Microtransactions are notoriously hated by gamers for giving players who repeatedly buy them an unfair advantage over non-paying players, making these games uncompetitive and discrediting skill.
But if that’s true, why are microtransactions so common? In this guide, we’ll explain why microtransactions exist and why they’re becoming more and more common in the mobile gaming industry.
1. Paid apps get fewer downloads
Take a look at any mobile app store and you will notice that most apps can be installed for free. Things are no different for mobile games with only around three percent paid. Why? Because people just don’t like paying for mobile apps. This is one of the main reasons why mobile games still suck.
Console titles come with an upfront fee, but this revenue model doesn’t work with mobile games, as it drastically affects download counts, leaving the game unpopular. And as a game developer, that’s the last thing you want.
By keeping your mobile game free to install, you can get lots of people to download it and earn revenue through indirect means like in-game ads and microtransactions. Some developers choose one of the two methods while others use both because sometimes you can disable ads in mobile games which hurts the company’s revenue.
2. Microtransactions enable recurring revenue
There are over 2.7 million apps on the Google Play Store and around two million on the Apple App Store. This is great for users because there is an endless amount of choices.
But at the same time, it’s a nightmare for game developers because it’s incredibly difficult to get their games discovered on app stores that are already filled to the brim. Microtransactions help mitigate this risk by helping you earn recurring income from the same player.
With an upfront fee model, you have to incur relatively higher marketing costs every time you want to acquire new players. This means that microtransactions not only offer stability, but are also more profitable, which makes them such an attractive revenue model.
3. Microtransactions are more profitable
Since microtransactions enable recurring revenue, they also provide the opportunity for larger profits for developers and publishers, provided that a large enough portion of their user base actually purchases items, outfits, or in-game weapons in their store.
For example, in paid games, you are incentivized to purchase special items that cannot be earned in-game through play, giving you an advantage over other players who do not purchase these items.
Similarly, in paid games, you are incentivized to purchase items to progress through the game faster, but items you purchase can still be earned in-game by grinding longer.
Take a look at the four highest-grossing games of 2021 according to Sensor Tower:
|Games||Total turnover in 2021|
|honor of kings||$2.8 billion|
|Genshin Impact||$1.8 billion|
All of these titles use microtransactions in one way or another.
4. Rising costs and competition
There’s another, more nuanced reason why microtransactions will continue to become more popular: production costs are rising. We know mobile gaming is the future as a number of console and PC titles are coming to mobile such as Apex Legends, League of Legends, Diablo Immortal, Just Cause, and more.
Naturally, better graphics and better design require more investment, and more investment means more risk. This risk is better offset by microtransactions than other methods because it allows for an endless flow of income.
Simply put, as long as you keep adding more content, items, weapons, etc. in gambling, you can expect sustained long-term income, which helps you stay competitive. A game based on a linear story, in comparison, will reap limited revenue because once the story is completed, the player will delete the app.
Microtransactions are here to stay
Many believe that microtransactions are ruining the gaming industry, mobile and otherwise. And while it’s true that they make the experience worse, it’s also true that game developers have to earn revenue one way or another.
These are either microtransactions, in-game ads, or upfront fees. The latter simply doesn’t generate enough money for most developers to be worth the risk. For this reason, microtransactions are unlikely to disappear anytime soon.