Microtransactions – A Big Word Made of Small Revenue Chunks

Historically, online games and virtual worlds have been monetized through subscriptions.  But recently, the model has started to change: publishers have seen that an upfront fee is a significant barrier to customer acquisition – potential subscribers have many compelling free, or what some call pay-as-you-go choices for online games to play or virtual worlds to join – and that barrier is now being removed.  Today, game publishers and developers are moving toward a more flexible pay-as-you-go model, where microtransactions are used to monetize virtual goods within the games.

With the pay-as-you-go model, gamers start playing for free. As they play, they purchase items and capabilities that are offered by the publisher. The specific items bought typically help them achieve new levels and improve their overall experience; a user might buy special equipment to use in the game, access to an event, or even the ability to go into a premium realm, which would otherwise be restricted to them. A microtransaction system can also allow the publisher to sell these items in-game and the user to purchase them without ever having to leave.

For attendees at the Independent Game Conference, PlaySpan CEO Karl Mehta can address present day market opportunities for developers and publishers to optimize revenue streams by integrated microtransactions and pay-as-you-go revenue models, and why many of today’s most popular games are offering these new pricing models.

Karl can also cover the types of alternative payment methods available on multiple existing platforms and how these can eliminate secondary issues that microtransactions solve, such as billing, fraud and monetization issues. Further Mr. Mehta can address publisher-sponsored, end-to-end solutions that must be implemented to manage the entire scope of the process, from creating legitimate primary and secondary markets, to fraud protection and item delivery.

In summary, the upside of a pay as you go model is that publishers can better control their in-game economies, while employing legitimate primary and secondary markets to control fraud and eliminate commerce system challenges. Publishers can also set their own rules and standards in the online game space, while gamers can better manage their personal play style and finances. In addition, the virtual goods revenue can supplement or even replace waning subscription and advertising revenue, which lets gamers play longer and pay over a longer stretch of time.

The lesson learned for independent game creators is this: adopt a model that allows you the ability to focus all your efforts into what you’re good at; building great games that everyone can enjoy and benefit from.

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