The video game industry cannot surrender on microtransactions.
Two of the largest video game firms in the United States – Electronic Arts and Take-Two Interactive – currently make the overwhelming majority of their money from live games, subscriptions and in-game purchases, based on their latest earnings reports. .
Microtransactions are purchases that users make in-game for real money. They appear as subscriptions, virtual currencies, and character customization options, amongst other things.
Popular live service titles like Fortnite, Call of Duty: Warzone, and Clash Royale have been built around this revenue model. Game publishers need to offer updates throughout the game’s specific lifecycle to draw players’ attention, which is where the term “live service” comes from. Players pay for these updates through season passes or subscriptions.
Players’ response to their first attempts at in-game purchases caused the video game industry to alter its approach to those subscriptions and the bundling of purchasable content.
“The industry is really moving towards what is called a battle pass system or some kind of seasonal content bundles,” said Mat Piscatella, executive director of video games at Circana. “There has been a much warmer reception to these systems because I think people are noticing that they are getting more value and more reliable value for money.”
Spending money in games has turn out to be a high-stakes affair, not only a lucrative business. The company’s latest earnings report shows that Electronic Arts’ live services business earned it $5.6 billion in the most up-to-date quarter. Epic Games, the creator of the popular Fortnite series, has taken Apple to court over an in-game payment system that the developer provided in Fortnite to be able to bypass Apple App Store fees. In Europe, the most important focus of technology regulators is app stores and so-called loot boxes.
Watch the video above to learn more about microtransactions, the backlash surrounding them, and where the industry is heading.
