microtransaction microtransactions sometimes abbreviated as mtx are a business model where users can purchase virtual goods via micropayments microtransactions are often used in freetoplay games to provide a revenue source for the developers while microtransactions are a staple of the mobile app market they are also seen on pc software such as valve corporations steam digital distribution platform as well as console gaming freetoplay games that include a microtransaction model are sometimes referred to as freemium another term paytowin is sometimes used derogatorily to refer to games where buying items ingame can give a player advantage over others particularly if the items cannot be obtained by free means the objective with a freetoplay microtransaction model is to involve more players in the game by providing desirable items or features that players can purchase if they lack the skill or available time to earn these through gameplay also presumably the game developers marketing strategy is that in the long term the profits from a microtransaction system will outweigh the profits from a onetimepurchase game loot boxes are an increasingly growing form of microtransactions through purchasing a loot box the player acquires a seemingly random assortment of items loot boxes are mostly used on pc and console games the concept behind loot boxes is that despite gaining more items for a given price the player may not want those items and can end up buying the same item multiple times instead of a onetime purchase for the desired item users may have to buy multiple boxes this method has also been called a form of underage gambling items and features available by microtransaction can range from cosmetic such as decorative character attire to functional such as weapons and items some games allow players to purchase items that can be acquired through normal means but some games include items that can only be obtained through microtransaction some developers ensure that only cosmetic items are available this way to keep gameplay fair and balanced microtransactions are most commonly provided through a custom store interface placed inside the app for which the items are being sold apple inc provides a framework dubbed inapp purchases for initiating and processing transactions impact mobile web analytics company flurry reported on july 7 2011 that based on its research the revenue from freetoplay games had overtaken revenue from premium games that earn revenue through traditional means in apples app store for the top 100 grossing games when comparing the results for the months of january and june 2011 it used data that it analyzed through 90000 apps that installed the companys software in order to roughly determine the amount of revenue generated by other popular apps they discovered that free games represented 39 of the total revenue from january and that the number jumped to 65 by june helped in part by the fact that over 75 of the 100 top grossing apps are games this makes freetoplay the single most dominant business model in the mobile apps industry they also learned that the number of people that spend money on ingame items in freetoplay games ranges from 05 to 6 depending on a games quality and mechanics even though this means that a large number of people will never spend money in a game it also means that the people that do spend money could amount to a sizeable number because the game was given away for free a later study found that over 92 of revenue generated on android and ios in 2013 came from freetoplay games such as candy crush electronic arts corporate vicepresident peter moore speculated in june 2012 that within 5 to 10 years all games will have transitioned to the microtransaction model freetoplaymicrotransaction may be used as a response to piracy the developers of the mobile game dead trigger switched the game to the freetoplay model due to a high rate of piracy many consumers have referred to video game microtransactions as a means of milking their product for more profit companies take content theyve already developed for their games and put it behind a paywall asking for 2030 to access the season pass consumer organizations have criticized that some video games do not describe adequately that these purchases are made with real money rather than virtual currency also some platforms do not require passwords to use a credit card to complete microtransactions this has resulted in customers getting unexpectedly high bills known as bill shocks in late 2017 some organizations such as belgiums gaming commission have called for the banning of loot boxes claiming they are a form of gambling data microtransactions have become increasingly common in many types of video games smartphone console and pc games all have conformed to the use of microtransactions due to its high profitability ethics the collection of this data on consumers although technically legal in the united states or outside the eu can be considered unethical companies are selling data about consumers involving their spending bank information preferences etc all to overall understand the consumer better making business models for gaming companies safer and more profitable considering all the companies involved the limits to the data being shared are endless visa google microsoft and paypal already have so much data on consumers and are freely able to share it google specifically holds information on more than just video games which raises questions of what they are sharing with the microtransactions already under a negative spotlight from the gaming community people may not be happy to hear that data on them is being shared to make microtransactions possible revenue data from a variety of sources show that microtransactions can vastly increase a companies profits three freetoplay mobile games that made heavy use of the practice clash royale clash of clans and game of war were all in the top five most profitable mobile games of 2016 microtransactions are also used in larger budget games as well such as grand theft auto v 2013 generating more revenue through them than retail sales by the end of 2017 this trend was consistent with many other popular games at the time leading to the practice being widespread in the 2010s vtevideo game monetization battle pass downloadable content freetoplay freemium games as a service loot box gacha games microtransactions season pass skin gambling 