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updated	2025-03-15
author	gart
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where do we go from here?

march 15th 2025

Introduction

Yesterday, I saw a message from a friend that detailed a new release in Halo Infinite's in-game store. Halo Studios have released a new set of cosmetics based upon armour from previous entries in the series, priced at £40. This shocked me, and I couldn't stop thinking about it; I mean, how are they able to get away with such egregious pricing? It made no sense. I don't know why I was so surprised, especially since I have been seeing the number of microtransactions in games increase every single day, with their prices also rising with them. It seems that, no matter how controversial microtransactions are, as long as people keep buying them, they will always exist. So where do we go from here?

History

In the early days of gaming, with arcades, machines would often have a 'pay to continue' prompt (As seen in games like 'Double Dragon 3'), and this is the earliest form of an in-game transaction that I could find. In the eastern gaming market, the South Korean company 'Nexon' had titles such as 'QuizQuiz' and 'MapleStory', in which both offered in-game transactions for cosmetics, and faster progression options. It wouldn't take long for the western market to also catch on, with 'Habbo Hotel' in 2001 and 'Second Life' in 2003, which focused on their respective virtual currencies that could be spent on cosmetics and virtual goods (such as decorations).

A pivotal moment came with the release of 'The Elder Scrolls IV: Oblivion', which offered paid cosmetic horse armour. This marked a significant step towards microtransactions in games that were not free-to-play, sparking initial controversy among players who questioned the value of purely cosmetic items in a full-priced game. We saw a further evolution of these microtransactions in the 2010s, with the explosion of mobile gaming, in titles such as Candy Crush Saga and Angry Birds, offering the options to pay to remove adverts, and the ability to skip levels for a small cost.

At the same time, Valve introduced crates and keys into their titles, Team Fortress 2 and CSGO. The ideas that Valve created would be iterated upon, becoming most popular in Overwatch, with their loot boxes, and in the FIFA series, with their packs. Fast-forward to 2017, with the launch of Fortnite's second season, where the world was introduced to the Battle Pass, which shifted the focus towards seasonal cosmetic rewards earned through gameplay or direct purchase. This is where it became apparent that microtransactions had become a central pillar of gaming.

Where we are today

The shift towards this design philosophy has impacted player experience and the perception of fairness. Players often express frustration and resentment towards pay-to-win mechanics, feeling unfairly disadvantaged by those who spend more money. The sense of accomplishment can be diminished when progression can be bought rather than earned through skill and effort.

Developers view microtransactions as a crucial means to sustain the ever-increasing cost of game development, particularly for free-to-play titles. They are an opportunity to generate recurring revenue beyond the initial game sale. Often, microtransactions are also used as a way to test market interest in new features and content, and to fund marketing efforts. There is acknowledgement in the need to balance the profitability with player satisfaction, but often this does not shine through to the final product, where players frequently express frustration with pay-to-win mechanics, and the feeling of being exploited by aggressive strategies.

Often times, limited time offers and exclusive goods are given in an effort to drum up FOMO, as an incentive to login and spend some money, which is often (but not always) paired with a low perceived cost; but even when the cost of individual items are as low as £5, eventually it all adds up. Loot box systems utilise 'Variable Rate Reinforcement' that creates a dopamine rush that is akin to gambling (which is problematic given the core demographic for games that utilise these systems are young teens).