Microtransaction (sometimes abbreviated as MTX) is a business model where users can purchase virtual goods via micropayments. Microtransactions are often used in free-to-play games to provide a revenue source for the developers. While microtransactions are a staple of the mobile app market, they are also seen on PC software such as Valve Corporation’s Steam digital distribution platform, as well as console gaming.
Free-to-play games that include a microtransaction model are sometimes referred to as “freemium”. Another term, “pay-to-win,” is sometimes used derogatorily to refer to games where buying items in-game can give a player advantage over others, particularly if the items cannot be obtained by free means. The objective with a free-to-play microtransaction model is to involve more players in the game by providing desirable items or features that players can purchase if they lack the skill or available time to earn these through game-play. Also, presumably the game developer’s marketing strategy is that in the long term, the profits from a microtransaction system will outweigh the profits from a one-time-purchase game.
Loot boxes are an increasingly growing form of microtransactions. Through purchasing a loot box, the player acquires a seemingly random assortment of items. Loot boxes are mostly used on PC and console games. The concept behind loot boxes is that, despite gaining more items for a given price, the player may not want those items, and can end up buying the same item multiple times. 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 ensure that only cosmetic items are available this way to keep gameplay fair and balanced.
Microtransactions are most commonly provided through a custom store interface placed inside the app for which the items are being sold. Apple Inc. provides a framework dubbed “in-app purchases” for initiating and processing transactions. Google’s framework for the same use is referred to as “in-app billing”, named more from the developer’s point of view. Apple and Google both take 30 percent of all revenue generated by microtransactions sold through in-app purchases in their respective app stores. Steam offers support for microtransactions in games on its platform through the Steamworks SDK.
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