For most of us, microtransactions are a necessary evil. That is, if your definition of a necessity includes extra lives in Candy Crush, which have officially been included in Maslow's (Revised) Hierarchy of Needs for the 21st century.
It's something of a cliché at this point, when writing about technology designed to exploit our addictive tendencies, to reference Candy Crush, and the conversation about the growing overuse of microtransactions in games seems to have peaked a few years ago. A conservative estimate of the size of the In-App Purchase economy in 2013 based solely on revenue from Apple's App Store was six billion dollars.
Both the game guru of King (creators of Candy Crush Saga) and the Vice President of EA Games predicted in the early 2010s that by this time, most if not all games would be free-to-play or include microtransactions somewhow in their business model. And they seem to have been correct.
Microtransactions have not only fully infected the gaming world from free-to-play to AAA games, but have become enmeshed in the fabric of our daily lives, as gamification and psychological manipulation of users by tech in every aspect – from getting our news on social media to our dating apps – has continued growing insidiously apace.
First, let's explore how advanced these psychological manipulation techniques have become, and then how they will affect other parts of our daily lives in the future.
In hilarious meta fashion the TV Tropes page for microtransactions implements a fake paywall in the article defining them with a link that says, "You need more TV Tropesbucks to see the rest of this trope's definition. Please enter your credit card details to continue," and goes to their "Self-Demonstrating Article" page. This is followed by buttons that say "Click here to reveal the second paragraph. You will be billed US$0.99."
I have clicked to reveal all five paragraphs and have yet to be billed, but you can never be too careful – heed the story of a Belgian teen who spent $46,000 on a mobile game.
The definition of a microtransaction is as follows:
This definition is particularly useful because while many of the examples of the psychological tricks that are used to encourage micropayments are from video games, the same techniques are used to encourage spending outside of the PC and mobile gaming world for all types of virtual and non-virtual goods.
How microtransactions work
If you've ever been close to a human, or human behavior, you may have noticed two little characters hanging around them: Little Shoulder Angel and Little Shoulder Devil (terms not yet recognized in the psychological literature). These two help us make all of our decisions; not our rational minds, not our emotions, but a constant war over our mortal souls.
Let's say the Little Shoulder Angel represents our best tendencies: towards enrichment of the self and others, peace, and happiness. Little Shoulder Devil, well, you know what it wants, and you can probably guess which one of them whispers that you should spend real-world money on intangible video game items.
Here's a quick breakdown of the many tricks that the Little Shoulder Devil (with some help from game developers) uses to trigger microtransactions:
Freemium content, also known as the foot-in-the-door method: this is the "first one is always free" approach to creating addicted customers. You get something for no cost first, and if you like it, there's more enticement to pay. "Freemium," the combination of free and paid (premium) services, was predicted as a business model of the future in 2009 by Chris Anderson in a book called "Free: The Future of a Radical Price".
Related to Freemium is the concept of reciprocity, which may have more to do with Little Shoulder Angel: if you are provided with something you like, you are willing to pay for it, even if it was free in the first place.
Reward Removal relies on the Endowment Effect, by giving you something (thereby raising its personal value to you) and then threatening to take it away. For example, if you can't beat the boss in the dungeon you may lose all your dungeon progress, and the Little Shoulder Devil says you better buy some extra in-game items to make sure you beat it. Another tactic is to give a player items they can't keep in their inventory unless they pay to expand it – the expansion seems so much more necessary because the item feels like it's already owned and therefore more valuable.
Ego Depletion is the fancy name for getting bugged over and over to buy things. Eventually, your decision-making system gets tired and Little Shoulder Devil's whispers get louder than your rational mind. There are even microtransactions called "pay once and play," in which you can pay one microtransaction for the assurance that you will not be offered any more microtransactions.
Price Shrouding is the obfuscation of your actual currency's value into the currency system of a game. According to one study of in-game currencies from Gamesparks, up to four different currencies is the current standard for a single game, with at least one Premium currency that can only be bought with real money. You have to use your real money to buy Game Gold, and use Game Gold to buy Shiny Fancy Items, and maybe even can sell Shiny Fancy Items within a game's auction house or stores to get Rubies, which are used to buy Different Shiny Fancy Items. By the time you're trading your Rubies, it's almost impossible to tell how much real money they were worth. Bulk discounts on these in-game currencies also abstract their value in real-world currencies.
Pay or Wait, also known as Illusory Discomfort or "fun pain" (this last term coined by a developer while working for Zynga) is the temptation for instant gratification. Of course there are (usually) mechanics within games (like waiting time or grinding) that will get you the reward you seek via the virtuous path of patience or skill espoused by Little Shoulder Angel, but Little Shoulder Devil lets you know you can also have it NOW NOW NOW! for the low low price of actual money.
Sunk Costs is the fancy economics term for throwing good money after bad (though it's really all bad money). Little Shoulder Angel says, "You've already spent $20 on Clash of Clans, maybe it's best to stop," and Little Shoulder Devil says, "If you spend $30 more maybe you'll win enough to feel better about spending $50!"
Variable Rate Enforcement is one of the reasons loot boxes have become an incredibly profitable form of mictrotransactions: you never know what you're going to get. Getting different rewards in each box activates your dopamine system more than knowing exactly what kind of reward you're going to get at any time (the same method that makes you play slot machines and other gambling games of chance).
Benign Envy: according to the study The Hidden Cost of Microtransactions: Buying In-Game Advantages in Online Games Decreases a Player’s Status, published in the international Journal of Internet Science in 2015, researchers studying the games Maple Story, Diablo III, and World of Tanks found three results from players buying in-game boosts, using real money in auction houses, and paying for better tanks in the three games respectively. Their first finding was lost respect for pay-to-players, the second was ill will towards them, and schadenfreude motivating other players to root against them. And the third effect was temptation for non-paying players to buy things themselves – even though they lost respect for and resented those other players who paid.
In 2015, Activision filed for a patent on certain technologies that were supposed to increase the likelihood of players using microtransactions, which was just approved this year (as reported by Glixel), although they deny implementing any of the patented features. One feature is designed to induce exactly this kind of envy by matching high-performing players who have just bought new items with players who haven't and are lower skill levels. The idea being that the player who loses will think it's because they did not buy the cool items their opponents have. Another feature was designed to place users who have recently purchased items in scenarios where those items would be beneficial, enhancing the Endowment Effect and perceived value of the item.
But maybe at this point you're saying, "Wow, it's a good thing I don't play any video games, those are for suckers!" Sad to say, we are all suckers in late capitalism, and you can't escape microtransactions anywhere.
The subscription model, which predated the microtransaction model in video games (one source cites the launch of World of Warcraft as a subscription in November of 2004 as the beginning of the end for how we pay for games) is creeping its way into every facet of life, and for some things (like consumer electronics that you may want to use for say, only three months at a time) it's an excellent alternative to ownership.
For others, like a subscription box for monthly anal toy delivery (it was called Butt Box) or a monthly subscription to beer koozies (full review of the Can Pants subscription box here), what you are really subscribing to is a constant barrage of microtransactions for frivolity, instant gratification, or features that seem like they should be in the full version of paid services.
In the realm of entertainment, the ads on most streaming services function effectively as microtransactions, as you give 20 or 30 seconds of your time in exchange for your video fix. Who hasn't been tempted to buy a subscription to Hulu Plus for $5.99 after seeing the same ad 500 times?
Maybe you're saying "Thank goodness I don't indulge in streaming video, and only play card games on my PC" In which case, weird, but you still can't escape them. Even Solitaire on Windows 10 requires $1.49 per month or $10 per year to not show ads.
You can buy microtransactions to enhance your dating life with Tinder Gold, which for $4.99 per month, amongst other features, lets you browse the people who have already swiped right on you – eliminating some of the dopamine-squirting joy of not knowing whether you matched with someone as you go, but providing an incredible boost for the ego to see your potential paramours all laid out and waiting for you to message them.
Plus, microtransactions have already started being implemented in the more quotidian parts of life, like waiting for customer service on the phone. In 2014, the UK's biggest 4G mobile network, EE, added the option of a 50 cent charge to skip to the front of the customer service phone queue.
Micropayments of the future
Hopefully they will engage Little Shoulder Angel and Little Shoulder Devil in equal measure
Cryptocurrencies (you didn't think a single feature in this issue wouldn't contain a reference to cryptocurrencies, did you?) have been speculated to be the future of micropayments, once they are stable enough to be used by more of the population in daily life. Blockchain advocates have speculated that cryptocurrency micropayments could even be the future of journalism: instead of implementing a subscription model, as several news outlets currently do, they would charge a fraction of a fraction of a bitcoin per article.
Almost everything entertainment-related in the future could be based on something like the Patreon model - you can pay a creator $1 every time they release something, as a microtransaction for art.
Or, in the worst case, we end up like the Black Mirror episode Fifteen Million Merits, in which all currency is transferred into a gamified, almost impossible to accumulate system that keeps people literally running on hamster wheels and is sapped away slowly but consistently for every aspect of life.
The most likely outcome, of course, is something in the middle. More of our lives will involve microtransactions to make them easier, and many of them will be annoying, but hopefully they will engage Little Shoulder Angel and Little Shoulder Devil in equal measure.
As our last prediction, we're with Twitter user @Papapishu, who is betting on Philip K. Dick being right again, "and smart locks end up having microtransactions like in Ubik." What follows is the excerpt of text from Dick's Ubik that accompanied this Tweet, a vision of our microtransactional future from a master of speculation:
The door refused to open. It said, "Five cents, please."
He searched his pockets. No more coins; nothing. "I'll pay you tomorrow," he told the door. Again he tried the knob. Again it remained locked tight. "What I pay you," he informed it, "is in the nature of a gratuity; I don't have to pay you."
"I think otherwise," the door said. "Look in the purchase contract you signed when you bought this conapt."
In his desk drawer he found the contract; since signing it he had found it necessary to refer to the document many times. Sure enough; payment to his door for opening and shutting constituted a mandatory fee. Not a tip.
"You discover I'm right," the door said. It sounded smug.
From the drawer beside the sink Joe Chip got a stainless steel knife; with it he began systematically to unscrew the bolt assembly of his apt's money-gulping door.
"I'll sue you," the door said as the first screw fell out.