Effect of Microtransaction Model on the Gaming Industry

Gaming is a 43 billion dollar per year industry. Hundreds of games are released every year and those games are sold for 40-50 dollars each. Famous games like Grand Theft Auto or Red Dead Redemption sell over 20 million copies making their studios over a billion dollars. But paying is not the only way to play games anymore.

Studios like Epic introduced a new gaming world called Free-to-play games. How it works is that the user can download the game for free and take part in an online community to play the game with other players from around the globe. The most famous examples are Fortnite, PUBG, Apex Legends and the recently released Call of Duty: Warzone. All of these games have the same schematic. A significant number of players are dropped on an island and they all fight each other until only one remains. There are several other modes such as Team Battles and 50v50 (50 players in one team battle 50 players in the other). You may be wondering how the studios make money on such games? Well, it is a very sophisticated business model. The games are for free, but there are a bunch of in-game purchases that users can spend money on such as Skins, Guns, Parachutes, etc. These objects have no effect on the ability of the player but only affect the appearance of the character in the online community.

Another thing that users can purchase is Battle Pass. The way it works is that it rewards you with things based on your performance in the game. If you meet the daily challenges, you are rewarded with skins and guns, etc. This business model is called the Microtransaction Business Model. The easiest way to define is:

Users spend money to buy goods in the digital world.

Like buying online money such as Vbucks in Fortnite. The concept behind introducing this model in the gaming world is to get users hooked on the game for free and then charge them for extra features. You may be wondering if all the purchases are optional and have no effect on the performance of the player whatsoever, people probably don’t spend money on these items. It is the opposite of that. Fortnite made $2.4 billion in 2018 alone. PUBG made $160 million just on the phone version of the game. This model is good for both the studio who makes money and for the players.

Now, let’s take a look at how it affects those who are working to make these games great. The game developers are the ones who are greatly affected by this model. They are required to work really hard in order to keep up with the changing trends in the game. This work initially includes setting up the whole game. But the work does not end there, they are required to work extra hours without any overtime pay to keep up with daily updates for users to buy such as new skins and other add-ons. These updates on a daily base are brutal for the developers. Working overtime with no compensation is a must if you want to work in a big gaming studio such as Riot or Activision.

The gaming industry is evolving and has now left behind many other entertainment franchises such as NFL, NBA, and others combined in revenue. The rapid change in gaming is causing a drastic increment in the number of gamers around the world since mobile gaming is also very common now. So having a proper gaming PC or a gaming console isn’t a mandatory requirement anymore so anyone with a smartphone and an internet connection can play these games.


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