Why the $183 billion video game industry can’t quit microtransactions

The
video
game
industry
cannot
quit
microtransactions.

In
fact,
two
of
the
largest
video
game
companies
in
the
United
States
— Electronic
Arts
and
Take-Two
Interactive — now
make
the
overwhelming
majority
of
their
money
from
live-service
games,
subscriptions
and
in-game
purchases,
according
to
their
recent
earnings
reports.

Microtransactions
are
purchases
that
users
make
inside
a
game
using
real
money.
They
show
up
as
subscriptions,
virtual
currencies,
and
character
customization
options,
among
other
examples.

Popular
live-service
titles
such
as
Fortnite,
Call
of
Duty:
Warzone,
and
Clash
Royale
were
built
around
this
revenue
model.
Game
publishers
must
provide
updates
throughout
certain
game
life
cycles
to
retain
player
attention,
which
is
where
the
term “live
service”
comes
from.
Gamers
pay
for
those
updates
through
season
passes
or
subscriptions.

Gamer
backlash
from
the
early
attempts
at
in-game
purchases
caused
the
video
game
industry
to
shift
its
approach
to
these
subscriptions
and
bundling
purchasable
content.

“The
industry
is
really
moved
to
more
of
a
what
they
call
a
battle
pass
system,
or
some
kind
of
packaging
of
seasonal
content,”
said
Mat
Piscatella,
executive
director
of
video
games
at
Circana. “Those
systems
have
found
much
warmer
response
because
I
think
people
are
finding
that
they’re
getting
more
value,
and
more
reliable
value
for
their
money.”

In-game
spending
has
become
a
high-stakes
issue
in
addition
to
a
lucrative
business.
Electronic
Arts’
live-services
operations
made
the
company
$5.6
billion
in
its
most
recent
quarter,
according
to
the
company’s
latest
earnings
report.
Epic
Games,
which
created
the
popular
Fortnite
franchise,
took
Apple
to
court
over
an
in-game
payment
system
that
the
developer
released
inside
Fortnite
in
order
to
bypass
Apple’s
App
Store
fees.
In
Europe,
app
stores
and
so-called
loot
boxes
are
a
major
focus
of
tech
regulators.

Watch
the
video
above
to
learn
more
about
microtransactions,
the
backlash
involved,
and
where
the
industry
goes
from
here.