rub.

    -Frank P. ‘Gray Eagle’ Williamson (just my 2 copper)

  2. Arnold Hendrick said

    Frank, I suspect you’re not alone. Quite a few gamers are happy to concentrate on the large-budget MMOs that are sold as boxed products. To this day a subscription business model works well for many. Nor do I suggest that the subscription model be abandoned by such products. I like some of its characteristics too, from a business as well as a player’s viewpoint. I think DDO’s experiment with F2P/subscription mix is VERY interesting.

    The article concentrates on marketing F2P games. Subscription games, especially boxed ones, are different beasts that require different marketing approaches.

    I do point out that F2P is the winning business model for download-only MMOs right now. I could be wrong. Have I overlooked something? Is there a new download-only subscription game that’s doing great? I can’t think of ANY new download-only MMOs that reached 50k subs, much less 100k, in the last couple years.

    – Arnold Hendrick

  3. Gareth said

    I feel the same as Frank on F2P games, I know I cannot get something for nothing, as soon as a game offers real power for real money then its no longer a game for me.

    Even the small tinkering around the edges is a put off, I do think that WoW’s charging for server transfers has had an negative effect on server balances. And EQ2’s station cash is always going to make players wonder if without it the main game would have more variety in appearance items (strangely though the XP speedup potions on offer really don’t bother me).

    A lot of people keep saying the subscription model is dead, personally I think the problem is more that the subscription market is heavily saturated. If every game closed down tomorrow so that we had an empty market I think you’d always be able to make more money then developing a subscription game then a free to play game.

    While I like normal simpler games from small developers, I do desire and expect the next big MMO to be something huge, the original premise of EQ1 offering a whole world I think is still what motivates a lot of players like me, and looking at console game budgets I think we’ll see more big MMO’s to come in future.

  4. Tesh said

    The subscription model isn’t so much dead as inherently limited, both by a saturated market and by the number of people willing to pay subscriptions in the first place. That group of people isn’t the only group willing to play and pay for MMOs. Other business models are *necessary* to pull in some of those players. I’m one of them; MMOs are fascinating, but a subscription will never* offer me enough value to make it worth my money. (*OK, any subscription more than $1 or so per month. That’s pretty much all of them at this point.)

    Puzzle Pirates has tinkered with subs and microtransaction/F2P for years now. To date, the microtransaction servers have been most profitable, but *both* actually are profitable. If nothing else, free players make it easier to keep critical mass.

    WoW is a weird beastie in that it has a TON of inertia behind it, so when most players are at the level cap, it doesn’t kill the game. That sort of stratification and population grouping would kill a smaller game.

  5. mbp said

    Great article Arnold full of interesting information and insights.

    My knowledge of game development and marketing is very limited but I am a long time game playing customer. I am still trying to work out what impact the apparently unstoppable rise of micro-transactions is going to have on my hobby from a customer’s perspective.

    I can see several good things about micro-transactions: They offer a business model that allows smaller companies to compete with the industry giants which increases the choice and variety of games on offer. In theory free to play with micro-transaction offers the customer all the choice. Customers can sample a wide variety of games at little or no cost and once they choose to play a game they can pay as much or as little as they like.

    Unfortunately the reality in many cases does not seem to be as customer friendly. My two biggest concerns are i) The impact on game design (games will be designed as grind fests order to maximise item shop revenues rather than customer entertainment) and ii) Micro-transaction systems which are designed to squeeze excessive amounts of money from a small number of addicted customers. I call this “customer abuse”.

    You mention four types of item commonly sold in an item shop:
    1) Faster advancement, 2) tedium shortcuts, 3) appearance selection and 4) Item access.

    To me 1) and 2) are almost always problematical. If a game is fun to play why would people want to pay to skip parts of it? There is a moral hazard here encouraging designers to design grind fests in order to encourage people to spend money to bypass the grind. As these items are usually consumables they are also a prime vehicle for customer abuse. We read about addicted customers spending hundreds of dollars a month in item shops and I imagine a good deal of this goes on pots and other consumables.

    I don’t have a problem with 3) even though I think Blizzards $10 for a non combat pet is just bad value.

    I have mixed views about 4). I don’t really have a problem with people paying for items but I can see dangers. If getting powerful items is one of the main objectives of the game then allowing people to buy powerful items for cash may be game breaking. One common form of customer abuse is to introduce a gambling system where you buy a box with an unknown item in it. It may be high quality or it may not. I have read of addicted players spending large sums opening such boxes in the hope of gettign a good item.

    I am perhaps most surprised that you don’t mention a 5th item shop category: 5) pay for access to content. This is very unproblematic and in my mind provides the best deal for the customer – you buy the parts for the game you want to play. The incentive on developers is to make an interesting compelling game so that customers want to buy more of it.

    I have recently broken my own micro-transaction taboo and have started playing Dungeons and Dragons online. I have even bought stuff in the item shop. I am happy enough with Turbines implementation because a lot of the item shop stuff is “pay for content” and I also think that the existence of a monthly subscription option limits the potential for customer abuse.

    My question for the future is this: given the apparent inevitability of micro-transactions for everything will this mean a descent into grind-fest games surviving on the revenues from a small number of their most addicted customers or will market forces ensure that only interesting, fun to play games with non abusive item shops survive?

  6. jason said

    good|superb|fantastic|excellent|great} job with this.

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