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{{short description|Video game business model}}
{{Excessive citations|date=September 2023}}
{{use mdy dates|date=September 2019}}
'''Microtransactions'''
Free-to-play games that include a microtransaction model are sometimes referred to as "[[freemium]]". Another term, "[[pay-to-win]]", is sometimes used pejoratively to refer to games where
[[Loot box]]es are another form of microtransactions. Through purchasing a loot box, the player acquires a seemingly random assortment of items. Loot boxes result in high revenues because instead of a one-time purchase for the desired item, users may have to buy multiple boxes. This method has also been called a form of underage [[gambling]]. Items and features available by microtransaction can range from cosmetic (such as decorative character attire) to functional (such as weapons and items). Some games allow players to purchase items that can be acquired through normal means, but some games include items that can only be obtained through microtransaction. Some developers<ref>{{Cite web|title = Common mis-conceptions about microtransactions {{!}} Game Sparks|url = http://www.gamesparks.com/blog/micro-transactions/|website = www.gamesparks.com|access-date = January 14, 2016}}
The reasons why people, especially children, continue to pay for microtransactions are embedded in human [[psychology]].<ref name=":5">{{Cite web|url=https://www.tuw.edu/psychology/psychology-behind-microtransactions/|title=Insert More Coins: The Psychology Behind Microtransactions|date=2016-02-25|website=Touro University WorldWide|language=en-US|access-date=2019-11-06}}</ref> There has been considerable discussion over microtransactions and their effects on children, as well as [[Loot box#Regulation and legislation|regulation and legislation efforts]]. Microtransactions are most commonly provided through a custom store interface placed inside the app for which the items are being sold. [[Apple Inc.|Apple]]
== History ==
Initially, microtransactions in games took the form of exchanging real-life money for the [[Virtual goods|virtual currency]] used in the game that the user was playing. The arcade game ''[[Double Dragon 3: The Rosetta Stone]]'' (1990) was infamous for its use of microtransactions to purchase items in the game. It had shops where players would insert coins into [[arcade machines]] to purchase upgrades, [[power-ups]], health, weapons, special moves, and [[player characters]].<ref>{{cite web |last1=Derboo |first1=Sam |title=Double Dragon 3 (Arcade) |url=http://www.hardcoregaming101.net/double-dragon-3-arcade/ |website=Hardcore Gaming 101 |date=November 4, 2016 |access-date=15 May 2020}}</ref> The microtransaction revenue model gained popularity in South Korea with the success of [[Nexon]]'s online [[free-to-play]] games, starting with ''[[QuizQuiz]]'' (1999),<ref>{{cite news |last1=Takahashi |first1=Dean |title=Nexon wins over Western developers by pitching gaming as an art form |url=https://venturebeat.com/2015/11/01/nexon-wins-over-western-developers-by-pitching-gaming-as-an-art-form/2/ |access-date=14 May 2020 |work=[[VentureBeat]] |date=1 November 2015}}</ref><ref>{{cite web |title=Quiz Quiz |url=http://mcompany.nexon.com/eng/games/game_qplay.aspx |website=[[Nexon Corporation]] |year=2011 |access-date=14 May 2020}}</ref> followed by games such as ''[[MapleStory]]'' (2003), ''[[Mabinogi (video game)|Mabinogi]]'' (2004), and ''[[Dungeon Fighter Online]]'' (2004).<ref>{{cite book |last1=Wolf |first1=Mark J. P. |title=Video Games Around the World |date=2015 |publisher=[[MIT Press]] |isbn=978-0-262-32849-4 |page=510 |url=https://books.google.com/books?id=Gen3CAAAQBAJ&pg=PA510}}</ref>
Notable examples of games that used this model in the early 2000s include the social networking site ''[[Habbo Hotel]]'' (2001), developed by the Finnish company [[Sulake]], and [[Linden Lab]]'s 2003 virtual world game ''[[Second Life]]''. Both free games allow users to customize the clothing and style of their characters
[[File:Oblivion—Horse Armor.jpg|The content of the "Horse Armor" package was generally seen as meager, inspiring some to complain of its [[United States dollar|US$]]2.50 price.|thumb|right|300px]]
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"We were the first ones to do downloadable content like that – some people had done similar things, but no one had really done additions where you add new stuff to your existing game." There was no pressure from Microsoft to make the move.<ref name="SCRUP">{{cite web|url=http://www.gamesindustry.biz/content_page.php?aid=23597 |title=Scrolling Up |first=Ellie |last=Gibson |publisher=[[Gamesindustry.biz|GamesIndustry.biz]] |date=2007-03-20 |access-date=2007-06-27 |url-status=dead |archive-url=https://web.archive.org/web/20070328173716/http://www.gamesindustry.biz/content_page.php?aid=23597 |archive-date=March 28, 2007 }}</ref>
In June 2008 [[Electronic Arts]] introduced an online Store for ''[[The Sims 2]]''.<ref>{{cite web |url=https://www.ign.com/articles/2008/06/30/the-sims-2-store-all-new-online-shopping-destination-for-your-sims-goes-live-today |title=The Sims 2 Store, All-New Online Shopping Destination for Your Sims, Goes Live Today |date=30 Jun 2008 |website=IGN}}</ref> It allowed players to purchase points that can be spent on in-game items. The Store has also been a part of ''[[The Sims 3]]'' since the game's release.<ref>{{cite web |url=https://store.thesims3.com/ |title=Store - The Sims™ 3}}</ref> In ''[[The Sims 4]]'' Electronic Arts removed the ability to buy single items, instead downloadable content is provided exclusively via expansion packs.<ref>{{cite web |url=https://www.ea.com/en-gb/games/the-sims/the-sims-4/packs |title=The Sims™ 4 - Packs - An Official EA site|date=May 31, 2022 }}</ref>
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In the late 2000s and early 2010s, games like [[Facebook]]'s ''[[FarmVille]]'' (2009), [[Electronic Arts]]'s ''[[The Simpsons: Tapped Out]]'' (2012) and [[Supercell (video game company)|Supercell]]'s ''[[Clash of Clans]]'' (2012) pioneered a new approach to implanting microtransactions into games. In conjunction with having virtual currency be used to purchase items, tools, furniture, and animals, These mobile games made it so users can purchase currency and then use that currency to reduce or eliminate the wait times attached to certain actions, like planting and growing carrots or collecting taxes from the townspeople.<ref name=":0" />
In March 2009 the [[Ultimate Team]] game mode was introduced in ''[[FIFA 09]]'' in which gamers can buy "packs" containing items such as players, stadiums and contract extensions with currency earned by playing the game or real world money.<ref>{{Cite web|last=
From around 2017, another major transition in how microtransactions are implemented in games occurred. "[[Games as a service|Live-service]]" games, like [[Epic Games]]'s ''[[Fortnite]]'', with constantly changing and updating content, became more prevalent in the video game market. These types of games heavily employ the use of the loot box microtransaction type. According to the September 2019 report by the [[Parliament of the United Kingdom|UK Parliament]]'s [[House of Commons of the United Kingdom|House of Commons]] and the [[Digital, Culture, Media
The aforementioned ''Fortnite'' is an example of a microtransaction model in which all purchases are solely cosmetic: players can choose to purchase "skins" (cosmetic changes to the way characters, weapons, and vehicles look) to show off to other players. However, a player can experience all the content of the game and be on an even playing field without purchasing any microtransactions because no feature or gameplay-affecting piece of content is locked behind a payment.<ref>{{Cite web|url=https://www.dummies.com/computers/pcs/computer-games/how-to-acquire-fortnite-cosmetic-items/|title=How to Acquire Fortnite Cosmetic Items|last=Loguidice|first=Bill|website=Deummies|language=en-US|access-date=2021-11-03}}</ref> These games still occasionally take accusations of being "pay-to-win" as combat-focused video games, such as ''[[Apex Legends]]'' or ''[[Call of Duty: Warzone]]'', offer skins that are inspired by real-world military equipment – often including [[camouflage]] – which technically can give players an advantage by obscuring them to human opponents.<ref>{{Cite web|url=https://www.eurogamer.net/articles/2021-06-22-looks-like-call-of-duty-warzones-controversial-roze-skin-if-finally-properly-nerfed|title=Looks like Call of Duty: Warzone's controversial Roze skin is finally properly nerfed|last=Yin-Poole|first=Wesley|date=2021-06-22|website=Eurogamer|language=en-US|access-date=2021-11-03}}</ref>
==Impact==
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[[Electronic Arts]] Corporate Vice-President [[Peter Moore (business)|Peter Moore]] speculated in June 2012 that within 5 to 10 years, all games will have transitioned to the microtransaction model.<ref>{{cite web|url=http://www.gamespot.com/news/microtransactions-will-be-in-every-game-says-ea-exec-6383445|title=Microtransactions will be in every game, says EA exec|work=GameSpot}}</ref> Tommy Palm of King (''Candy Crush Saga'') expressed in 2014 his belief that all games will eventually be free-to-play.<ref name="recode.net"/> According to Ex-[[BioWare]] developer Manveer Heir in a 2017 interview, microtransactions have become a factor in what types of games are planned for production.<ref>{{cite web|url=http://www.pcgamer.com/ea-pushing-for-more-open-world-games-because-you-can-monetise-them-better-says-ex-bioware-dev/|title=EA 'pushing for more open-world games [because] you can monetise them better,' says ex-Bioware dev|work=PC Gamer|date=October 23, 2017 |last1=Donnelly |first1=Joe }} October 23, 2017</ref>
[[Free-to-play]] coupled with microtransactions may be used as a response to piracy. An example of this is the mobile game ''[[Dead Trigger]]'' switching to a free-to-play model due to a high rate of piracy.<ref>[http://www.androidcentral.com/how-high-unbelievably-high-piracy-dead-trigger-devs-not-saying How high is 'unbelievably high' piracy? Dead Trigger dev's not saying] [[Android Central]]. July 23, 2012</ref> While microtransactions are considered a more robust and difficult to circumnavigate than [[digital rights management]], in some cases they can be circumvented. In 2012, a server was created by a Russian developer, which provided falsified authentication for iOS in-app purchases. This allowed users to obtain features requiring a microtransaction without paying.<ref>{{cite web|url=
Consumer organizations have criticized that some video games do not describe adequately that these purchases are made with real currency rather than [[virtual currency]]. Also, some platforms do not require passwords to finalize a microtransaction. This has resulted in consumers getting unexpectedly high bills, often referred to as a "[[bill shock]]".<ref>[https://www.polygon.com/features/2014/4/3/5566578/selling-candy-to-babies Selling candy to babies] – Richard Stanton, April 3, 2014</ref>
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* Loot box rewards are determined by random chance and percentages, plus they can directly influence gameplay via the items they bestow.<ref name=":1">{{Cite journal|last1=Randau|first1=Denise|last2=Nguyen|first2=Anh|last3=Mirgolozar|first3=Adrian|date=December 7, 2018|title=Loot boxes: gambling in disguise? - A qualitative study on the motivations behind purchasing loot boxes|url=http://www.diva-portal.org/smash/get/diva2:1278647/FULLTEXT01.pdf|journal=Jönköping University International Business School Bachelor Thesis}}</ref>
* They sometimes cost too much money for what they are worth. For example, a bundle of 50 loot boxes in [[Blizzard Entertainment|Blizzard]]'s first-person shooter game ''[[Overwatch (video game)|Overwatch]]'' costs $39.99.<ref>{{Cite web|url=https://www.polygon.com/2016/5/26/11785084/overwatch-loot-system-guide|title=Are Overwatch's loot boxes worth your money?|last=Friedman|first=Daniel|date=2016-05-26|website=Polygon|language=en|access-date=2019-11-03}}</ref><nowiki/>
* They may facilitate [[gambling]]
* Games with loot boxes, like ''FIFA'', can become "[[pay-to-win]]" (in order to advance past certain points, or to become the best in the game, it is virtually required to pay real money to receive in-game currency to purchase items or to pay for bigger and better items directly).<ref name=":1" />
* Microtransactions in games that are not [[free-to-play]] means that gamers are paying more money after already paying to experience the full game.<ref>{{Cite journal|last=McCaffrey|first=Matthew|date=2019|title=The Macro Problem of Microtransactions: The Self-Regulatory Challenges of Video Game Loot Boxes|language=en|location=Rochester, NY|ssrn=3309612}}</ref>
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Games would have to remove their microtransactions in order for it to be sold in their country. If the game companies don't comply, then Belgium's government said that it will enact "a prison sentence of up to 5 years and a fine of up to 800,000 euros".<ref name=":2" /> While most game publishers agreed to modify their games' loot boxes in accordance with governmental laws, or otherwise as a result of negative reactions, others, such as Electronic Arts, have contested that they do not constitute as gambling. However, EA eventually complied with the Belgian government's declaration and made it so players in Belgium can not purchase FIFA Points, the premium (obtained by buying it with real money) in-game currency used in ''FIFA''{{'}}s "Ultimate Team" game mode.<ref>{{Cite web|url=https://www.ea.com/en-ca/news/fifa-points-belgium|title=FIFA Points in Belgium|date=2019-01-29|website=Electronic Arts Inc.|language=en|access-date=2019-11-03}}</ref> Professional ''FIFA'' players in Belgium were disappointed because not being able to buy FIFA Points makes it harder for them to compete and succeed in the ''[[FIFA Global Series]]'' and the EA-sponsored e-sports competition for ''FIFA'' games, showing just how "pay-to-win" they feel FIFA Ultimate Team is.<ref>{{Cite web|url=https://bleacherreport.com/articles/2836528-is-it-too-expensive-to-be-good-at-fifa|title=Is It Too Expensive to Be Good at FIFA?|last=Akerman|first=Nick|website=Bleacher Report|language=en|access-date=2019-11-03}}</ref>
In the United States, there have been some calls to introduce legislation to regulate microtransactions in video games, whether on mobile, [[Video game console|consoles]], or PC, and numerous attempts have been made recently to pass such legislation. In November 2017, [[Hawaii]] representatives [[Chris Lee (Hawaii politician)|Chris Lee]] and Sean Quinlan, during a news conference, explained how loot boxes and microtransactions prey on children and that they are working to introduce bills into their state's house and senate.<ref>{{Cite web|url=https://www.polygon.com/2017/11/22/16690182/battlefront-2-loot-crates-hawaii-belgium-banned-regulation-investigate|title=Battlefront 2 loot crates draw lawmakers' attention in US, Belgium (update)|last=Good|first=Owen S.|date=2017-11-22|website=Polygon|language=en|access-date=2019-11-05}}</ref> A few months later, in February 2018, they successfully put four bills onto the floor of Hawaii State Legislature.<ref name=":3">{{Cite web|url=https://www.polygon.com/2018/2/13/17007830/hawaii-loot-crate-laws-ea-star-wars-battlefront-2|title=Hawaii lawmakers introduce loot crate regulation bills|last=Good|first=Owen S.|date=2018-02-13|website=Polygon|language=en|access-date=2019-11-05}}</ref> Two of those bills would make it so games containing loot boxes can not be sold to people under the age of 21, and the other two would force game publishers to put labels on the case of their games that have loot boxes in them, as well as make them be transparent about the item drop rates for the rewards in their game's loot boxes.<ref name=":3" /> However, all four bills failed to pass through the Hawaii State Legislature in March 2018.<ref>{{Cite web|url=https://www.hawaiitribune-herald.com/2018/03/24/hawaii-news/loot-box-bills-fail-to-advance/|title='Loot box' bills fail to advance|first=Michael|last=Brestovansky|date=2018-03-24|website=Hawaii Tribune-Herald|language=en-US|access-date=2019-11-05}}</ref> In May 2019, Republican Senator [[Josh Hawley]] of [[Missouri]] introduced a bill named "The Protecting Children from Abusive Games Act" to ban loot boxes and pay-to-win microtransactions in games played by minors, using similar conditions previously outlined in the [[Children's Online Privacy Protection Act]].<ref>{{Cite web|url=https://www.usatoday.com/story/tech/news/2019/05/08/senator-seeks-ban-pay-win-and-loot-boxes-video-games/1144804001/|title=Senator to introduce legislation banning video game 'loot boxes,' 'pay to win' features|website=USA TODAY|language=en|access-date=May 10, 2019}}</ref><ref>{{Cite web|url=https://www.hawley.senate.gov/senator-hawley-introduce-legislation-banning-manipulative-video-game-features-aimed-children|title=Senator Hawley to Introduce Legislation Banning Manipulative Video Game Features Aimed at Children {{!}} Senator Josh Hawley|website=www.hawley.senate.gov|date=May 8, 2019 |access-date=May 10, 2019}}</ref> The bill received some bi-partisan support in the form of two co-sponsors from Democrats [[Richard Blumenthal]] of [[Connecticut]] and [[Ed Markey]] of [[Massachusetts]].<ref>{{Cite web|url=https://www.gamesindustry.biz/articles/2019-05-24-us-loot-box-bill-receives-bipartisan-support|title=US loot box bill receives bipartisan support|website=GamesIndustry.biz|date=May 24, 2019 |language=en|access-date=2019-11-05}}</ref>
The United Kingdom has also been closely observing microtransactions, especially loot boxes, and their effects on children. A major report by the UK [[Parliament of the United Kingdom|Parliament]]'s [[House of Commons of the United Kingdom|House of Commons]] and the [[Digital, Culture, Media and Sport Committee|Digital, Culture, Media, and Sport Committee]], released in September 2019, called for the banning or regulation of microtransactions and loot boxes to children as well as having the games industry to take up more responsibility with regards to protecting players from the harms of microtransactions that simulate gambling.<ref>{{Cite web|url=https://www.parliament.uk/business/committees/committees-a-z/commons-select/digital-culture-media-and-sport-committee/news/immersive-technology-report-17-19/|title=Immersive and addictive technologies report published - News from Parliament|website=UK Parliament|language=en|access-date=2019-11-05}}</ref> Specifically, the committee's conclusion is that microtransactions should be classified as gambling in the UK and therefore subject to current gambling and age-restriction laws.<ref>{{Cite web|url=https://publications.parliament.uk/pa/cm201719/cmselect/cmcumeds/1846/184609.htm|title=Immersive and addictive technologies - Digital, Culture, Media and Sport - House of Commons|website=publications.parliament.uk|access-date=2019-11-05}}</ref> In October 2019, the [[Children's Commissioner for England]], which promotes and protects children's rights, released a report describing the experiences, thoughts, and effects, positive and negative, of gaming on children ages 10–16. Within the report, some of the children directly stated to the interviewers that the microtransactions and loot boxes that they encounter and subsequently buy, are just like gambling.<ref name=":42">{{Cite journal|last=Longfield|first=Anne|date=October 22, 2019|title=Gaming the system|url=https://www.childrenscommissioner.gov.uk/wp-content/uploads/2019/10/CCO-Gaming-the-System-2019.pdf|journal=Children's Commissioner Publications}}</ref> The report concludes that showing the odds and percentages of certain microtransactions to players does not go far enough and does not actually solve the problem.<ref name=":42" />
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==== Statistics ====
According to the ''Parent Zone'' study, in the United Kingdom, 97% of males and 90% of females aged 10–16 years old play video games.<ref name=":6">{{Cite
In the case of ''Fortnite'', many of the outfits and other cosmetics are locked behind a "[[battle pass]]" that the player must pay for. A "battle pass" is a tiered system where the player buys the pass and must unlock the tiers on their own. By completing challenges and other missions, they earn in-game items like outfits, emotes (special animations used to taunt opponents, celebrate victories, dance, and show-off), and other cosmetics. It is about $9.50 (or 950 of ''Fortnite''{{'}}s in-game virtual currency, V-Bucks), but the player can also pay about $28 (or 2,800 V-Bucks) instead to unlock the battle pass and they automatically complete the first 25 tiers (out of 100 tiers) of it.<ref>{{Cite web|url=https://www.polygon.com/fortnite/2019/10/15/20915293/fortnite-chapter-2-battle-pass-season-1-unlocks-skins|title=Fortnite Chapter 2 battle pass skins and rewards|last=Goslin|first=Austen|date=2019-10-15|website=Polygon|language=en|access-date=2019-11-14}}</ref>
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===== Social =====
For many children, the excitement
Children might want to fit-in by paying for microtransactions and loot boxes and obtaining very rare items in front of their friends, creating a lot of hype and excitement among them. This makes paying for microtransactions a very positive experience for them. However, when children buy items in front of their friends, [[peer pressure]] often set in.<ref name=":4" /> Friends pressuring the player to continue buying packs hoping that they will be able to see them get a rare item can cause the player to spend more than they may actually be able to.<ref name=":4" /> The pressure to spend money on in-game content also stems from children seeing their friends have these special, rare items, and them wanting to have it themselves. Essentially, when everyone around them has it, they will want it too in order to feel like a part of the group.<ref name=":6" />
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Peer pressure is not the only way children's social gaming experiences are altered. As noted in both the Parent Zone report and the Children's Commissioner's assessment, children who play ''Fortnite'', explained that [[classism]], as in discrimination against people of different economic and social classes, exists among the players of the game.<ref name=":4" /><ref name=":6" /> Some children fear that if they have the free 'default' skin in ''Fortnite'', no one, friends nor random strangers, will want to play with them as the default skin is seen as a symbol of a player being bad at the game.<ref name=":6" /> The default skin is used as judgement and an insult against the player whose in-game avatar wears it, too.<ref name=":6" /> Players wearing default skins are considered 'financially poor' and very 'uncool' by their peers and the game's community, so children spend money on microtransactions in order to avoid having that 'tag' or target on them.<ref name=":4" />
The [[Mass media|media]] that children consume outside of the game can also affect their social interactions and in-game spending. A popular mode of entertainment for children is watching [[YouTube]] videos of other people playing their favorite games. In the case of ''FIFA'', children may watch
===== Financial =====
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{{reflist}}
{{Video game controversy}}
{{Video game monetization}}
[[Category:Micropayment]]
[[Category:Video game controversies]]
[[Category:Video game terminology]]
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