Micropayments, mega angst, and the future of console games

It's not the most fearsome name for an ominous, lurking force in video games, but it still has many console gamers up in arms and on the defensive: microtransactions.

With microtransactions, portions of a video game's content are walled behind a system of low-cost purchases or in-game currency, and this is a reality that has long been the lucrative core of Facebook, mobile, and free-to-play PC titles. After some experimentation, the business model has made its way to full-priced console games, from Forza Motorsport 5 to Grand Theft Auto. Depending on your outlook on that gaming bastion, this could be another reason to hold off on an Xbox One or PlayStation 4, or it could be the beginning of the end.

The move toward microtransactions brings to mind some of the more malignant issues lying beneath flashy next-gen launches and the war for the living room. It's no secret that gamers don't particularly like change, not when it's sloppily handled and looks on the surface antithetical to earlier days of cheaper, simpler gaming -- on discs and cartridges -- that involved no further transactions.

"It feels like you're intentionally making a bad game," said Frank Lantz, a game design veteran and director of New York University's Game Center. "You're offering the player, 'OK, well I'm going to make this more tortuous and boring that you'll pay me not to experience it.'"

And in 2013, the behemoth console sector of the gaming industry is grappling with changing up its business models while trying to defend the bottom line. It's a strategy that is amplifying the already adversarial relationship between consumers and microtransaction pioneers like publisher Electronic Arts, named worst company in America two years in a row.

Now that microtransactions in console titles are the next big push from game publishers, they're also quickly becoming an emerging nucleus of player hate. Think of the model as downloadable content (DLC) goes mobile, or "fee to play" as The Escapist's Jim Sterling puts it. Not aiding publishers is the fact that mixing the terms "microtransactions" and "console gaming" is considered tantamount to heresy among hardcore gamers.

You see, by tacking extra costs onto a $60 product when players have also already spent $500 or more on hardware -- and then an additional $60 for the annual service that lets them play that game online -- microtransactions in console games are being seen not as the industry adapting to the times in a measured manner, but rather as an unwanted gesture driven by the pursuit of profit.

Microtransactions in 2013: The design dilemma

Microtransactions in full-priced console games have been experimented with before -- in Mass Effect 3 and Dead Space 3, to heated backlash -- and have had their fair share of controversies even in PC titles. For instance, Diablo 3 received so much pushback for its purported "pay to win" auction house that developer Blizzard decided to ax both real and in-game money systems entirely from the game.

But it hadn't quite reached a boiling point until this fall, when a handful of games -- many for the next-gen PS4 and Xbox One just released in November -- were designed with intrinsic microtransaction models that many gamers feared fundamentally tampered with design processes and a game's core experience.

Xbox One exclusive Forza Motorsport 5 from Turn 10 Studios has become the poster child for this debate, implementing an in-game currency model that players could use to access what some considered to be an inordinate amount of in-game content. Furthermore, the prices for that content were so high -- and the game's progression system for earning credits without paying so slow -- as to slyly entice people to rely on real money instead, the criticism went. Contributing to the outcry was the fact that the game also had a system that allowed players to purchase a booster that would speed up the amount of currency you earned for a brief period of time.

"I just get an uneasy feeling that monetization was firmly in Turn 10's mind when it devised its progression mechanic," wrote Dave Cook at gaming site VG24/7.

Forza's microtransactions became such a pressing issue that developer Turn 10 Studios had to make changes to the game's economy to allow faster earning, as well as offer a brief 50 percent discount on all car purchases and dole out a number of appeasing bonus vehicles.

Neither Turn 10 nor Microsoft, which owns the studio and oversees the Forza series, would comment on the matter of microtransactions. Though Microsoft Studios chief Phil Spencer told Kotaku that the company is "still learning" about microtransactions and looking to adjust their implementation based on player feedback.

Given the PR nightmare Microsoft waded through after unveiling the Xbox One in May and subsequently walking back many of its riskier features, many gamers were placing their hopes in Sony to be the pro-consumer alternative to that caricatured version of Microsoft. But Sony, too, has cozied up to microtransactions, slipping them into the recently released Gran Turismo 6 for the PS3. Though Sony, which owns Gran Turismo developer Polyphony Digital, is adamant in its defense that the microtransactions in no way impose themselves onto players.

"I do want to clarify that microtransactions are not something that is a focus in Gran Turismo 6," said Farm Saechou, a Sony representative. "It is not required -- we do not penalize players for not making transactions (they still have access to everything) and it is completely optional and not prompted in the in-game experience at all."

In Gran Turismo 6, the microtransactions do allow players to purchase in-game currency as a way to bypass the unlocking of content one would have to otherwise earn through game play. For instance, buying the most expensive car in the game -- the Jaguar XJ13 -- would cost an astounding $140, if you were so inclined to access it that way. "We do not require players to purchase or use purchased in-game currency to experience or progress through the complete game," Saechou added.

That distinction is important because "just offering an alternative path to busy people," as Sony President Shuhei Yoshida wrote on Twitter, instead of a system that appears to incentivize the use of real currency is a dividing line between doing microtransactions right and doing them in a way that tarnishes the experience. It's that distinction that players feel Turn 10 Studios did not take into account with Forza, letting the game's progression system and overall design tip into the realm most console players associate with the worst aspects of mobile and free-to-play games.

@ThyDarkAngel microtransaction per se is not a bad thing, how the game is designed around it could become a problem

-- Shuhei Yoshida (@yosp) December 4, 2013

Still, many gamers abhor the idea of microtransactions in console games at all, seeing it -- no matter how they're implemented -- as a red flag signifying both the decay of the off-the-shelf product that has its upfront costs and nothing else as well as a compromise on good design.

"There's a way in which they [microtransactions] are a kind of intrusion of an unpleasant reminder that you're engaged in a business relationship," Lantz said. "We used to push off all this unpleasant tension...onto another department," he said of traditional clashes between design and marketing departments in game making.

But now, given the rise of new business models, these conversations are being baked right into the design process. "You can't externalize all the negative aspects of making a product because it's right there in the game," Lantz said.

Lantz, whose studio Area/Code -- makers of the popular Drop7 mobile game -- was acquired by Zynga in 2011, is well aware of the ways in which social and mobile monetization strategies intertwined with game design can be detrimental to the creative process. "There was a real imbalance between creative voice and the business person who thought of games as a commodity," he said. "I think we all recognize that plasticity of a social game that doesn't have the feel of something crafted by someone who's passionate about games. There might be someone like that in the process, but their voices do not carry loudly."

It's not all doom and gloom at the moment, as this is just the beginning of a likely protracted conversation the console industry will have with consumers as it maneuvers microtransactions. "I believe that while these companies are providing options for consumers, they must also be executed with care," said Liam Callahan, a game industry analyst at NPD. "Meaning, the way a game offers paid transactions is important as gamers cannot feel that they are being forced into buying things to progress and gamers also despise 'pay-to-win' types of monetization."

But Lantz points out that games like Forza do illustrate that the tide is turning with the onset of the next-gen. "AAA titles still feel like they're made by people who are passionate about games. They still have that culture. They still come out of the culture where the voice of the enthusiast rings loud," Lantz said. "But we're starting to hear this other sound," he added with a pause, "the sound of the cash register."

The stakes for console gaming

DLC, online passes, and now microtransactions are all attempts from the AAA industry to further monetize the smaller slice of the gaming market consoles command. Sony and Microsoft had blockbuster launches of their new consoles after a seven-year lull. However, that doesn't save the space from being bogged down by expensive, controversy-prone hardware and highly priced software that still struggles to make money off multimillion-dollar games that are not designed around an annual release schedule solely because it maximizes profit.

Christofer Sundberg, founder of Sweden-based Avalanche Studios, which is developing the upcoming Mad Max reboot, wrote in a widely circulated tweet, "Micro-Transactions, subscriptions and other biz models will be the next generation of games. It is that simple." He's not alone in expressing that change in the console industry is coming, for better and for worse.

"Why are publishers so eager to implement solutions like that? They're living in a world where the total growth of the install base of the market is of grave concern," said Greg Richardson, CEO and founder of free-to-play developer Rumble Entertainment. Before venturing into the development space, Richardson held stints at EA and Elevation Partners that saw him oversee the publisher's acquisition of BioWare, which would later develop the popular Mass Effect console series that EA would use as one of its primary trial runs for microtransactions in console gaming.

"The cost of building and marketing this product is tremendous," he added. "So they're saying that instead of changing the model, we are going to go even deeper in the wallets of the people who are already passionate about those games."

As for the total growth of the install base Richardson refers to, it's important to note that by the time the PlayStation 2 was retired in early 2013, it had sold 155 million units. Total unit sales of the PlayStation 3 and the Xbox 360 combined were barely able to crest that figure by November of this year, and industry analysts expect the new consoles to fare only slightly better at best.

The unpleasant side effect of this stagnation is that publishers have become heavily reliant on innovation-stifling development strategies to make more money per game. The biggest game makers -- not just EA but Ubisoft, Activision, and the slew of studios Microsoft and Sony oversee -- now repeatedly return to proven successes like Call of Duty and its first-person shooter brethren and double down on a commitment to try to annualize every new series.

This monetization model of milking a franchise rehash for $60 to $100, and now much more with microtransactions, each year is unproven as a long-term model in the face of the ever-rising number of alternatives to hardcore, price-heavy gaming. The approach is also one that is stuck between gaming of the past and newer business models that treat video games not as expensive things you own, but as cheap services you pay for as you see fit.

"It's the erosion of the boxed product," said Lantz. "All the stuff we complain about -- 'sequel-itis,' the fact that every game looks like every other game -- that is partially a result of the influence of a business model."

Now publishers and game makers are experimenting with taking that boxed product down a path toward a fundamentally different business model, all while keeping the initial price tags high. Microtransactions are now present not just in Forza and Gran Turismo, but also in next-gen titles like Ryse: Son of Rome and wildly popular games like Grand Theft Auto V. The experimentation will undoubtedly sprout up in a number of next-gen titles in 2014 as well, though many developers like Destiny-creator Bungie are tight-lipped on the existence of such pay systems.

Respawn Entertainment's unique decision to exclude them from upcoming Xbox One exclusive Titanfall was warmly welcomed by fans. "We want to make sure people understand we're not going to nickel-and-dime you with microtransactions," producer Drew McCoy told GameSpot. "What you get on the disc is what you bought, and that's how we're going to do it." That's an increasingly rare position to take, and one that openly lays out those pay systems in console games as potentially anti-consumer.

But contrary to what many console devotees will tell you, microtransactions are not always the embodiment of money-grabbing suits rotting gaming to the core. The model does function properly, in a multitude of genres and platforms, and is blazing a bright future for games outside the bubble of AAA development, one that may even be warmly welcomed on consoles if microtransactions are done right. Killer Instinct, a free game for Xbox One, walks the line of various microtransactions in an experimental display of what more console games may look like down the line.

Most importantly though is that these new business models can bring down initial cost, sometimes to zero, and foster risky and rewarding moves by allowing game makers more leeway to change a formula weeks, even months, after a game's launch thanks to the lower barrier to play. League of Legends and Dota 2, both free-to-play titles that subsist wholly on microtransactions, are now the most played PC games in the world.

A path to microtransactions done right, and hopefully innovation too
One point of agreement is that mixing and mashing fundamentally different business models was never supposed to be easy, and that actively hoping that console game makers and publishers figure it out sooner is better than admonishing them for trying at all.

"I don't think there are any simple solutions. We're better off to try these different things, and when they're not working, complain loudly," Lantz said. "But don't complain in a way that is naive. Recognize good ways of doing this and bad ways of doing this." Lantz also is quick to point out that all consumers, not just gamers, tend to dislike anything that involves spending more money, making microtransactions an easy target for accusations of greed regardless of how they're used.

"I think it's hard when you say, 'Hey, I'm going to go into this contract where I buy a shiny disc that I get to own and keep' -- the old contract -- and now one that has this second, new microtransactions model graphed on to it," Richardson said.

But where microtransactions have a future are in the ways in which they can help transform colossal console gaming ventures into more nimble operations. Ideally, that would allow them to employ the innovative approaches of the larger-than-ever indie game community and the now tried-and-true free-to-play approach of PC titles.

Sundberg of Avalanche Studios conceded to the difficulty in a follow-up tweet to his blunt admission of the future of microtransactions:

@wyp100 There will be f-ups for sure. Hopefully we can lower the initial price-piont and build the game with the community instead.

-- Christofer Sundberg (@CHSundberg) November 21, 2013

Building the game with the community is ultimately the player-first future underneath the bad reputation of mishandled micotransactions. With that model done right, costs can go down and riskier strategies become more viable. Players will be less reluctant to try out original titles knowing they're not spending $60 or more and less reliant on the guaranteed experience of worn-out franchises. And, in turn, game makers may become less inclined to serve up those Call of Duty's and the same round of sequels every year with little more than incremental changes.

"Maybe as annoying as it is now, this new world, new business model, will have some downsides and some crappy games that feel like slot machines, and also good games with a little too much slot machine in them," Lantz said. "But then maybe it will also lead to an environment where there's more experimentation, more innovation."

Lantz points to an often overlooked aspect of the first-person shooter Doom, released by Id Software in December of 1993 and widely recognized as one of the most influential video games of all time. Many can recall its ground-breaking graphics and perhaps most vividly its level of then-unprecedented violence.

But beyond boundary-pushing gore lies a lesson in experimentation: Even 20 years ago, the developers had employed a unique monetization strategy, shareware, that let players experience a healthy chunk of the beginning of the game before prompting them to buy the full version.

"People forget that they were tampering with business models," he said. "Those guys weren't evil. They were trying to make a buck and make a great game at the same time."