Does the future of gaming lie in micro-transactions?

Does the future of videogames lie in selling in-game items? Some industry analysts seem to think so. We take a look at a growing trend...

The last few years has seen a huge shift in the way games are played and distributed. Where games once came on cartridges, discs or even audio tapes, we’re increasingly downloading our games from online stores such as XBLA, PSN or Steam.

While this has been the case for some time now, and will become a growing trend in the future, there’s been another trend, that has emerged in tandem with the rise of online distribution and, indeed, online games. More and more often, we’re seeing games that are billed as free-to-play.

Only last week, Valve announced that one of the finest games in its portfolio (if games actually come in portfolios), the multiplayer shooter, Team Fortress 2, would be going free-to-play. Now, while TF2 is a few years old now, it’s still a much-loved and brilliantly crafted game, and Valve’s decision to start giving the game away to play for nothing may, to a casual observer, seem rather an odd one.

Yet Valve is merely following a business decision that has long been taken up by other developers and publishers. A quick scout around the Internet will reveal a considerable number of MMORPGs and shooters that can be downloaded and played for free – titles such as Runes Of Magic, MapleStory and Lord Of The Rings Online are just some of them.

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Where, in the past, most online games were funded through subscriptions, an increasing number are turning to other forms of revenue to make money – specifically, a mixture of advertising and micro transactions.

Micro-transactions will presumably play an important part in Team Fortress 2’s future for Valve. The company began selling in-game items, most obviously hats, some time ago, and this will now become TF2’s prime source of income, though we wouldn’t be surprised if Valve started to sell map packs for the game in the near future.

Publishing giant EA has been exploring the possibilities of micro-transaction-funded games for some time now – Battlefield Heroes, Battlefield Play4Free and Need For Speed: World are but a few examples.

It’s a way of making money that appears to be rapidly replacing the subscription-based funding that was previously seen in MMOs, and games such as World Of Warcraft are, it seems, becoming increasingly unusual. EA’s forthcoming collaboration with BioWare, the ambitious, expensive Star Wars: The Old Republic is one of the few MMORPGs to buck the current trend.

Nevertheless, EA seems to think that a profitable future lies in free-to-play games. According to a story over on Games Industry.biz, EA’s Frank Gibeau has stated that the publisher will continue to “aggressively invest” in free-to-play titles, citing its 17 million users as a sign of its success.

EA’s hope – which is much the same as any other developer or publisher’s – is that a game will reach a broad enough audience to generate the same amount of money from millions of tiny payments as it would through fewer subscription fees of, say, £14.99 per month.

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But while EA and Valve have embraced free-to-play games, many companies, such as Microsoft and Nintendo, are largely against the idea. It’s a resistance that could prove to be their undoing in the long term, argues Rick Gibson of the consultancy Games Investors.

“Xbox Live Arcade has a network that typically converts ten times as many players to payers,” Gibson told Games Industry.biz. “And when they start to spend, they spend heavily. For some reason it’s not actually being exploited on consoles.”

Gibson points out that Sony is one of the few console manufacturers to have dipped its toe into the micro-transaction waters, with its Home service offering virtual items for sale in its online shop.

Even that old stalwart of subscription-based MMOs, World Of Warcraft, may one day become a free-to-play game – and that rumour comes from none other than its lead designer, Tom Chilton. Last year, he told PC Gamer, “I can definitely imagine that being the case with World Of Warcraft. If another game comes along and blows us away it may not make sense for us to have a subscription fee. Or even further down the line, when we have another MMO out.”

So is it really a mere matter of time before all games become free-to-play? It’s certainly a possibility, particularly as physical media as a means of distributing games seems to be dwindling all the time. As we gamers become increasingly used to the idea of downloading games rather than buying them in a box, it’s likely that we choose to consume them will change, too.

It’s possible that we’d rather only pay for a game for as long as we play it, rather than pay a flat fee for something we’ll only bother to play for an hour or two. While smaller, indie developers will more than likely continue a small fee to download and play their games, as is currently the case on iPhone games, for example, I can certainly see the way we play big-budget games changing considerably over the next few years.

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The cost of developing big games is always increasing, and studios are always looking for new ways to fund their games, as we’ve seen with the announcement of Call Of Duty Elite. It’s likely that many other developers will follow suit, particularly if Elite proves to be a success.

It could also prove to be the case that environmental concerns will also change the way games are funded and distributed, at least according to Rick Gibson.

“Peak oil is the point in global oil production where it reaches the crest and goes into terminal decline, Gibson said. “Now, I’m not suggesting that we’ve reached peak console in terms of a terminal decline, but certainly it’s unlikely that the boxed industry is ever going to reach the same heights that it has before. We think micro transactions are increasingly attractive to a vast chunk of users.”

It’s certainly a valid point, though the continued rise of micro-transactions in games will, of course, largely depend on the players themselves. Companies such as EA may have proved that free-to-play games can turn a profit, but will how would gamers respond if almost every game they played – whether it’s FIFA, Super Mario, Gears Of War or Uncharted – went the same way, with those games funded exclusively through the purchase of in-game items, or extra maps?

That’s a question that companies such as Nintendo and Microsoft are asking themselves, and they’ll no doubt be watching their competitors closely for signs of success over the next few years.

Games Industry.biz

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