The purchasable minipets continue to cause a storm across the blogosphere. I’ve already mentioned them here and here, but rather than offer another analysis on the Pandaren Monk as I did with Lil’ K.T. I’m just going to offer one finally post on it and then I’m leaving these two alone.

I don’t care what fears people have about Blizzard offering other things in the future (they can go ahead and put T5695 gear up for sale for all I care), as far as I’m concerned that is in no way a valid argument for anything.

The only argument I have found that is valid to any degree is not so much an argument as it is a failure to understand: How can you justify spending $20 on two pets?

To even things out a bit, let’s forget about the $5 donation to the MaWF and just look at it as a flat $20 price tag here with no further bells and whistles.

Cost Analysis
Actual Cost: One Pet
Most people are looking at this: $10 = 1 pet

What most of them are failing to see is that it actually works out to this: $10 = 50 pets

Which means the actual cost is: $0.20 = 1 pet

The reason for this is because each of these pets is a BoA item that is mailed to every character you have and every character you make in the future. Each account is able to have 50 total characters across all servers, and every one of them gets this pet for the same fee. Now, not everyone is so much an altoholic as my wife and I (both of us have had to delete toons for having reached the 50 toon limit), so not everyone is going to be able to see it that way. But, some people are as bad as I am, or even worse, and they actually get an even better deal than twenty cents a pop.

For the sake of consistency though, we’ll go with a maximum of 50 toons.

Actual Cost: Both Pets
Alright, lets open it up a bit and throw that second pet in there.

Most people see this: $20 = 2 pets

What they miss: $20 = 100 pets

Actual Cost: $0.20 = 1 pet

Now, the math here obviously comes out to the exact same thing because the cost is the same in both cases. We double the cost, but we also double the quantity purchased.

Perspective
To put that into perspective a bit, let us change what we’re purchasing to nails instead of vanity pets. As with any example, it’s not going to be perfect and any trolls can come by and chew on my nails if they want. Yes, nails are real world items that can serve a purpose and be functional, but that’s not the point. Read with the intent to understand, not with the intent to respond.

Example: We’re going to say that you just bought a beautiful Asian painting. The details of the painting aren’t important, but if you’re really interested I’ll tell you that it depicts a monk. You need to hang it on your wall, but you don’t have any nails. So you go to the store to buy a nail and find out that they don’t sell nails individually, they only come in two varieties and they only come in boxes of 50. Either nail would work, but the picture will hang a bit differently with one than it will with the other, and both ways appeal to you.

You aren’t sure which nail is going to suit you the best, but you know that you could probably find uses for either type. You also know that you only need a single nail, but having several might come in handy later on down the road. If you could buy a single nail for $0.20 then you would prefer to do that, but sadly the store doesn’t allow such purchases. So you have to decide whether you want one type of nail, or both types of nails, and you have to deal with the fact that you may very well be buying more nails than you’ll ever use.

My decision was to buy both types of nails and see which style of hanging appealed to me more, knowing that I could change between both styles of hanging whenever I wanted to by switching out one type of nail for the other.

Conclusion
The point of me breaking this down for you isn’t to try to convince you to change your mind on whether or not to buy them, the point is to open your mind a bit to help you see a clearer picture of what you’re actually buying. In essence, you aren’t just going to a store to buy yourself a nail, you’re going to a store and buying a box of nails. Whether or not you decide to use them all is up to you. You may only need a single nail to hang up that nice picture on your wall, but you’re buying a whole box that’s available for you to use if you have a want or need to do so.

How you justify the cost is dependent on how you chose to look at it. Did you spend $20 on a single nail, or did you spend $20 on a box that has 100 nails in it? The answer is up to you; it’s all in how you choose to look at it.

I didn’t spend $20 to buy my wife 2 pets, I spent $20 to buy my wife 100 pets, and she’s enjoying every one.

There is a growing movement towards using microtransactions to generate revenue for original content. Article by PaidContent

Ummmm... what?

Hey everyone!  Sorry guys, I’ve been so busy with project for Massively and other sources that I just haven’t had time to blog!  I feel bad, because I have a couple things I really wanted to talk about, but I felt that this topic was the best thing I could vent on to get me back in the mood of talking again — Champions microtransactions.

But, I’m afraid that saying that line is surely a misnomer.  I’m not for or against the Champions Online C-Store at heart.   I don’t intend to buy anything out of the shop, even when they gave me 400 points to spend in it thanks to my GameStop pre-order package.  Likewise, I’m kinda happy it’s there, just in case I do need an emergency respec and I don’t feel like earning one or waiting for a free one to be handed out.

No, what I’m pissed about is the inconsistency of people regarding microtransactions.  Specifically: World of Warcraft versus Champions.

I alluded to my opinion briefly in my last Anti-Aliased, but I’m so fired up about this issue that I think it really deserves its own blog post.  I hate the fact that people let World of Warcraft get away with fucking murder while they go off and rail on Champions.

To give my case a visual illustration, I like to compare this to the South Park episode where Cartman tries to use “psychic powers” to catch a serial killer.  While he tries to help the police department, the South Park police keep missing the HORRIBLY CREEPY DUDE standing in the bikini and blood covered poncho at every crime scene.  They even sometimes stare at the real killer, only to brush him off while they persecute someone else because Cartman said they were the killer.

Warcraft has come out with 10 dollar pets.  10 FUCKING dollar pets.  Not one dollar, not two dollars, no 10 fucking dollars.  I don’t know any virtual pet you could possibly offer me that’s worth 10 dollars of my cash.  It’s a disgustingly high price point, yet people are sitting there and staring at these stupid pets saying, “You know, I really kinda want that.”  Warcraft’s allure and “OMGMMO” status are somehow blinding people from noticing how ungodly expensive this is when compared to…

Champions Online.  The same Champions Online that outraged people when they offered extra costumes at 3 dollars a set.  Or action figure vanity pets for 2 dollars.  Or, even worse, the favoribly priced $12.50 retcon.  No, somehow this game is trying to steal all of your hard earned cash so Cryptic can roll around with it in their pool of money.

No one seems to notice WoW sitting over there, happily peddling 20 dollar server transfers, 30 dollar faction changes, or these stupid 10 dollar pets on top of their 15 dollar a month subscription.  Everyone’s too busy being outraged over Cryptic asking people for 2 bucks on top of their subscription fees.  I even brought this up in Anti-Aliased, and people were blinded enough to tell me that “What WoW offered wasn’t the same as microtransactions.”

I’m sorry, you’re right.  IT COSTS MORE THAN “MICRO” IN WARCRAFT.

But these are the same people who denounce microtransaction item stores.  The same people who spew forth the notion that MTs ruin the quality of the game because developers are too busy putting their work into making MT items and not the game itself.

They don’t care (or notice) that Cryptic only offered five new costumes and a few icon sets versus the 5 events, new monsters, brand new powerset (Celestial powers), new PvP battleground, and new world PvP introduced in Blood Moon.  Not to mention the changes to the game’s weather and skybox to make the place look absolutely creepy.  Somehow, those 5 whole costumes detracted from Blood Moon’s content, even when Blood Moon offered way more than most holiday events.

Let me be clear — I don’t fight for Cryptic because I’m some rabid fangirl of Champions Online or because I’m getting “paid off” by them.  I fight for them because I think they’re getting the short end of the stick when it comes to public opinion.  I fight for them because I find the lengths people go to somehow denounce them insane, especially when World of Warcraft does the same damn thing Champions did, only 10 times worse, and everyone’s ok with it.

Do I sound like a broken record at this point?  Probably, but I keep saying this shit in different ways because if I don’t, some idiot is going to come in here and attempt to contradict me because I didn’t cover all my bases.  So let me be clear one last time.

HATE THE COMPANY THAT IS COMPLETELY RIPPING YOU OFF, NOT THE ONE THAT’S MILDLY RIPPING YOU OFF.  OR, BETTER YET, HATE THEM BOTH.  HAVE SOME DAMN CONSISTENCY, PLEASE.

*clears throat and walks off*

Blizzard announced last Friday that they have installed a shark tank in their office parking lot for game developers to practice their water ski jumps.

Actually, not really but it seems half the Warcraft blogosphere is now declaring that Blizzard has officially “jumped the shark,” doesn’t care to make good games anymore, crossed a mysterious line it shouldn’t, gone over to the Dark Side of capitalism, is catering only to casuals and socials, and is scamming everyone with a dubious and shameful ploy involving charity.

What’s caused all this consteration you ask?

Apparently if you take a vanity pet from one of the trading card sets or the collector’s edition of the game and instead deliver it digitally all sorts of bad things happen.

What everyone is worried about is that Blizzard will make the jump from microtransactions for vanity items to letting players buy epic armor and weapons. Or that using resources on making items for these vanity transactions takes away from good game development. Neither of these arguments holds water. Blizzard’s entire game philosophy to date has been to make progression dependent upon skill and effort. Just as well, additional revenue whether from novels, comics, trading card games or game subscriptions all contribute to the bottom line which means that Blizzard has additional resources for game development.

Or maybe Activision is secretly hoarding all the proceeds from Lil’ K.T. for more water skis.

There are many varied opinions on Blizzard’s recently released pet store, some happy, some angry, but mostly indifferent. As for me, I was initially upbeat on the idea until I saw the price point for the pets. $10 is a substantial amount of money for something that is purely for vanity and I cannot justify spending that much on a non-combat pet.

Other online games that feature microtransactions generally price their vanity items a lot lower, so I’m wondering why the $10 price point. One could argue that for those games where microtransactions are their bread-n-butter they have to price low in order to attract impluse purchasing. These games also run on the model of microtransactions for game progression or features and that’s how they pay the bills for service and content updates.

With Blizzard and World of Warcraft we’re not in that situation. We pay a monthly fee for access to the game, services, features and content. We’ve seen “micro”-transactions in the form of character recustomization, server transfers, faction and race changes and those are priced to be cost-prohibitive to prevent abuse and to otherwise instill value on the decisions made by a player when creating their character(s).

Yet these features are priced where they are because there are enough players out there willing to pay for the features offered. This brings us back to the $10 tag on the vanity pets, there will be enough people willing to pay that much for a vanity “look at me!” pet. If the price had been set at $5 I’d probably have splurged for both my wife’s account and my account, but $10 is just too high.

What confuses me the most, however, is the decision to set aside 50% of the proceeds from sales of the Pandaren to the Make-A-Wish Foundation for the remainder of this year. It’s very noble for Blizzard to give money to this charity, but why not send 100% of the proceeds? Obviously the idea is to tug on the hearts of players to feel like they’re doing the right thing and get something out of it for themselves.

I challenge Blizzard to rethink this stance and send 100% of the proceeds to the Make-A-Wish Foundation. It would send a clear message to everyone that their pet store isn’t merely a money grab. I would fully stand behind the pet store if they donated all proceeds (from mini KT as well) to charity, but as it currently stands I am very weary over the store.

We’re slowly inching towards a slippery slope where Blizzard might offer features and/or mechanics as a microtransaction. Before I get blasted for suggesting that microtransactions may become prevalent, you have to realize that Blizzard has 180′d on a lot of things that they said they would never do. It isn’t completely crazy to think that at some point in the future content may be dangled in front of us for a fee. You have to understand who is at the helm of Activision-Blizzard and the things that he brings to the table.

“I don’t think it is specific to video games. I think that if you look at how much volatility there is in the economy and, dependent upon your view about macroeconomic picture and I think we have a real culture of thrift. And I think the goal that I had in bringing a lot of the packaged goods folks that we brought in to Activision 10 years ago was to take all the fun out of making video games.”

“I think we definitely have been able to instill the culture, the skepticism and pessimism and fear that you should have in an economy like we are in today. And so, while generally people talk about the recession, we are pretty good at keeping people focused on the deep depression.”

On one hand you have to hand it to him, Activision has definitely succeeded in a volatile market that we are in today. He has been able to acquire wildly successful IPs that have kept the rest of Activision afloat. Had it not been for Call of Duty, Guitar Hero, and Blizzard’s IPs Activision would be a sinking ship. The culture he has developed has probably been a motivating factor in some of Blizzard’s decisions, and I am worried that we’ll continue to see more pressure on Blizzard to generate extra revenue to justify Kotick’s culture of fear.

Yes, I am not kidding. Blizzard, it seems is very seriously contemplating to boost their already fat wallets with another enhancement of gamers experience or ‘how to get more $$$ out of you’. 

You won’t need to level up and hunt down a mount to get an animal companion in Blizzard Entertainment’s latest in-game business venture. The newly opened “World of Warcraft” Pet Store accepts real money for critters and even includes a charitable angle tied to its $10 price tags.

 ”Today we’re pleased to introduce the Pet Store for ‘World of Warcraft,’ a new way for players to obtain in-game pets to join them on their adventures in Azeroth,” Blizzard announced this week. “Two brand-new companions are now available for purchase exclusively at the Pet Store in the online Blizzard Store: Lil’ K.T. and the Pandaren Monk.”

Each pet currently runs $10, and the Pandaren Monk comes with an extra holiday marketing pitch, thanks to its ties to the Make-a-Wish Foundation.

“For every Pandaren Monk that finds its way to a player’s side between now and the end of the year (December 31, 2009 at 11:59 PDT), we’ll donate 50 percent of the $10 purchasing price to the Make-a-Wish Foundation in an effort to brew up a little hope, strength, and joy in a child’s life,” Blizzard stated.

The pets are listed in the Blizzard Store under the “Collectibles” tab and will each be available exclusively there, not through other questing or adventuring means. They do not, however, appear to have any in-battle use, so don’t buy one expecting it to unleash Panda kung-fu action on your rival guilds.

What kind of pet do you want to see offered through the “World of Warcraft” Pet Store? Do think your “WoW” character could use an animal companion? Share your comments on our blog.

We are approaching the time of year when for many people in the western world, Christian or not, thoughts turn to charity. How can we use our hard earned money to help other people and make the world a better place?

Among the many good causes who’d like a slice of that pie, this week sees a couple more game companies throwing their hats into the ring. (I feel like it’s RMT week or something.)

Say you love her, buy her a minipet (on WoW)

There were a couple of big(ish) WoW news items that came up yesterday. People seem to be mostly ignoring the fact that you’ll soon be able to earn arena points from winning battlegrounds which is a pretty big climbdown on Blizzard’s part, in favour of the minipets added to the Blizzard shop.

So, for $10/£9 (this is an extortionate exchange rate for us, by the way) you can now buy yourself a funky minipet with special moves to add to your collection. Or, smartly, they have made it very easy to buy one as a gift for someone else who plays Warcraft. Is letting people buy minipets going to break the game? Nope. It’s not functionally all that different than giving them away with rare cards in the CCG. It is, however, another step towards a fully fledged item store. Maybe they just weren’t making enough money. I think they are smart enough to avoid selling items that will affect gameplay but the temptation to see if they could push their players just a little further is always going to be there.

It also raises questions along the lines of “How much is a minipet worth anyway?” For the price of both minipets you could snag yourself a copy of Torchlight, for example. The answer of course is that it’s worth whatever people are willing to pay and from forums I frequent, I see a lot of people enthusiastically buying the new pets either for themselves or for partners/friends. The pets themselves are undoubtedly high quality, as such things go, with their special emotes and animations.

They plan to add more pets to the shop as time goes on. I wonder if they’ll go as far as a ‘pet of the month’ club where you just increase your sub to cover the monthly minipet too. I suspect a lot of players would spring for that.

Free Realms not so free after all

Player vs Developer spotted an announcement buried deep in an interview about Free Realms about a shift in philosophy for that game also. Previously, a large part of the game was free to play. If you picked up a monthly sub you got access to more powerful and interesting classes to play, and access to extra quests and activities. In addition they had an item shop selling many of the usual suspects (pets, cosmetic items, potions, equipment).

In early November (ie. nowish, I guess) that’s all set to change. The game is now only free to play up to level 5 in any career, although that now includes the jobs which had previously been locked to subscribers. But if you want to keep playing after that, you have to subscribe. Naturally the cash shop will remain available. Pre-existing characters will still be allowed to level up to 20 on the previously free jobs.

I can only assume that they feel they’ll make more money from switching to a full subscription game. Maybe the free to play wasn’t working out as well as they’d hoped? (I suspect the issue is to do with targetting kids as their main audience, they’re just not a market with much disposable income to spend on cosmetic gear and pets.)

Why choose between subscriptions and RMT when you can have both?

What both of these announcements have in common is that they show that the big western AAA MMOs are playing around with different payment methods and seem to be settling on the one which is least advantageous to players.

To whit: they’re going with a mandatory subscription, possibly a mandatory box sale for the initial game and expansions, and also throwing in an item store.

We’ve seen it in Champions Online, we’ve seen it in EQ2, we’ve seen it in WoW (they’re just more explicitly selling cosmetic items now), and if the model sticks, they probably won’t be the last ones down the line.

It’s widely held that some of the indie games have more favourable RMT schemes, such as Wizard 101 and Puzzle Pirates. Ultimately, I think they’re going to be the outliers though. STO is likely to use a similar scheme to Champions given that it’s coming from the same company. And who knows yet what Bioware will decide to do with their Star Wars game?

And that leaves Dungeons and Dragons Online, where the free to play model seems so far to be working for them very well (unless you’re in Europe). So well, in fact, that they’ve just opened another server. Have they just monetized better by charging for instances? Will anyone else follow their lead?

So, I decided to make a stab at tackling my Feed Reader today, in some of my spare time. I’m greatly enjoying reading everyone’s blog posts, even though I’m hideously behind with things. Haven’t finished it yet, but here’s some of the things that caught my attention:

• Blizzard to start selling in-game cosmetic pets for $10 a pop. I’ve been playing the refer-a-friend time with Spinks of late. We’re at level 40 now and my first month is over. Might sub another month to get to 60 when the R-A-F bonus runs out. But I hate microtransations, so I’m feeling a bit more ambivalent today than I was yesterday.
• Free Realms transforms into Fee Realms at level 5 in more microtransation news. Don’t mind this one so much as you get to dabble free, and apparently the costs are fairly small.
• The new Siege of Mirkwood trailer is up and available and deals with the Lieutenant of Dol Guldur – the lack of a name stems from licensing issues, according to Zubon.
• KIASA name Torchlight Diablo 2.5 in reviewlet I’m totally in agreement with.
• Tom Chick over at Fidgit enters into a bit of a spat with Bioware over the extra storage in the $7 DLC and accuses the company of nickel-and-diming. Bioware replies.
• The Wii is dead, long live the… ?
• Green Armadillo takes a look at the marketing and pricing of the Siege of Mirkwood and the extension of the pre-order deals and deadline. It’s an interesting take and cites some other things to read on the subject, which I greatly enjoyed. Not sure it’s a cover up, since it seems blindingly obvious they’re taking money for what was once free to players in content updates… but valid points, nonetheless. 

More as I catch up further tomorrow!

Source: Venture Beat, Dean Takahashi interview with Tim Chang

Norwest’s Tim Chang explains why virtual goods are so hot in social games October 26, 2009 | Dean Takahashi | Comments | tim-changTim Chang, principal at Norwest Venture Partners, has immersed himself in the online games sector for some time and he says that the hottest business model for game startups in 2009 is virtual goods. With the virtual goods business model, game companies let users play online games for free. But they charge them when they want to upgrade to new capabilities such as cool clothing or better weapons. This model was pioneered in Asian online games, but it has only recently been embraced in the U.S. While ad-based games have cooled off in the recession, virtual goods is finally taking off in the U.S., with revenues expected to hit $1 billion this year. We asked him about the state of the game industry and the role of virtual goods in this interview. Chang will be a speaker at the Virtual Goods Summit, which takes place this week on Oct. 28 and 29 in San Francisco. Look for our coverage of it.

VB: What’s the state of affairs for virtual goods? TC: Virtual goods is like the new mania, just like advertising was for web sites. Everybody talks about virtual goods now as the new business model. It shows that a lot of companies abandoned advertising and turned to virtual goods as a panacea. I think 2010 will be an interesting time to learn where virtual goods will work and where it doesn’t. In 2010, we’ll see how much of this is fad and how much is a lasting business model.

VB: There are very different views around virtual goods. Nexon has been saying virtual goods is real for a decade. Others say that it works well in Asia, but not the U.S. And the Inside Virtual Goods report asserts that virtual goods is already a $1 billion industry in the U.S. Can you put that into perspective for us?

TC: It depends on how you define virtual goods. Technically, every song sold on iTunes is a virtual good. Yeah, it could be $1 billion. The way I size it is to focus on the top three companies in the U.S. The run rate just in the U.S. for Zynga, Playdom and Playfish equates to about $350 million a year now. And if you add the rest of the long tail developers on Facebook and MySpace, it’s quite credible to say that the U.S. market for virtual goods for social games is already at half a billion. If you were to include free-to-play online games (where you play for free, but purchase goods in the game through micro-transactions), and if you include casual massively multiplayer online games (MMOs), then I think you could tally it up to over $1 billion. Internationally, Tencent’s QQ virtual goods business is already over a billion dollars by itself in China. So, yes, it is already a multibillion-dollar market worldwide. One point I would stress is that virtual goods is representative of micro-transactions, and micro-transactions is the bigger story. Micro-transactions are the perfect way to monetize content that has been disrupted and fragmented by the Internet. You don’t buy a CD anymore because you get the right song you want on iTunes. You don’t buy a $50 game. Now you can play a game for free and upgrade with items as you play. The social web, Facebook, and mobile can fragment and unbundle the content. Content is becoming snack-sized and micro-transactions are the perfect way to pay for it. That’s why I think it is here to stay and it is not just a fad.

VB: The big companies and brands can look at virtual goods and say it’s still a tiny market. They probably get 95 percent of their revenue from traditional means. Why should they get excited about it?

TC: They have to defend the legacy businesses they have, so I understand that. However, it’s exactly the same as rewinding 10 years ago and the music labels saying there was no money in MP3 songs. Little did they know that in five to six years that the record business would be less than half the size it was. The shift in the audience will happen in less time than they expect. The shift is going to be tough for the big game companies. Console game sales are still $20 billion. But console sales are dropping 20 percent year over year. That’s the same declline rate that music and CDs had, and look where they are now. Same goes for TV and movies. They are seeing the same shift of audience attention to online and social media. Today, it’s less than 10 percent of console revenues. But, five years from now, they have half lost half of their revenues in consoles.

VB: If you look at the number of people who are playing social games or free games, I suppose you could conclude that there is a loss of those users for the console industry? You can conclude that it’s not just the recession, but an actual loss of users?

TC: I think it’s all additive. The recession is hurting them. But the people who are playing games are not all gamers. They are casual players who don’t own consoles. The growth is coming from the 90 percent of the population who are not self-identified as gamers. They are drawn into the social games because they are frictionless. They are light and they are social. You are expanding the pie. The whole world is going social. You don’t have to be gamers to play these games. Meanwhile, the recession is eating into hardcore game sales. More gamers are buying used games and doing secondary game trades. More people are simply not going to retail to buy goods anymore. It’s the same for packaged CDs.

VB: I heard John Schappert, the president of Electronic Arts, give a talk about how he thought there was a social gaming bubble and that in the next couple of years, he thinks the hype will deflate and brands will make gains in social games.

TC: I think that’s correct, but only through acquisitions. They’re going to pay through the nose to buy a Playfish or somebody. I don’t think they will be able to do it through their organic growth. Look at the efforts of Ubisoft and others who have created branded social games, only to find they couldn’t get big distribution of them. I think the traditional publishers are learning painfully now that social games are a completely new distribution method. Legacy methods of advertising and publicity don’t work. It’s a whole new state of the art and a three-legged stool required to succeed. That is real clever Facebook ad spending, virality of games, and very skillful cross-promotion into your daily active user base. Those are the things that Zynga, Playdom and Playfish are figuring out now and that EA, Ubisoft and these others don’t have a clue on how to do.

VB: How do you interpret the growth of Zynga’s hit games, FarmVille and Cafe World, which are the fastest growing social games ever? Does it mean that Zynga is unstoppable?

TC: These might be the first case studies that validate the argument I made earlier. It’s not just content, but a whole new kind of distribution here. Zynga is proving there is a new kind of distribution muscle when it comes to social games and that’s why EA and others can’t do it. EA and the old guys know how to do it on retail, but on Facebook, it’s a whole new playbook. Zynga has shown that you can basically target a rival’s game, iterate on it, and make it slightly more innovative. Then, through the power of virality and cross promotion, you can make it enormously popular in a couple of weeks.

VB: You make this point about how easy it is to copycat games. It’s horrifying to game developers who take pride in doing original work.

TC: I think so. But the game industry has always had a history of light copying or iterating. There are so many first-person shooters. In social gaming, there has been more blatant copying, where games look like the other one pixel for pixel. That is to be expected in the early days when there is a lot of low-hanging fruit. The big three are shifting from copying to original games with higher production values. That’s how they will one-up each other. There will likely be premium social games with better graphics. I believe that Playfish is leading the charge on that.

VB: As I look at some of this from a traditional gamer’s view on taste, I think they suck. Are these games quality games as they are now and that hardcore gamers like me are missing something?

TC: You and I are gamers and we grew up appreciating traditional games based on high production values, extremely immersive stories, long-engagement sessions and old school gamers forget that non-gamers get turned off by the same elements that turn gamers on. Full 3-D graphics scares away non-gamers. It’s two ends of the spectrum. A traditional gamer may look at something and view it as a piece of crap. A lot of people looked at Club Penguin and thought it was a piece of crap. I’ve seen two-dozen pitches trying to beat Club Penguin with full-production values, better 3-D graphics and all this other stuff. When they let kids play it, they find kids get lost. If the kids can’t jump in a mini game, they get bored. Most social game players are more like kids. They have short attention spans. They want to do something quickly and with as few clicks as possible. The eye candy distracts them or turns them off.

VB: What are some of the metrics here on virtual goods when you look at an individual company that you are considering investing in?

TC: There are a few key metrics. The k factor is one. That is, what is the inherent virality of the application. For a new registered user, how many more registered users will that give you? Then you have to look at the quality of users, as defined by the pay rate. How many of the new registered users turn out to be a monthly active user and how many of them are daily active users (DAUs), and what percentage of those daily active users turn out to be purchasers.

VB: Getting people to pay is the crux of the virtual goods business model. If game companies fail at that, they could have a disaster on their hands with a lot of users and not enough people paying for it. Is there a lot of risk in this model?

TC: There is. This point is very key to the design of social games. And that is the use of compulsion loops. You monitor stats. You get your users addicted. You start annoying them with how long it takes them to get something done. That triggers impulse buys of goods that will save them time. That is at the heart as a good compulsion loop. There are other models like freemium, where you give them the first two levels and charge them for more. That has yet to be proven on conversion rate. And there is episodic content, where you charge 99 cents or so for each new episode. The compulsion-loop based design of social MMOs tend to do darn well.

VB: If free to play is risky, does it make sense for the game companies to embrace three different business models, such as free-to-play with virtual goods, advertising, and subscription?

TC: The future of this whole space is a hybrid tiered subscription model. About 85 percent of your users won’t be monetized. They won’t pay. But you can show them ads, give them lead-generation surveys, and you can view them as icing on the cake. They are not the basis of the business. Some 10 percent of the users can upgrade to micro-transactions. And if you’re lucky, maybe 1 percent will pay for a monthly subscription. The challenge for the game designer is how do you cordon off your game to appeal to those three buckets of players. The value of having the players who are monetized only through the ads is social. They may attract other players. I bet that all three of the business models will be going in parallel for the successful startups in coming years.

VB: How big has social gaming become, in terms of numbers of companies and their valuations?

TC: The big three have pulled ahead of the rest in monetization. That’s Zynga, Playfish and Playdom. There is a whole tier of smaller shops. Many of them are profitable. So the ecosystem can support multiple profitable companies. They won’t grow to the same scale as the big three. Maybe the big three have already pulled away to escape velocity and none of the others can catch them. One of the key strengths in being a big social games publisher is having a great network for cross promotion. One of the big fears of the smaller social game companies is they will be profitable but won’t have anywhere to go. They will need to be acquired by a bigger player or merge with others to bulk up.

VB: The big three have good valuations, then? TC: Yes, but since they are profitable, you can argue they deserve the valuations. Even if you apply public company multiples on profits.

VB: Will they go public or get acquired?

TC: A lot will depend on the next 12 months. You’ve already seen the rumors on EA and Playfish. That makes a lot of sense. It looks like Zynga has a very good shot of going IPO. If they do, that will force the hand of existing public media companies in this space and they may go and buy somebody. We may see one of the big three taken out by an acquisition, and then we may see a lot of the smaller guys acquired too.

VB: It’s very exciting that things are changing so fast.

TC: And here’s the funny thing. Zynga in theory could go public faster than Facebook does. Zynga is built on the back of Facebook. What is ironic here is that gaming rescued Facebook. A third or more of Facebook’s revenue this year will come from social game advertising.

VB: As a platform, do you believe Facebook will be healthy?

TC: It’s still growing. It’s hard to tell for now what the real churn rate will be. Social games have churn rates. You have a hole in the bottom of the boat, but the boat is moving so fast that you don’t see it taking on water.

VB: Will the iPhone have the same kind of success with games as Facebook has had?

TC: This is the big bet that we are all making, that Apple’s shift to a true free-to-play model will make a difference. They just announced that you can do in-app purchases in free iPhone games. That creates a free-to-play model, where you give away the game for free and upsell people to buy virtual goods. We can get some of the same mechanics going on iPhone that has happened on Facebook. The question is how viral will the iPhone games be. We are still figuring that out. I am an investor in Ngmoco, an iPhone game maker. Over time, the iPhone platform will be more like Facebook. A year from now, I believe you will have social games that are successes on both Facebook and the iPhone.

Source: Venture Beat, Dean Takahashi interview with Tim Chang

Virtual goods sales to hit $1 billion in 2009 as social games pay off big

Posted: 14 Oct 2009 08:00 AM PDT

Thanks to the astonishing growth of games on social networks such as Facebook and MySpace, the U.S. virtual goods market is poised to clear $1 billion in revenues in 2009, up more than 50 percent from a year earlier, according to a new report.

By 2010, revenues could hit $1.6 billion as users become more comfortable paying for virtual goods in small transactions that are executed in a seamless fashion. But 2009 will be remembered as the year when it all took off, said Justin Smith, founder of Inside Network and co-author of the report.

That’s the finding of the Inside Virtual Goods report being released today by Inside Network and the Virtual Goods Summit. The 60-page study is one of the most thorough investigations to date into the scope of virtual goods, which include virtual gifts that people give to each other on Facebook as well as in-game weapons users buy with real money so they can inflict more damage on other players.

“I don’t know anyone who expected it to grow this fast,” said Smith. “The Facebook platform went from zero to hundreds of millions of dollars in two and a half years. It reflects a broader shift in society where people are spending more time on casual games.”

The report is valuable because it’s been very hard to pin down any reliable numbers on what has become a fast-growing sector of the tech economy. Smith co-authored the report with Charles Hudson of the Virtual Goods Summit. Smith said in an interview that social networking games are the biggest category within the virtual goods sector and that Facebook leads the way with virtual goods revenues.

Facebook itself is generating virtual goods revenue through the virtual gifts that people pay for, about $2 at a time, when they send gifts to their friends. But about 80 percent of the virtual goods revenue on Facebook is being generated by third-party application vendors, Smith said.

That’s why we’ve seen huge growth at Zynga, Playdom and Playfish — three social game companies that collectively should generate more than $300 million in virtual goods revenue this year. Zynga’s newest game, Cafe World, grew to more than 10 million users in just a week. Beyond the game publishers, there’s also a group of companies such as Offerpal, Zong, Boku, Peanut Labs, Adknowledge, Gambit and others who are thriving as they create systems for people to pay for virtual goods.

“A lot of payments happen via PayPal, but others are making the system more frictionless,” said Smith.

As we noted in our story on South Korean virtual goods pioneer Nexon, virtual goods took off in Asia first, but many games that succeeded over there did not succeed in the U.S. because of different cultural tastes. Many game industry veterans have been skeptical that virtual goods models would take off in the U.S. But this report suggests they ignore virtual goods-based business models at their own peril. In many categories, startups are leading the way, not traditional game makers.

The report breaks down the use of virtual goods by types of games, regions, and demographics. Beyond social games on social networks, another growing category is virtual worlds and casual massively multiplayer online games. Hardcore MMOs such as Eve Online are also generating virtual goods revenues. Those games have more paying users, but the games are intimidating to more casual users. And there are emerging areas worth paying attention to, such as virtual goods in console games and iPhone games. With the launch of version 3.0 of the iPhone software, virtual goods trading on the mobile phone has more potential.

Over time, platform holders such as Facebook might think about putting a tax on virtual goods. That is, they might collect a fee on all virtual goods transactions that take place on their platforms. But they better be careful. That would be messing with the goose that lays the golden egg.

Source: Venture Beat 10.12.2009

More than a month and a half after launch, Cryptic has finally put some useful items for sale in their microtransactions store (the C-store).

1000 Cryptic points = $12.50

4 additional characters slots = 1200 points ($15)

Full retcon = 1000 points ($12.50)

Character rename = 280 points ($3.50)

2 additional costume slots = 400 points ($5.00)

The store also has some costume sets (240 each), emblem sets (80 each) and figurines (80 each) available.

Months ago, Cryptic had a minor public relations nightmare when news came out that Champions Online would have a monthly subscription and a cash shop.  Far too many people blew it out of proportion, flooding forums with rants and declarations that they would never play CO.  They all thought that CO would have a cash shop that’s similar to many free-2-play games that depend on their cash shops for money.

I was never worried.  The C-store is exactly as I always thought it would be.  The items available are on par with the cash shop offerings in other popular games like Guild Wars and City of Heroes.

The costume items are a bit expensive, but the prices for everything else seem reasonable.

I was a bit worried about how much Cryptic was planning to charge for a full retcon, but now that it’s finally available, I think the price is fair.  $12.50 to completely redo your character’s powers and talents?  Sounds good to me.  If it was any cheaper, far too many people would constantly redo their characters.

I’m sure that skeptics will say that Cryptic is going to constantly screw with the powers, forcing people to buy full retcons with every major patch.

An oldie but a goodie from LiveGamer

Friendster partners with MOL to integrate microtransactions for games and virtual gifts. Coverage by PC World

[Edit - this is all now official. Go, pre-order!]

So the announcement is imminent and resourceful souls from our forums discovered that on the Codemasters’ account pages, there was already information up about pre-ordering Siege of Mirkwood and the Adventurers’ Pack (which includes 2 extra character slots and shared storage). To get both it will cost £19.99 or 27.99 Euro, to pre-order just the Siege of Mirkwood will be £14.99 or 19.99 Euro. I don’t know my exchange rates all that well to relate the Sterling to Euro conversations. But £20 vs $20 is a bit more of a hit that expected.

Now, Codemasters appear to have gone for a more simplistic pricing structure than Turbine. There’s no hidden ‘pay for 3 months subscription and get Siege of Mirkwood free’ as far as we know so far. And we don’t know what Codemasters costs are in terms of setting up the digital download. And that’s me being charitable.

Mines of Moria cost me £14.99 from Play.com. It was probably £19.99 retail or bought direct from Codemasters. I forget, because I always shop around for the best deal for me. But this time I don’t get a shiny box to play with, I get to download the game, and Adventurers Pack, because let’s face it, I WILL get both. I hope it runs smoothly. And I honestly don’t mind if it costs me that kind of money on top of my Lifetime subscription to keep the game running in Europe. But – it’s not entirely what I expected, and I’m surprised what’s a relatively simple pricing structure needed to be signed off and took so long to get approval. Either it works for Codemasters or it doesn’t.

There would be complaints whatever the cost. That’s for certain. And let’s face it, the official announcement has yet to take place and more offers could go up there, or things could change. This isn’t officially ‘out there’ information, but I doubt it would surprise many of us if it turned out to be accurate.

There’s no mention of a release date. I’m far more interested in hearing WHEN we get it, than when we can ORDER it.

I’ll do a quick update as and when we hear more. For now, you can assume this is unofficially what we think will happen, based on the account pages.

[Edit: that was fast, now the EU pre-order page appears to be up and running with a new offer - the LotRO Triple Pack containing Shadows of Angmar, Mines of Moria and Siege of Mirkwood for £29.99 and coming with the Harbingers' Cloak for pre-ordering. A Special Edition of the Triple pack adds the Adventurers' Pack for an extra £5. But under 'additional offers' you can also buy the Adventurers' Pack for £4.99 and a Loot Bag for £4.99 also. The Loot Bag includes

Ten special in-game items specially selected from all the items ever released:

• Bree-horse (In-game mount for level 25 and up)
• Ring of Agility (+3 agility)
• Ranger's Cloak (+42 armour, +5% out of combat run speed boost)
• Waybread of Imladris (Removes wound and poison effects. Restores power, heals damage, and increases Morale & Power regeneration)
• Scented Hope Candles (+10 Radiance, stack of 5)
• Lucky Horseshoe (+5 Fate, additional +5 Fate when activated)
• Cloak of Durin’s Crown (+42 armor, +120 Non-combat morale regen)
• 5 Resist Acid Potions (+100 Acid Defence for 21 minutes)
• Pesky Dormouse (Housing decoration, this mouse exits his hole to look around your house)
• Ore-Miner’s Helm (Cosmetic head wear)

The offers for those of us who already have Shadows of Angmar and Mines of Moria are, indeed, as I posted above £14.99 for Siege of Mirkwood, and £19.99 for Siege of Mirkwood and the Adventurers' Pack (and only those buying both together as the 'special edition' get the unique mount!). As well as the possibility of buying the Loot Bag and Adventurers' Pack as stand-alone add-ons for £4.99 each. The Siege of Mirkwood offers can be pre-ordered now, from what I can tell. The Loot Bag has a 'coming soon' tag on it.]

About a week ago, I noticed new addition to my top navigation bar on Facebook: 70 ‘Facebook Credits.’ Intrigued, I decided to explore further, only to become increasingly frustrated and confused about what these credits even meant, ultimately giving up all hope just minutes later. If you do not see these credits atop your Facebook page, then you are simply not part of Facebook’s trial run of the Facebook Credits program. Turns out that I am one of several thousand ‘lucky’ guinea pigs for the new initiative–standard Facebook beta-testing process used many times in the past.

What are Facebook Credits, anyway?

Facebook credits are a currency for purchasing virtual goods. It currently costs $1 for 10 Facebook Credits, which can be used to make purchases across the Facebook platform for things like gifts, third-party applications and games. As of now, the list of third-party options is short:

- Birthday Calendar
- (fluff)Friends
- GroupCard
- (Lil) Green Patch
- MouseHunt
- PackRat
- Pirates: Rule the Caribbean!
- Robin Hood
- SocialCalendar

So what are people buying exactly with these Facebook Credits? A good example of virtual goods would be cute fashion accessories for your virtual pet, or perhaps a plot of additional farmland for your farm in Zynga’s Farmville game.

Really? Virtual Goods?

Over time, the list shown above is destined to grow…and grow fast. Just how big is the virtual goods market going to be? Many experts point toward the mass appeal in Asia as predictor of potential U.S. market growth. Qzone, Asia’s most popular social networking site, generated $1 billion last year, only 13% of which came from advertisement. Zynga, makers of the immensely popular game FarmVille, claims to have over 50 million users and generate $100 MM across their whole line of games. So yes, people are buying virtual goods…a LOT of virtual goods.

The business models…Ooooohh the business models

Facebook has over 300 million users, up from 200 million just 8 months ago. Yet despite this astronomical user growth, Facebook did not become cash flow positive until this quarter, according to CEO Mark Zuckerberg. Virtual payments offer Facebook the perhaps the most enticing way to become profitable to date. But it is not only Facebook that stands to make bank on this new model. There’s an entire “ecosystem of companies is involved in each microtransaction: PayPal and Paymo handle the money, for instance, and companies such as Blockbuster insert ads and coupons” (quote taken from this article). It’ll be interesting to watch this whole situation unfold, as an American market gets accustomed to the concept in general. In the meantime, there are some companies you may want to consider investing in (paypal, verisign, Facebook (if it goes public), etc.)…but I don’t pretend to be a wealth manager, so I’ll leave that up to you individually.

Sourced from Barb Dybwad at Mashable

“13 Things To Do On Twitter Besides Tweet”

Tired of delivering the typical stream of status updates on Twitter? Why not try some of the following ideas for other things you can do with the service?

Thanks to an open API and a philosophy of interconnectivity, Twitter’s vast array of third-party services has you covered on a number of alternative uses for the famed microblogging tool.

Let’s take a look at a few of them.

1. Share Files

A service called FileSocial provides a great way to send files smaller than 50 MB. Simply sign-in with your Twitter credentials to share your file with all your followers. FileSocial uses OAuth to log you in, which is more secure than asking for your Twitter username and password.

If you want to send a person-to-person file privately, check out FileTwt. You’ll have to sign up for an account on the site to enable private file-sharing up to 20 MB in size. The downside is they don’t use OAuth for authentication.

2. Exchange Business Cards

Routinely running out of those business cards made of dead trees? Work in an industry where almost everyone you meet is on Twitter? Check out twtBizCard, a simple service that lets you set up an electronic business card that can be easily tweeted to your new contacts by sending them an @reply with the hastag #twtBizCard.

When you sign up, the service will pull in the data from your Twitter profile as starter information, and you can add other details to customize your card.

3. Share Music

Music lovers have a lot of options in this category (see 10 Ways to Share Music on Twitter). Depending on exactly what you want to do, you might want to check out a few of these. For example, Blip.fmis very much like Twitter but specifically for music, and can integrate with your Twitter account to share what tracks you’re listening to or “blipping.”

To that list we’d also like to add Songza, a very easy to use music search engine that lets you easily tweet any track you’re listening to by clicking the song name and selecting the “Share: Twitter this” option.

4. Share Images

The media-specific Twitter tools abound, with a goodly number of options available for image sharing here too. Perhaps the “classic” service here is Twitpic, but even beyond image hosting services there are a number of alternative methods for sharing photos on Twitter by SMS, email and more.

To this list we’d also like to add that Flickr added Twitter posting earlier this summer as well, so if you already use Flickr to host your image collection, this is a great way to also share photos to Twitter in one fell swoop.

5. Share Videos

To round out the media-specific categories, there are also third party services lining up to help you share video on Twitter as well. From TwitVid.io to Tweetube (which handles other sharing duties as well), there’s probably a service out there to cover your needs.

We’d also like to add TwitVid.com and 12seconds.TV to that list. The latter perhaps obviously limits you to only 12 seconds’ worth of video, but it meshes well with the spirit of Twitter’s 140 character homage to brevity.

6. Raise Money

It’s still an emerging trend, but Twitpay is out in front of the microtransaction platform pack on Twitter. It’s a hot space that Facebook is looking to get in on as well.

There are still some limitations to using Twitpay as a Twitter payment platform, but for the adventurous there could be money to be made from selling your own wares via the service. Or, take a cue from Wi-Fi startup SkyBlox, who used Twitpay to raise a portion of their funding via Twitter.

7. Lobby for Health Care Reform

Want to bring a little participatory democracy to your Twittering? Check out Tweet Your Senator, a feature of the President’s website that mashes up Twitter with Google Maps to help you send a message to your Senator about healthcare reform legislation.

8. Screencast

Looking for a one-stop shop to whip up a quick screencast and distribute it on Twitter? Check out Screenr, a screencast tool with seamless Twitter integration.

You have 5 minutes to record your videos including the ability to pause and restart, and you can preview the screencast before sending it out.

9. Play Games

Love it or hate it, interactive Twitter-based game Spymaster can be addictive if you play it, or insanely annoying if you don’t. If you’re interested in playing, or just finding out more about the mechanics of the game and what it’s all about, be sure to check out our comprehensive Complete guide to Spymaster. And please don’t assassinate us.

Spymaster isn’t the only game in town, either. Check out some of these other alternatives for getting your Twitter game on as well.

10. Social Bookmarking

Delicious, diigo, et al feeling like too much overkill? Or just looking for an easy way to archive the links you share on Twitter?

Enter Fleck Lite, a simple bookmarklet-based tool that will both generate a shortened URL based on the page you’re sharing and archive the collection of links you’ve shared for later reference. If you share a lot of links on Twitter and want a convenient way to remember them for later, definitely give this one a try.

11. Be Someone Else

Ever wanted to know what Twitter looks like through another user’s eyes? Wonder no more: cTwittLike is an application that lets you see the Twitter stream someone else would see. Just enter the Twitter name of the person whose shoes you want to walk in, and you’ll get a list of the latest tweets from the users being followed by that person.

Unfortunately, due to lots of attention from the interwebs this app is currently down. But hopefully you’ll be able to return to your regular schedule of Twitter voyeurism soon.

12. Start a Petition

Looking to change the world but don’t know where to start? Petitions are a powerful tool organizers have been using for decades to raise awareness, demonstrate support for an issue, and bring people together around a common cause.

Check out several startups helping you start petitions on Twitter, from Act.ly to Twitition and more.

13. Find a Job

This is sure to be a popular one in today’s economy, or lack thereof. No single service will seal the deal for you, but check out our guide to landing your next paycheck via Twitter.

From finding new people to follow in your industry to making use of tools like TweetMyJobs, Twitter offers an unprecedented chance to find out about new opportunities and connect with potential employers in real-time.

What else can you use Twitter for besides our daily dosages of pointless babble? Let us know in the comments!

In my previous post I talked about my unease with Liv’s interview and with microtransactions.  Luckily, a reader pointed out a post by Ayase on the Aion Source forums that clears up my misunderstanding of Liv’s interview:

Aion is and will remain a subscription-based game. The “micro-transactions” I know have been discussed so far only involve lesser additional services, rendering “micro-transaction” a fairly erroneous word to describe it. Overall I think we’re looking at a quite conventional subscription system, but as the reply in the interview states we aren’t at a stage in planning yet where we can tell you exactly what we’ll have. Rest assured that it wouldn’t make sense to anyone to have a game which requires both micro-transactions and a subscription fee to be played decently.”

This is good to hear and although it does not completely rule out micro-transactions it does lessen my worry quite a bit.  Thanks Ayase!

Source: Aion Source Forums

***EDIT***  Also, thanks to Rer for his post that calmed my fears!

The upcoming game I’m most excited about is Champions Online.  Recently, there’s been a HUGE uproar over the fact that Cryptic has announced that CO will support microtransactions.  A lot of people in the forums have a kneejerk reaction when they hear about MT’s.  They are crying that they will never play a game with MT’s and predicting that CO is going to bomb.

Here is a relevant excerpt from Cryptic’s latest ‘State of the Game’ developer’s blog post.

Champions Online will support micro-transactions, but contrary to the concerns of some people, the game is not ‘based’ on them. There are the basic tenets for our micro-transactions:

• The vast majority are aesthetic items, such as costume pieces, action figures, emblems, etc.
• A very few are account-level management tools, such as being able to rename a character
• Micro-transactions should never limit your ability to enjoy the game or reach the level cap
• Any micro-transaction that has a game effect can also be earned in the game through play

Also, it’s important to note that the overwhelming majority of micro-transactions are account-wide. This means if you buy a costume piece or an action figure, every character on your account gets it.

Finally, many of the pre-order programs that we’re finalizing now have cryptic points associated with them. This is a way for us to allow our players to choose their own pre-order reward(s) which falls into our whole customization concept for Champions Online.

Even with this additional information about MT’s, a lot of players are still upset.

To those people, all I can say is…stop whining!!

How is this any different from in-game bonuses that come with dropping some cash on Collector’s editions or preorders?  The in-game bonuses that typically come with Collector’s editions and pre-orders are often unattainable in any other fashion, so that is actually worse.

With the horrible economy and the ridiculously competitive MMORPG genre, I can’t blame Cryptic for wanting to make a few extra bucks.  If a few extra dollars from my pocket can make a difference in Cryptic’s bottom line, then I’m happy to help. The more money Cryptic has, the more money they have to spend on creating a better game (and working on Star Trek Online).

Game developers are not rockstars.  They aren’t rolling in cash, partying every night and sleeping with groupies.  Game developers work their asses off and the end result is hardly a guaranteed success.  Even the suits in the gaming industry are taking a huge risk with every single game release.  Success is no guarantee of long term viability in an industry where top development houses are being shut down (Ensemble Studios…what the hell, Microsoft???).

For $15 dollars a month, MMORPG gamers are getting an incredible deal.  I can’t think of many other entertainment options that can rival the value that you get from an MMORPG.  Most forms of entertainment cost a fortune.  One night out in NYC can easily cost me triple digit figures.  Most hobbies can get very expensive as well.

It’s unbelievable to me that people are complaining about a few extra dollars.

By Noel Bagwell
June 19, 2009

Usually local news broadcasts have little national relevance. In the case of Channel 5 News out of San Francisco, that generality doesn’t always apply, as this clip will show you. If you’re not familiar with Zynga, you probably aren’t on Facebook. If you’re familiar with online games like Mafia Wars, Dragon Wars, or Zynga’s Texas Hold ‘Em Poker app, you’re probably familiar with them because of their prevalence on Facebook (and MySpace).

What Zynga bases its revenues on are “microtransactions,” which occur when lots of people pay small amounts of money for virtual (or real) products, usually online. The idea is, that if you are, for example, playing a video game, you’ll pay a small amount of money for a little “bonus” or “power-up” in the game. In Zynga’s Texas Hold ‘Em Poker game, you can buy chips in various amounts. In Dragon Wars, you can buy “Favor Points” which can be used to give you various advantages in the game. Each of these “microtransactions” are very small, but when you add them up, they add up to a tidy sum.

Those tidy sums have made Zynga a multimillion-dollar corporation that, apparently, cannot hire fast enough and has perks that were commonplace back when the “dot-com bubble” was in full effect, but which, now, are extremely rare in all but the largest of companies (like Google and Microsoft).

What is mind-boggling to me is that successful video game developers, like Blizzard Entertainment, have been so slow to adapt their business model to incorporate microtransactions. There has been some interesting discussion, for some time now, about the pros and cons of games like World of Warcraft incorporating microtransactions into their gameplay experience. They’ve done a little bit, in terms of implementation of paid character customization, but it is extremely basic, and arguably quite over-priced. In truth, there is an argument that could be made that what Blizzard is doing with World of Warcraft is not really microtransactions, because the amounts of money Blizzard charges aren’t really small enough to be considered microtransactions, but that’s a debate for a different article.

It remains to be seen MMORPGs will adapt to the prevalence, generally, of microtransactions in online gaming, but I think the new Star Wars: The Old Republic MMORPG will probably introduce microtransactions to the MMORPG community on an unprecedented level – at least, that’s the word on the street.