Thursday, March 03, 2016

EA's Microtransaction Model Generates $1.3 Billion in Sales

Microtransactions are not new, but they are a big deal in the gaming world. As a number of gamers rally against the practice, which gives people the option to purchase additional in-game content ranging from clothing to temporary item boosts; an equal amount are happy to dump a few extra dollars to get said items. Speaking at a Morgan Stanley Investor Conference, EA CFO Blake Jorgensen outlined the growth of microtransactions, and how it's improved the company's digital sales. Drastically.

Almost half of the $1.3 Billion they earned last year was from EA's "Ultimate Team." This faction is focused on EA's sports titles, and allows gamers to buy booster packs and additional game modes for FIFA and Madden.

Think about it...$650 million dollars last year was spent on microtransactions in sports games. And as we know, sports games are considered the more "casual" aspect of gaming and pulls in a wide range of audiences. These are the same people who are happy to drop down a few dollars for more lives in Candy Crush and Angry Birds. An extra $3.99 on a $60 game they've paid for is probably not as big of a concern when this is one or two of the games they buy that year.

Overall, EA earned $2.3 Billion in digital transactions last year, which does include general game sales through Origin, Steam, and Amazon.com. That means over half of those purchases were microtransactions.

Wow. That's one hell of a business model.

I'm still ambivalent about the need for microtransactions. For games like Dragon Age: Inquisition online and Grand Theft Auto Online their current system of in-game sales is one that I can accept. They don't restrict your freedom in the games and you can get the items listed if you are willing to invest a little bit of time to purchase them with in-game cash. But for those who don't want to wait, you have to option to buy them outright. The gamer isn't punished for not having those items with barriers that prevent you from progressing in the game. Unlike Assassin's Creed: Unity which has chests littered throughout the map that you can only open if you buy them. Some of them contain items that you need to move to other areas of the world that are locked out from you. And that sucks. A game you have spent $59.99 on is now blocking you from progressing until you drop more money. Or the Triple Triad game in the Final Fantasy app - another fine example of trying to nickle and dime the consumer. You get a set number of crystals/lives to play. Each time you play, you use up a crystal: win or lose. Unlike Candy Crush you don't maintain your crystal if you win. After 5 rounds, you have to wait on the clock to refill them, or buy more crystals. Super lame.

The microtransaction debate will continue to rage on, but you can't deny those numbers. People are willing to pay for the digital boosts, even on games that they have paid full price to play.

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