Late last week, Activision Blizzard announced their record breaking 4th quarter and it was all thanks to microtransactions. In their media release they state that in the 4th quarter alone microtransactions made them over a billion USD and over 4 billion in all of 2017. For comparison, their entire annual income was 7 billion. This means microtransactions contributed to the majority of their earnings. This is an indication that game publishers have financial incentive to increase their controversial focus on microtransactions.
Which games contributed to this?
The three biggest studios included in Activision Blizzard are the namesake developers, Activision and Blizzard, as well as mobile game developer King. Activision have slowly began focusing on microtransactions over DLC in 2017 through Call of Duty WW2, Destiny 2 and Skylanders Imaginators. The media release notes that Blizzard, through all of 2017, didn’t have a single game release. Instead they gained revenue through existing properties, most notably Overwatch’s loot boxes and Hearthstone’s card packs. The most significant studio is King, known for their incredibly popular mobile games Candy Crush Saga and Candy Crush Soda Saga. Both Candy Crush games were in the top 10 highest grossing US titles, despite both being free to play.
What does this mean?
The biggest takeaway from these figures is that microtransactions are an integral part of publisher’s business models. Activision Blizzard made an unprecedented 4 billion USD from microtransactions alone. It was just last week that Gamers Classified wrote about the possible “fall of loot boxes”. However the overwhelming financial success is a business incentive for publishers to ignore any controversy surrounding microtransactions and double down. As example of this is EA’s Star Wars Battlefront 2, which received such backlash against its “pay to win” reliance on microtransactions that they disabled them completely. However, EA executive Blake Jorgensen told investors that they would be reintroducing them in the following months due to underwhelming sales. Microtransactions are here to stay, offering developers continued revenue to fund post launch support for games, like Overwatch’s constantly expanding maps and roster.
More microtransactions despite controversy?
While an important financial tool for publishers, microtransactions are not without their controversy. The Battlefront 2 example was just one of many PR disasters following “pay to win” allegations. Often at the heart of these complaints is that microtransactions directly impact gameplay, giving those who pay more an unfair advantage. However many of Activision Blizzard’s microtransactions are either for a single player or PvE component of the game, or a cosmetic or visual item for characters.
This of course draws comparison to another controversial side of microtransactions, specifically loot boxes. After Valve launched Counter Strike: Global Offensive in China, they were forced to reveal the drop rate odds for all items. This led many to condemn Valve for the lack of transparency and lack of fairness in loot boxes. Germany took a strong stance against loot boxes, labelling them as gambling marketed to uninformed children. They also have considered an outright ban for loot crates. Much of this applies to a game like Overwatch, but, unlike gambling, Overwatch offers a guarantee of 4 items instead of an all or nothing model. However, consumer backlash seems to be contained entirely within the media with company revenue suggesting the opposite. For microtransactions to disappear they would have to be financially detrimental.
With microtransactions being both highly controversial and highly profitable, they have never been more relevant. Publishers like Activision Blizzard are more likely to look at controversy and adapt their microtransactions models to make them more transparent and fairer rather than to outright remove them. Overwatch is currently in their Lunar New Year event, introducing exclusive skins and emotes to their loot boxes.
Nick McDonald @gamersclassified
Gamers Classified
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I'm actually afraid of what Rockstar is going to do with microtransactions when it comes to Red Dead Redemption 2 after seeing the amount of money they have made on micros with GTA (Shark Cards) I miss the days of just buying the game being the last purchase you make. That is still what I do actually but it's a shame that it has come to a point where people need to continuously spend money in order to enjoy updates of the game. Used to be all included. I believe microtransactions take away the fun of the game and are solely based on the bottom line of $$$ for the companies and not the enjoyment of the players.
GTA for example brags free updates but it is nearly impossible to enjoy the new updates such as new expensive cars and other vehicles without you spending real cash on the game. Because of this, users who do not spend more money on a game they've already invested time in money are not able to enjoy these 'free' updates. Gone are the days I suppose. I just hope Red Dead Redemption comes out ok and the greed factor isn't oozing from the game fresh out of the box. Pardon if this seems like a rant, but that's just my 2 cents. ;) . Nice post!
I agree wholeheartedly. Gone were the days where you got everything from the moment you bought it. GTA V Online success (Microtransactions!) stopped them from making an extended version of the story line as well! I was waiting for that :(
Really well written piece! I'm also curious about the future of lootboxes. The Battlefront 2 backlash caused such a stir that I could easily see some type of regulation instituted.
When it comes to Blizzard I personally don't have any issue with the way lootboxes in Overwatch are implemented, because they are purely tied to cosmetics and not progression. On the other hand, in Hearthstone the card packs function like loot boxes and are %100 necessary in order to be competitive. It would be interesting if this system had to be reworked, and I'm sure consumers would probably prefer paying directly for the cards they want.
Thats actually the very reason why I quit Hearthstone unfortunately and why I still play overwatch haha. Hit it right on the nail sir!
I'm ok with loot-boxes in paid games if they are purely for cosmetics.
It's also a bonus if these items are then sell able (on the steam market place for example.
I've gotten lucky and opened chests that contained items worth hundreds of dollars. (which i then sold to buy more chests)
Things like character unlocks and gear upgrades are taboo though, unless its a f2p game.
I agree, nothing wrong with it as long as its purely cosmetic unless of course as you mentioned it is f2p. Spot on sir!
Imo, loot boxes are a legitimate medium to generate income,
but often you get milked like a cashcow.
First you buy the game for 60€.
Then you have to buy the seasonpass for 40€.
And then you're forced to buy loot boxes for characters, items or faster leveling after paying 100€.
Thanks for the informative article =)
Thank you for the feedback and yes getting milked isn't the right way about it but it seems to be more common nowadays!
Wow! Very interesting and quite impressive for me. Very good, men!
Thank you for the feedback!