A Brief History

Microtransactions have their roots in the early days of online gaming. Online multiplayer games such as Everquest and Ultima Online, both of which came out in the late 90’s to the early 2000s, offered players the ability to purchase virtual items and currency using real-world money and are some of the earliest examples of microtransactions in gaming. The reaction to them in those early days wasn’t nearly as divisive as it is now. In the early 2000s, microtransactions in video games first cropped up within games after DLC (Downloadable Content) rose to prevalence within the industry along with the rise of the modern internet. Though DLC existed before the 2000s in a much lesser form, the concept opened doors for the medium as a possibility to add content to a game post-release to potentially fix bugs or add on to an already finished game as bonus content such as simple cosmetics that were given for free. However, when microtransactions became more common around 2006, their predatory nature raised questions that included how they may potentially be predatory and abuse the psychological mechanism of fear of missing out (FOMO).

Often, the DLC that is created is backed up by data gathered about their players or outside data from trends throughout the industry. This data guides decisions on how they should implement the microtransaction system effectively in their games in ways that will yield the most profits. For example, at the most basic level, let’s say you’re making a game that is an online multiplayer game and you want to make a profit. If you had the option to choose between earning a flat 60 dollars now or 100 dollars or more over time per player that invests into your game, which would you choose? This is something that companies think about when deciding on how to monetize their games. Now you’ll see microtransactions often seen in live service games that continually update or in a plethora of mobile games on e-storefronts like Apple’s App Store and Android’s Google Play store. These games can continually collect data about which items are yielding the most sales, allowing them to tailor future offerings in ways that are most likely to appeal to to a wide audience and trigger further purchases.