Microtransactions: 3 common misconceptions

This is a guest post from Lori Bray who is a qualified journalist and has spent many years working within the games industry.

Microtransactions have a bad rap.  No one wants to see their app featured on the Daily Show for fleecing a ten-year-old out of $1500.  Or be known as the developer who ruined a beloved franchise with bad cash shop design.

But microtransactions have a lot of advantages, especially for small devs and publishers.  Keeping the title free means fewer barriers to entry and a more efficient cost-per-install.  Microtransactions also mean that far more granular price points can be developed, converting a wider base of users who might not be willing to maintain a €12/month subscription or purchase a retail box for €30-40.  They also mean that there’s no artificial cap on your price points, meaning users who are more devoted to your title can spend more that a typical sub or collector’s edition box.

There are plenty of opinions out there on the subject.  Just about every gaming journalist from Eurogamer to Forbes have written articles about how they think microtransactions should or shouldn’t be designed, but most of them are filled with some really bad advice.  Like:

1.  Don’t sell power.

This seems to be the mantra from armchair game designers across the globe.  Your game must be an egalitarian paradise where the only thing separating the high tier from low tier players is skill and dedication.  Those engaged enough with your title to make a purchase can enjoy some kind of vanity customisation, and that will be a strong enough value proposition to make sure your lifetime values are higher than your cost-per-installs.

This is quite possibly the worst piece of advice given from users who ultimately aren’t interested in ever purchasing game content.

An example that’s frequently held up as a paragon of free-to-play cash shop design is League of Legends — an experienced player could theoretically do just as well with the free week champions as with the newly released champion purchased with 975 Riot Points.

Don’t get me wrong, this is a fabulous microtransaction design that has propelled Riot into a household name for PC and MOBA gamers.  But, looking at the facts, League of Legends has a lower average revenue per user than games with hybrid/freemium models, or games which flat out sell power in their shops:


gamesparks microstransactions f2p games development

Even when accounting for Riot’s massive active user numbers, their total revenues for 2013 still come out below Crossfire, a game which sells power almost exclusively:

 gamesparks f2p game development microtransactions


If selling power isn’t a cardinal sin, what is it that draws such negative press?

It’s a complex issue, but to boil it down to a simple concept: balance.

If power is sold without any sort of mitigation, the disparity between your free players and your paying players will quickly grow unmanageable, leaving free players uncompetitive and bitter.  Let a base of paying users stagnate and you’ll see the retention rate of your new players plummet as veterans start ganking novices out of boredom.

There are a few approaches for managing this phenomenon:

  • some publishers keep veterans together on a single server with regular server/database merges.  This allows novices to experience a fresh server, and allows populations to mature at their own pace.  But get the pacing wrong and your retention is going to take a hit.  This technique is also associated with burn and churn free to play titles that haven’t been developed or properly adapted for western markets, so be wary.
  • some publishers sell only what can be acquired in game. Sometimes this means that any item in the shop can be found in game with enough sweat, or some form of alternative currency is introduced that users can earn through gameplay (See: Guild Wars 2 Gems, or League of Legends Influence Points).  This compromise satisfies most hard core gamers, but if the grind to reward ratio is off, casual gamers can be put off.
  • some innovations in free-to-play embrace the inherent unbalance of online gaming.  The monetisation designer of Warhammer 40k Eternal Crusade is open about the fact that paid characters will be more powerful, and that game items will be purchasable in shop but never as powerful as raid/dungeon drops.  We’ll need to wait until the end of 2015 to see how this hybrid approach goes over.

Long and short of it?  Selling power isn’t going to get you tarred and feathered, as long as you keep the systems balanced and enjoyable for all your users.


2. Don’t sell time.

Here is another piece of standard advice that goes against all practical monetisation experience.  Typically, if you aren’t selling vanity or power, you’re selling time:

  • Have a mount in your cash shop?  You’re selling the time your players saved running from place to place.
  • Have inventory expansions in your cash shop?  You’re selling the time your players save rifling through the NPC merchant UI.
  • Have XP boosts in your cash shop?  You’re selling the time your players save progressing through your product’s content.

Time is a brilliant monetisation mechanic because no matter how well paced your product is, there will always be certain segments of your users who value time over money.  At the right price point, these types of items will be hugely popular.

Users are not alienated by time saving monetisation mechanics, but rather using time as a limitation for engaging with a game.  Locking users out of your title until resources regenerate or until a cash shop purchase is made is almost always going to be a bad decision.  DeltaDNA, a game analytics platform, calls it a “barrier to engagement,” and it’s one of the leading reasons why users don’t convert into buyers.


gamesparks f2p game development microtransactions

In some cases, unpopular time mechanics can find massive popularity with some simple rebranding and reframing.  The most important thing to remember is not to punish users for playing your title, reward them for returning.

The most famous example of this is probably World of Warcraft’s rested XP system.  In its original design, experience gain began at 100% and diminished over the length of the users’ session.  As the system was hugely unpopular, it was rebranded: now users who logged out in certain locations would receive a “rested xp bonus.”  When the bonus was used up, users gained experience at the default rate of 100%.

The systems were exactly the same, but the former punished users for playing the game, the latter rewarded users for returning.  Apply the same principles to your monetisation strategies.


3. Don’t pester users with the cash shop, when users are ready to spend, they’ll find it on their own.

No one likes asking for money, and there’s more conventional wisdom that game cash shops should be unobtrusive, if not practically invisible.  According to this line of thinking, users should only ever see the cash shop or its offerings when they are already thinking about making a purchase.

It’s a nice line of thinking, but it’s inefficient and it means you’ll leave behind users who are ready and willing to spend money in your game.

I tried this approach on one title that I published.  The cash shop opened with minimal fanfare, and once live I relied on game design and player good will to drive sales.  After a disappointing quarter of revenue, it was clear that this method wasn’t going to deliver the sales the game needed to thrive.

During the next quarter, I designed 2-3 special offers per week targeted at different user behaviour segments (I’ll talk about this in a future blog post).  Every time there was a cash shop update, I had my team promote it: on social media, in game, on our website and forums.  My community managers even designed events and social media games where the users could participate in designing the special offers they wanted to see.

After doing all this, sales for the following quarter clocked in 53% higher.

Just to reiterate, with no new goods introduced into the shop, with no new in game content, and with no major increase in MAUs, sales were over 50% higher.  My users were happy to be reminded about the cash shop, as long as those reminders came with good value.

Wrap Up


The most important thing to keep in mind when designing your monetisation strategy is to keep a lean, iterative approach.  Understand how your players are behaving in game and search for ways you can enhance their experience without diminishing your title’s balance and flow.  Too many developers tack on a cash shop in the home stretch of development and never refine once player data starts flowing in.  What works in your first six months of launch may need to be tweaked or overhauled as your product matures, and that’s ok as long as you anticipate and react.

  • dhjdhjdhj

    TF2 and GW2 don’t sell power…

Who uses GameSparks?