Game On: ‘Microtransactions’ are rampant in the gaming industry

Video game monetization is not a new concept, but it’s become increasingly common over the past decade. More and more game publishers began publishing expansion packs over the internet, allowing gamers to purchase and download additions to the games they already owned. For instance, “Left 4 Dead” sold new campaigns, and “Halo 3” added multiplayer maps and expanded the scope of its level editor.

You usually had to plunk down a bit of extra cash – typically $10 to $15 – but the general consensus was that the expansions allowed developers to breathe new life into existing games, thus increasing the replay value for fans. In recent years, the concept has been expanded upon ad nauseam, and new terms have been coined – among them “microtransactions,” “loot boxes” and “pay to win.”

These are apt monikers. Where once gamers paid $10 for three brand new arenas to play around in, it is not uncommon for today’s games such as “Fortnite” or “Apex Legends” to ask that same price for your in-game character to stand out with a new “skin” for their weapon. That’s a microtransaction, and it’s not uncommon for online multiplayer games in particular to have hundreds of these items available to purchase.

It wasn’t long ago that such cosmetic items were rewards for being a dedicated or skillful gamer. In 2008, I poured dozens of hours into completing a list of 50 challenges for “Halo 3” just so my character could have a katana on his back. A completely functionless sword, mind you – it just looked neat! In “Halo 5: Guardians,” the most recent game in the series, similar items are locked not behind an achievement list, but a paywall.

Studio artists spend countless hours designing these in-game cosmetics, and their work is often exceptional. The resources to keep those artists gainfully employed have to come from somewhere, but the practice of adding more and more paid content to games seems increasingly anti-consumer as time goes on. Loot boxes such as those offered by “Overwatch” and “Star Wars Battlefront II” are especially suspect – through loot boxes, gamers can trade real-life cash for a mere chance to receive the in-game item they’re actually hoping for.

This form of microtransaction has been shown to perpetuate gambling issues, according to a study done by the Royal Society of Open Science, “adolescents and loot boxes.” The study shows that older adolescents who spent money on loot boxes displayed more than twice as high measurements of problem gambling than those who did not, and that adolescent problem gamblers spent more than five times as much money on loot boxes than those who did not have a gambling addiction.

The issue is prominent enough that in May 2019, Sen. Josh Hawley of Missouri introduced a bill to Congress to “regulate certain pay-to-win microtransactions and sales of loot boxes.” Like all legal documents, the exact phrasing of the bill is meticulous and grants certain exemptions. The bill hasn’t budged, but if it were to pass, the majority of microtransactions would be effectively banned by the Federal Trade Commission – the gambling-like loot boxes would disappear while expansion packs would still be allowed.

But with huge swaths of cash suddenly missing from the pockets of publishers and their developers, many released video games with ongoing development would likely see much of their staff reassigned at best, or laid off at worst. Games that fit that criteria include “Fortnite,” “Apex Legends,” “Call of Duty: Warzone,” “Valorant” and “Overwatch,” among others – some of the most popular games on the market today.

These “games-as-a-service” are theoretically complete games that continue to publish significant content updates for many years. Because of the profits from loot boxes, developers are able to dedicate a significant portion of their staff to create additional content for these games. If those funds disappeared, development for those games would be severely stunted. Thus, the money gamers already funneled into those products would not go toward further development of their favorite games.

Following China’s banning of loot boxes in 2017, similar laws cropping up throughout Europe and a public hearing in August in the U.S. between the FTC and the Entertainment Software Association, game publishers have begun to back away from the loot box model in favor of “battle passes” – these query players for around $10 upfront to unlock a series of in-game challenges that can be achieved to unlock items, effectively removing the gambling issue.

Microtransactions are likely here to stay, but at least the most anti-consumer of them – loot boxes and pay-to-win mechanics – seem to be falling out of fashion.

If you’re waiting on Congress to make a more definitive move, I hear they have their hands tied with a very different kind of pandemic for now.