Getting microtransactions right

Spinks had a link to an Extra Credits video on microtransactions which I consider a very good overview on what are "good" and "bad" Free2Play models.

One difficulty when discussing good and bad is that different people tend to define these terms differently. Is something good if it works well, or is there an ethical dimension to it? And how ethical is it to take money from your customers? Opinions on that tend to differ widely.

For example, I am generally in favor of the idea of supermarkets. They provide goods at lower cost with a wider range of choice. Nevertheless I do recognize that supermarkets are using psychological tricks on their customers to make them buy more: Sweets near the checkout, promotions in the most visible spots, necessary items in the back forcing people to pass lots of other stuff. Is that "good" or "bad"?

Free2Play games also use psychological tricks to make players spend more. First of all there are very few games in which you can actually spend money directly on virtual items. In nearly all Free2Play games you first buy an intermediate currency, and then spend that currency on the virtual items. That almost always ends you up with leftover currency, encouraging you to spend more. It also makes the price less obvious, as the price tag for that monocle is now "12,000 Aurum" instead of "$68". Furthermore you have the impression that you can make a great deal by buying more virtual currency at once, as the exchange rate usually is more favorable if you do.

But even with all the tricks, I do believe that players aren't stupid. It is the basic economic theory of the homo economicus which predicts that somebody buys an item, even a virtual one, because that item gives him more utility than the money he spent on it. I most certainly had several cases where the microtransaction model or pricing of a game turned me off before I ever paid anything, while I'm not shy of paying in Free2Play games I have fun with.

That isn't to say that the games I do spend my money on always have gotten microtransactions perfectly right. For example World of Tanks gets microtransactions 95% right: The premium option, the gold tanks, and the conversion of blocked xp into free xp are all very well done, and fulfill the criteria in the Extra Credits video. I also liked Wargaming.net's recent announcement that their next game, World of Warplanes, will share the gold virtual currency with World of Tanks (and even the free xp). The one flaw in their microtransaction business model is the gold ammo, which is the only item which actually makes a player using it more powerful than an equally skilled player in the same tank without the ammo. Like EVE players do about the possibility to buy capital ships with real money, one could argue that gold ammo has too little impact for too much money to count as "pay to win", but the option being there is somewhat annoying.

In the end I am optimistic that this is a learning process. "Bad" microtransaction won't be accepted by the players, thus the games relying mostly on those bad options will fare badly and disappear. And the new games will copy those microtransaction options which have been shown to work. If EVE's new deluxe clothing line sells well at a cost per item similar to luxury real clothing, we'll see similar stuff in other games. But I suspect that Extra Credit got it right in his video: The best-selling stuff will always be items of convenience (faster advancement, more inventory, etc.), and not just status symbols or pure power.