The Dark Truth about Microtransactions in Video Games

Ah, free games — one of the great luxuries of the digital age. Nothing’s better than seeing dozens of free games as you scroll through your app store. The possibilities seem endless.

You find an app that sparks your interest and install it. After playing it for a few hours, it grows on you. Out of the blue, a notification appears and tells you that you’ve exceeded your daily credits. To continue playing, you’ve got to pay $0.99. It’s not much, and you’re in game mode. So, hell, why not, right?

Microtransactions in video games might seem trivial, but they’re not as harmless as you might think. Game companies engineer games to get you hooked. As more people suffer from gaming disorder and it destroys lives, it’s not exactly ethical. 

In this article, I’ll take a deep dive into the realm of microtransactions in video games. But before we get into it, let’s answer the most basic question — what are microtransactions?

What Are Microtransactions? 

Microtransactions are tiny financial transactions you make online or in apps. They’re a key feature in free-to-play games or “freemium” mobile apps. 

Micro in-game purchases are the main revenue source for today’s gaming industry goliaths. While some estimates say microtransactions make up 30% of gaming revenue, others say it’s as high as 77%. 

Games apps make money in three ways: paid games, in-app purchases, and ads. You would think paid games are where it’s at profit-wise, but the reality is quite different. 

According to numbers cited by Statista, paid game app revenue was $1.25 billion in 2022, compared to a staggering $145 billion from in-game purchases. Advertising revenue from games was $78.8 billion. 

Types of Microtransactions

Still unsure how to recognize microtransactions? It may help to know the different types. Here are the most common types of microtransactions in games. 

• • In-game items. Virtual items can be weapons, vehicles, armor, or anything else you can “use” in games. Items can also be purely cosmetic. For example, Diablo 4 microtransactions are only for aesthetic items to customize appearance.
    
  • Expiration. This type of microtransaction gets you to spend so you can keep playing. It’s a similar idea to how arcade games have time limits. If you don’t keep spending, you can’t keep playing.
    
  • Full game. You might get a free-to-play game sample but then you have to pay extra to play the full game or to get additional content.
    
  • In-game money/coins. Currency within games is becoming increasingly popular. For example, Fortnite uses V-Bucks and VALORANT uses VALORANT points. Research shows in-game currency can encourage players to spend more than they would with real currency.
    
  • Random chance packages. Also known as “loot boxes,” “crates,” or “packs,” these microtransactions are designed to entice you to gamble. You may end up getting more bang for your buck or win a rare item, but you also may not.

The type of microtransaction coincides with the type of mobile games you play. Whether it’s Candy Crush Saga, Clash of the Clans, or Star Wars Battlefield II, don’t get caught in the microtransaction trap. 

Why Are Microtransactions So Controversial?

The microtransaction business model is contentious — and for good reason. Peer-reviewed research from 2022 showed that microtransactions play a major role in gaming and gambling disorders. Games are psychologically engineered to get you to spend as much money as possible.

Shouldn’t psychologists help people with addictions instead of exploiting them? Game companies don’t think so. Despite the damage game companies cause to people by creating intentionally addictive products, very few of them question the ethics. So how do they catch you?

Free-to-play games use the word “free” to hook you into microtransactions in video games. After sweetening you with the idea that you’re getting something for free, they entice you to spend real money to enhance your gaming experience. Compared to how fun the game is when you throw dosh at it, the “free” version feels dull. 

Why not just stop playing? Well, when you realize the game isn’t free, you’re already deeply invested in it. At this point, it’s easier to justify spending a few bucks than to pull yourself away cold turkey. As crafty and deceptive as this business model is, it certainly isn’t stupid  — and, it’s 100% intentional. 

Hook, Habit, Hobby

Game developers take inspiration from the Hooked Model outlined by Nir Eyal in his book Hooked. The model was first developed to unravel the addictive nature of digital products. Companies now use it to create addictive products by getting you to pass through a progression of stages — Hook, Habit, and Hobby.

The Hook stage is the initial purchase or “ice breaker.” It breaks the wall that says, “I will never spend in a game.” Once this wall is broken, players are more invested — nobody wants to pay for something they won’t use. And the more time you spend in-game, the more opportunities game companies have to sell to you. 

The Habit stage focuses on establishing repeated behaviors. In psychology, habit formation plays a massive role in addiction. The entertainment industry knows this. They reverse-engineer addiction research to exploit you by getting you hooked on their products. 

Once they hook you and solidify your habits, the Hobby stage comes into play. This stage marks a deeper level of engagement where occasional players become full-blown enthusiasts. Players willingly invest more time, effort, and resources into the game. Game publishers achieve this by creating captivating content and challenging quests to engross you. 

The Psychology of Game Design

Game companies use psychological strategies to encourage you to keep spending while you play mobile games. “Retention and monetization” is a mantra to them and they’ve no shortage of ways to make you fork out. They refer to big spenders as “whales” — big catches. 

Torulf Jernstrom’s conference presentation “Let’s go whaling” breaks down how companies profile you based on your Bartle type. These categories reflect real player habits and help entrepreneurs design sales strategies to trigger reactions from every type of player.

Here’s a breakdown of Bartle types:

• • Socializers. About 80% of gamers fall into this category. Socializers love interacting with others and are happy to collaborate in teams to reach goals. As long as they’re socializing, they’re satisfied.
  • Achievers. These players derive joy from displaying their winning status to friends and other players. About 10% of gamers fit this category and you’ll likely recognize one when you come across them. They’re not shy about telling you about their achievements.
  • Explorers. Explorative players also constitute around 10% of all gamers. They enjoy discovering new content. More than anything else, explorers like surprise and novelty, caring less about winning or scoring points. This type of player will go to the edge of the content feeling at the walls to find secret passages.
  • Killers. These players make up less than 1% of players. In many ways, they’re similar to Achievers, the main difference is they enjoy seeing people lose. This small group is only truly satisfied when they’re winning and everyone else is losing. 

“We’ll Leave the Morality Out It” 

During his presentation “Let’s Go Whaling,” Torulf Jernstrom instructs game companies how to exploit each Bartle type for maximum profit. They sell convenience to Achievers allowing them to unlock special elements. Customization or opportunities to interact more with other players hook Socializers. Lastly, they offer extra content to Explorers and competitive advantages to Killers.  

Each strategy corresponds to a Bartle type, and in-app purchases are packaged to be irresistible. Sales appear as “huge discounts” — the oldest trick in the book. 

Jernstrom blatantly states “That’s how you get them to spend a lot.” So, when you think you’re getting a mega deal in Valorant or Grand Theft Auto, remember that this is just what the man behind the curtain wants you to believe.

When Jernstrom says “We’ll leave the mortality out of the talk” the crowd of gaming entrepreneurs laugh in response. This insightful glance behind the scenes demonstrates how they regard players like you — as fish and whales.

The Dark Reality of Game Addiction

It’s easy to see why engineering games to make people act impulsively is dangerous. While most people can keep their gaming under control, others are more susceptible and vulnerable to throwing all they have at it. What’s sad is how games are designed to exploit these types of people.

Teenager Bankrupts Family

Not long ago, the South China Morning Post reported that a 13-year-old girl bankrupted her family. She got hooked on mobile games and one microtransaction led to another until she’d blown through her parents’ entire life savings.

Devastated and broke, the girl’s parents desperately tried applying for refunds from every game company her daughter had spent money on. At the time of reporting, she had not received any refunds. 

Parents Are at Risk

Learning to control your impulses is one of the most important parts of being an adult. It’s something kids are not as good at. Unfortunately, the gaming industry targets players with weaker impulse control, which often means children. If given the chance, they might pilfer from their parents without realizing the full weight of the consequences. 

Keep the Family Safe Online

It’s disturbing to know how much finesse game publishers put into tailoring games to exploit you. In a way, microtransactions are the ultimate trick. While individually trivial, it might not seem so innocent when you add it all up. It certainly isn’t insignificant to game companies who make multiple billions every year from microtransactions. 

The only way to level the playing field is to educate yourself and your family about how PC games are made to exploit. Don’t be surprised to find parts of freemium games off-limits. It’s not always bad to spend on your hobbies. But it might be a good idea to think before rushing in and spending on impulse.

Do you really need to splurge on all the latest cosmetic enhancements and downloadable content? Probably not. 

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