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The Language of Monetization Design
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The Language of Monetization Design

March 13, 2013 Article Start Previous Page 2 of 3 Next

What is a Microtransaction?

A microtransaction is the purchase of one "piece" of your game for a set price. It is a one-time transaction that in some cases can be repeated. Used by itself, the term is so broad that it becomes a liability in any discussion. Here "what" you are selling is much more important than the fact that it was purchased piecemeal. So here I will discuss the what of non-subscription content purchases and attempt to wean you off of the term "microtransaction".

Virtual Goods Sales: Nexon began playing with microtransaction virtual goods sales when I was working for them as a designer in 2001. There are two dynamics that are important here. Do the items provide a competitive advantage? If so they are Supremacy Goods, as defined in my paper of the same name. This can have profoundly negative effects on your monetization efficacy.

Non-supremacy goods generally take the form of cosmetic and "flavor" items that do not provide a clear competitive advantage in a game. There are gray areas that may sell well, like items that are balanced but give more tactical options and thus provide more "flexibility" to the user.

Virtual goods can, in some cases, be sold by entities other than the developer. In these cases the process is often described as a real money transfer (RMT) sale. For a full discussion of these dynamics see my Real Money Transfer Classification paper.

In that 2011 paper, I broke down RMT into three categories. RMT3 is industrial gold farmers and sellers, which were organized almost 10 years ago by a company called IGE that caused considerable harm to our industry. RMT1 was the reaction to this -- what we usually now call "microtransactions." RMT2 is what came before both of these -- what I call "expert trades" between active participants in a virtual world. It was essentially wiped out by both RMT3 and RMT1.

Blizzard recently attempted to bring back RMT2 and monetize it using a real money auction house in their Diablo III product, without understanding the involved potential pitfalls. I described these pitfalls six months before anyone got a look at D3 in this paper.

If you sell an item that can normally be earned via gameplay, then you are selling game objectives, and this breaks your game, as described in my Game Monetization Defined paper. This will have negative effects on your revenue generation.

Content Sales: If there is some part of your game that is inaccessible until you pay to unlock it, then I consider this a content sale. DLC sales are exactly the same thing, though usually that term is associated with single player game products, not online multiplayer games.

Note that while players can compete against each other in single player games via leaderboards (a very useful method of motivating your customers), this also reduces the Supremacy Goods effect of selling content that gives players a gameplay advantage.

Please note that for something to be a content sale and not a time gate (see below) it has to allow access to some part of your game that is normally completely inaccessible without payment.

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