Remember Prince Harry mentioning banning Fortnite when talking about mental health at a Young Men’s Christian Association (YMCA) event in West London last 2019? He claimed it was, quote-en-quote, created to addict and even more addictive than alcohol and drugs. His remarks sparked various debates not only among gamers but also among health workers, lobby groups, and governments.
Prince Harry’s attempt to ban Fortnite also determined a core debate in today’s video game industry: the controversy over microtransactions (MTX). From the word “micro,” they’re “small” in-game purchases that utilize real money for in-game items or virtual currency. At its best, they help support hardworking developers. On the flip side, this pay-to-win scheme has been seen as a corporate attempt by game and tech companies to drain players’ money.
Whether good or bad, today’s gaming industry can’t quit MTX anymore. MTX’s market size increased from $73.27 billion in 2023 to $80.88 billion in 2024, potentially reaching $121.18 billion by 2028. With a compound annual growth rate (CAGR) of 10.6%, can Prince Harry really ban Fortnite and other so-called addictive video games with MTX? Let’s check it out here.
What Are Microtransactions?
This concept was originally started by Nexon, a South Korean gaming company. In 1999, they introduced the idea of buying clothes, accessories, and other cosmetic items using real money in their game The Kings of the Winds. In the same year, they also applied the same concept in another game called QuizQuiz.
Now, it has become a revenue model in which users make virtual purchases, such as characters, abilities, special features, or content within apps, to access special features. In games, these virtual purchases can be categorized into two: fixed rewards and random rewards for specific actions.
First, fixed rewards may include:
- Small purchases – such as extra lives, which are typically affordable, often costing a dollar or less
- Skins and customization – including skins, outfits, or accessories
- In-game currency – players tend to use them for future in-game upgrades or purchase items, which can also be used in casino games like FanDuel Blackjack games
- Expansion packs – major content updates, such as new characters, locations, storylines, or gameplay features bought as downloadable content (DLC) for better gameplay than the base game
- Bonus purchases – exclusive items or bonus currency given after a purchase
- XP boosters – experience points (XP) that let players level up quickly
- Pay-to-unlock – unlock locked game characters, content, or levels
- Limited-use items – power-ups or consumable items that let players have temporary advantages
- Holiday themes – exclusive items based on holidays that may be available for some time before or after an event
Second, random rewards may typically include loot boxes. They may contain “rare” items that typically excite many players, but they’re randomly selected. This randomness is among the reasons why they’ve been heavily criticized. The game has become a “game of chance,” which significantly resembles gambling.
Additionally, some games exploit players’ desire for rare items. Electronic Arts (EA) did this in its game Battlefront II. EA designed loot boxes that contain skill cards. In other words, gamers can buy competitive advantage by chance, which may crucially affect competitive balance in online gameplay. This irresponsible microtransaction practice sparked discontent among many players and is now dubbed the “Battlefront 2 loot box controversy.”
Why MTX Remains In the Gaming Industry
Despite previous controversies, the rapid growth of MTX is the primary reason why the gaming industry won’t drop it. Statistics show that this growth can be attributed to today’s digital economy, where more and more people are embracing in-app purchases (IAP) in mobile apps, digital assets, and blockchain. Game-wise, it can also be driven by the prevalence of the free-to-play model and the integration of esports and live streaming.
Within the next few years, MTX is expected to cause major trends within the forecast period of 2024-2028, including:
- Cross-platform monetization
- Integration of cryptocurrency and blockchain
- Emergence of virtual marketplaces and social commerce
- Increased regulatory scrutiny, specifically on consumer protections
However, one of its drawbacks is the stringent regulations imposed on it within the forecast period. For instance, the United Kingdom government highlighted the potential danger of loot boxes in July 2024. This was backed by evidence gathered by the Department for Digital, Culture, Media & Sport (DCMS) in September 2020. As a result, the UK government imposed strict regulations on MTX, which may negatively influence its growth within 2024-2028.
The good news is that many tech companies are innovating solutions to make MTX more gamer-friendly and morally acceptable. For example, major companies like Microsoft, Nintendo, and Sony are adopting new loot box policies aligned with the standards of the Entertainment Software Association, the game industry trade group in the United States.
Another solution is the adoption of blockchain technology. For instance, the French game company Ubisoft Entertainment developed and launched a blockchain-based game called Champions Tactics. In this game, players can enjoy security, true ownership of in-game assets through non-fungible tokens (NFTs), transparency, interoperability, automated processes with smart contracts, and decentralization. All of these perks enable gamers to influence game development and governance.
Final Thoughts
Microtransactions will continue to exist in the gaming landscape. While they received backlash due to other companies’ greed, they will stay in the industry due to their increasing market growth and promising potential. For more recent information, continue to stay tuned for the latest updates on MTX.
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