The Rise of Microtransactions

By February 14th, 2024 No Comments

Microtransactions have long been an aspect of gaming where users can purchase virtual items and products for a small fee. Companies encase microtransactions within games and apps to improve and offer an exclusive experience to users. Often appearing in free games and apps, it is a way for companies to make money in-game. These can often be spending money on extra lives and additional features. Microtransactions, however, have leaked outside of the gaming sphere and have become commonplace in other online services.

Examples of Microtransactions:

Many people may be reluctant to purchase apps for their phones. It seems unnecessary to spend money on apps when there are hundreds of free alternatives. As a result, many popular apps on Google Play Store and iPhone’s App Store are free. However the companies who have created and released the apps need a way to return their investment and make a profit. This is where microtransactions come into the fold. You can find Microtransactions in games in the following ways:

  • Extending the game through purchasing lives.
  • In-Game Currencies, rarely follow a 1:1 exchange making the value of the currency unknown.
  • In-Game Products, such as clothing for characters in the games.
  • Random Packs, also known as loot boxes, tempt users to purchase as there is the potential of unlocking a unique or rare feature.

These microtransactions have become easier to pay for thanks to payment methods like Apple Pay. Paying £1 for extra lives is easy on apps, and the amount seems insignificant to users who love the game. But these little purchases add up.

Microtransactions are a lucrative business model that many of us are unaware of

The Business Research Company reported that the global online microtransaction market size is predicted to grow from $67.94 billion in 2022 to $76.66 billion in 2023. There are now some games, an example being FIFA, that make more money from microtransactions than the initial purchase of the game. Games are created with delayed purchases in mind to extend the lifecycle of users playing.

Microtransactions have slowly cemented themselves outside of the world of gaming. They are now commonplace on streaming services to which we already pay a subscription. An example is Amazon Prime. In the UK, Amazon Prime costs members £8.99 monthly and includes a video streaming service. When scrolling through, they will show TV and Film titles not included with Prime, only to discover once clicked that they can cost upwards of £1.99. It is unrealistic for Amazon to be able to include all TV series and films within their memberships. However, it is the subtle planting of videos that we must be rent or purchase for a small fee that incorporates microtransactions into the service. The monthly subscription is no longer enough to access all the features of the streaming service, and it allows companies to make additional profit on top of the profit from memberships.

Microtransactions are there to entice…

Amazon Prime is not alone in offering an additional cost to their memberships. We can find these extra costs on other platforms in the form of one-off purchases for a small fee or a smaller subscription running adjacent to the original cost. Free app YouTube now offers a subscription of £11.99 for users to watch ad-free content and download content. Spotify is a further example of a free app that entices users into spending through add-free subscriptions. For uninterrupted music and podcasts, users can pay £9.99 per month. As is the case with free gaming apps, it is not necessary to pay for these services; however, it becomes attractive to frequent users.

Microtransactions are there to entice. They are features deliberately left out of the original purchase or free apps to give companies an additional income stream. Many people feel that some features should be included in the original purchase. It is similar to going to a restaurant hungry, ordering a burger and then realising it is an additional cost to add cheese, bacon, or chips. People have ideas of what a product should include, and microtransactions allow users to modify their experience by deciding what is and are not worth the additional cost. It is clear microtransactions are here to stay, and it will be interesting to see how they drip into other business sectors in society.