Thursday, September 13, 2007

Psychochild on microtransactions

Psychochild has an interesting blog entry from the talk he gave at the Austin conference on Emerging Business Models. Quote: "it's now painfully obvious that microtransactions work in North America".

Okay, you shouldn't believe all the forecasts in his slides (Especially not the one where the revenues in Asia, Europe, and Asia add up to 105%). But I would agree with the general observation that microtransactions will swap over from Asia to the western world.

Microtransactions are more dominant in smaller games, especially browser games. Monthly fees will probably remain the dominant model for triple-A big MMORPGs with multi-million dollar production costs. Quoting from the Warhammer Online FAQ: "Given the expense of creating the game, maintaining the customer service system (in-game, phone and email) and creating new content, the only way for a company to justify these expenses is with a monthly subscription fee. However, when you look at the monthly fee (usually $10-$16USD) that a player pays to access the content almost 24x7, there are few entertainment values that can top that. Basically, for the price of one movie ticket in NYC, a small soda and a small cup of popcorn you have access to an ever-changing and growing world on demand (minus short downtimes for server or software upgrades)."

But what about the mid-size games? The most frequent comment echoed in the blogosphere about Tabula Rasa was "nice game, but I'm not paying $15 a month for that". Guild Wars would have been a lot less successful if it had cost $15 a month. I already applauded Hellgate London for wisely making the monthly subscription optional. From what I hear (haven't played it), Hellgate London is somewhat better than Tabula Rasa anyway, but given that they appear in the same quarter and are somewhat similar in action-MMORPG style, the more adapted business model of Hellgate means that it will blow Tabula Rasa out of the water. As much as I am looking forward to Pirates of the Burning Sea, I'm not sure yet that it's worth a monthly fee; although in this case the inclusion in the Sony Station Access might still save the day.

One problem with monthly fees is that they don't vary much, and thus invite direct comparison. Would you rather spend $15 a month on World of Warcraft or on Star Wars Galaxies? The alternative battle of "would you rather spend $15 on World of Warcraft or play Guild Wars for free" is a lot easier to win for the not-quite-as-good game. So once you got people playing your "free" game, you offer them a double xp buff for some small sum of real money, or access to extra content, or decorative fluff. The key here is choice, having the option of spending as little as $0 to play the game, thus not having to cancel your account if you don't play for a while. Whether that would work for huge games like WoW or WAR isn't sure, but for smaller game this or another alternative business model is the only viable future.

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