Micro-transactions as a business model

I have just read a couple of online pages from http://www.vindicia.com on micro-transactions as a business model and how it is used.

According to this site, most micro-transactions are under a particual amount of money, usually under $1. It as well says that "This business model started to gain prominence around 2005 after an adoption by online gaming and service providers in Asia yielded positive results. However, microtransactions have not reached the same level of success in other regions or vertical markets." it would be worth looking into the sales of micro-transactions in different locations of the world. This could then possible show where its worth explore the different uses and sales of micro-transactions from different locations and how this effect the games made.

The page then explores why micro-transactions, although currently popular in games, may not be as popular as they should be because of the high transfer fee compared to a high priced game/subscription. They show this chart that shows the comparison of a $20 subscription fee compared to a $5.00 ticket. This chart below shows what they have found:



It shows the different of almost double of what the percentage of the transfer cost is between them with the small payment costing so much more. On this site they talk how micro-transactions are still a viable business method and to get better results to use the 'Itunes method'. They describe it as "Aggregating purchases up to a preset amount or time period for a higher average price." but there is a disadvantage with this as according to them "loss of very few valid transactions quickly offsets the savings generated by a higher average transaction price." They also mention that subscription fees are more likely to repeatedly bring in sales rather than smaller micro-transactions. This is more connected to the phycology of sales than micro-transactions but is worth a later visit in research to find out more about how micro-transactions may effect the mind and what ploys are used.

Submodels:

Two submodels mentioned are Virtual Goods and Virtual Currency. Virtual goods are the buyable items in-game which a player has to pay for with real money. This items could then potentially have different game effects. Usually they are more cosmetic that don't effect game play rather makes a players character more recognisable as there own. Others can effect the game play, e.g speed up in game effects leading to more in game items. Choosing these items are difficult and need research and also closely relate to the type of the game, multiplayer games usually don't envolve game enchancing items as they will split non paying customs against with paying customers, but solo games do as it wont upset anyone else just help the player.

Virtual Currency is when a game uses its own money system in game that is used for purchasing items. This means that the player doesn't have to pay real money to earn in game rewards and items. However if a player doesn't want to they can spend real money to gain access to more Virtual currency thus skipping the time in-between playing and earning the needed amount.
They class it as 'dichotomy'

I have found this site very helpful in understand the business side of the micro-transation process and how it can be implemented and how it also is a risk with a higher transfer cost that something with a higher cost. I also have thought of new areas of explore research.

http://www.vindicia.com/Best-Practices/online-business-models/microtransaction-model

Team Fortress 2 - Valve - Micro Transactions

I recently came across a small article on how Valves game Team Fortress 2 has made $2 million through the sales on virtual content in which is usually in micro-transactions in a year. In Team Fortress 2 a update was created in which players could buy or trade virtual goods such as hats in which players could dress their preferred player type in. A year on these sales have made $2 million in profits and although to a large company such as valve this is not huge to any one else this is large for micro-transaction sales.

The most important part of this article is this:

"Equally interesting is the launch of the Steam Workshop, "an improved item submission system" which lets item-creators submit, review and rate Team Fortress 2 items. "Rate items highly and you just might see them become available in-game," Valve says. "If your creation is accepted for distribution in-game, you can even earn a percentage of sales." With Steam Workshop, ou could be a percentage-of-a-millionaire!"

In the recent update players can now design there own virtual items in which then can be rated by other players then maybe put in game. This is a great scheme for micro-transaction sales because before you design an item you need to know that people might buy it and this allows Valve the chance to let its fans tell them what they want and have someone else do it and then are sure to get people to buy them. This means they should make profit.

http://kotaku.com/5849625/valve-celebrates-mann-co-birthday--2-million-in-team-fortress-2-item-sales-with-a-mann+sized-update