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FEDERAL STATE EDUCATIONAL INSTITUTION

OF HIGHER EDUCATION

NATIONAL RESEARCH UNIVERSITY

HIGHER SCHOOL OF ECONOMICS

Saint Petersburg School of Economics and Management

Department of Management

Microtransactions as a form monetization in online free-to-play games

In the field 38.03.02 `Management'

Educational programme `Management'

Dmitry Evstigneev Vladimir Litash

Saint Petersburg 2020

Abstract

These days, gaming industry is experiencing a rapid development and online free-to-play games have especial popularity. In this work the structure of revenue in general of online free-to-play games were researched, what percentage of this structure microtransactions have and what influence they have on the in-game processes. Microtransactions in online free-to-play games are financial operations, which are related to the purchases of in-game items via real money. Despite the popularity of such form of monetization, it is still obscure what is a real revenue from these financial operations. In this research the detailed analysis of microtransactions were done in such dominant game projects as DOTA 2 and Counter Strike: Global Offensive. Within this work different types of microtransaction in Counter Strike: Global Offensive and DOTA 2 were described, the data was analyzed with the help of SPSS and Excel and at the same time real players were surveyed about the in-game purchases. This research helps to better understand the structure of monetization in online free-to-play games and it will be usefull not only for game developers, but also for employees in the gaming industry.

Table of content

• Abstract
• 1. Introduction
• 2. Theoretical foundation
• 2.1 The first microtransaction and types of in-game purchases in DOTA 2
• 2.2 The encouragement of players for microtransactions in DOTA 2 and Counter Strike
• 2.3 How microtransactions are processing in DOTA 2 and Counter Strike: Global Offensive
• 2.4 Literature review
• 3. Statement of the research question
• 4. Methodologyand data description
• 4.1. Data description
• 4.2. Methodology
• 5. Description of results
• Conclusion
• References

Appendix

1. Introduction

These days, different online services, sites, games are using diverse tools of monetization and for some reasons free-to-play games outperformed its pay-to-play competitors in profit. Thus, in report by SuperData “2019 year in review: digital games and interactive media” it was shown that free games on personal computer had approximately 21.1 billion of dollars in 2019 while pay-to-play games had only 3.3 billion of profit in 2019 (SuperData, 2019). The success of free games is noticeable and vast majority of them have some unique features that might lead to such enormous profits. Some studies concluded that over 80% of games these days have such feature as cosmetic microtransactions (D. Zendle, R. Meyer, N. Ballou, 2019). player microtransaction counter strike

Also there is such type of microtransactions when players can buy items from other players. This is quite different from usual form of in-game purchases, because the price of items is decided by players directly and this form of microtransactions is similar to how market works. The key feature that transforms this form of microtransactions into monetization tool is a fact that there are fees for every purchased item. The fee is constant and, for instance, in such video game digital distribution as “Steam”, fee is 5% for every purchased item and 10% more percent are going to the game company directly. Therefore, such unseen features in free games sometimes can create a mirage that they are not playing a huge part in monetization and needed for gamers only. In this study, in-game microtransactions as monetization tool in free-to-play games will be studied. To make a high-quality research, only one free-to-play game will be studied in details. Nevertheless, it should be online game with high number of players online and with great annual revenue. A great example of such game is multiplayer online battle arena Dota 2. This game on the market of game industry since 2013 and still shows high numbers of players online (for instance, in 2020 the peak of players online was nearly 730 thousand people. The lifetime peak of players online was 1 295 114 players online in Dota 2). Moreover, according to SuperData research, Dota 2 had 406 million dollars of annual revenue in 2017 and it was the fifth free-to-play game with the best annual revenue worldwide.However, it is not enough to study such complex topic as micrpotransaction only within the limits of one free-to-play online game. Therefore, another game from the Steam will be taken for analysis of this complex topic and it will be Counter Strike: Global Offensive. According to Statista, Counter Strike: Global Offensive used to make about 414 million dollars in 2018. Also, only in August 2018 Counter Strike used to become free-to-play for all players. At the same time, Counter Strike is competing within game industry since august 2012.

Onwards, it is substantial when users are enjoying the way of game monetization. In-game advertisements are pretty irritating for majority of players, but according to Qutee report which was done in 2018, it was shown that nearly 69% of players are fine with in-game microtransactions even if it is only for cosmetic purposes(Qutee,2018). This is why this specific form of game monetization is going to be researched, because it has an immense potential. Last trends in gaming industry also show that more and more players are becoming addicted to such microtransactions. Therefore, with the aim to check some trends in DOTA 2 and Counter Strike: Global Offensive and make a representative result for other free-to-play online game, in following research several hypotheses will be tested, but they will be formulated in future sections.

Thus, in this work, the aim is to study microtransactions as monetization tool in free-to-play games which will be illustrated by the example of DOTA 2 and Counter Strike: Global Offensive. Furthermore, both of these games are one of the first free-to-play games that offered unique ways of monetization the game by providing different loot boxes with cosmetic purposes only and it has numerous other forms of microtransactions that other companies can only copy from these giants of gaming industry. At this point DOTA 2 and Counter Strike are pioneers in the world of microtransactions in games, because in the case of DOTA 2, the game even risks to collect money from players to finance its biggest annual tournament - “The International”. In this study all of the microtransaction methods and forms in DOTA 2 and Counter Strike will be described and researched with the aim to estimate how they possibly can monetize the game.

This topic is researched mainly because of the fact that authors of this work is planning to work in the game industry in future. Therefore, the monetization in general in online free-to-play games is a unique subject of a research, but especially microtransactions when people are paying real money for some in-game content (just cosmetics in most cases). Microtransactions are a unique phenomenon within gaming industry in general and there is no actual data how crucial this type of monetization is. For this purpose and because of the personal interests of authors of this work, it was decided to study microtransactions in online free-to-play games with the aim to understand what types of microtransaction there is these days and how they can generate profit from players who are playing in a free game. In general, the gaming industry is becoming more and more perspective, especially it is noticeable in the period of global pandemic, when more people are starting to play games. Thus, according to Steam Charts the online in DOTA 2 looked like this from January to April 2020- 378 925 people online in January, then growth in players started to be visible, because in February 2020 there were about 405 978 players online, then 437 147 players in March and about 493 300 players online in the April 2020. The growth is immense and same situation is seen within Counter Strike: Global Offensive - 501 196 players in January 2020, 543 979 players in the February, then a sharp increase in players, because there were 671 033 players in the March 2020 and 857 604 players in April what is a tremendous growth in just a few months.

Also, it is crucial to understand how the structure of income looks like in general in online free-to-play games. First of all, there is no income from game sells and in general there is only two main sources of income: microtransaction (any in-game purchases via real money) and the cybersport. In simple words, cybersport is everything what is related to the professioan gaming and to the entertainment. It means that cybersport is about tournaments, professional teams with managers, trainers and players like any other sport has. Cybersport consists of different parts of income also, such as: revenue from advertisement, profit from sold tickets on tournaments, partnership with other organizations, profit from translations online and even revenue from betting. Translation online is the most unique part of revenue, because majority free-to-play games has their own official streaming channel on different streaming platforms as twitch, YouTube, Mixer and so on. However, some games just pay to other streaming channels to translate some tournament.

With the aim to make a representative study, first of all, it will be needed to make a questionnaire with the purpose to gather unique primary data and calculate the monetization from different types of microtransaction in researched free-to-play online games. Secondly, different forms of microtransactions which are DOTA 2 currently using or used to have will be researched and described. Finally, the correlation between players online and amount of sold item will be analyzed, but it will be described in details in future section of this work. There is a chance, that not only updates in game mechanics motivate more people to play the game, but also new cosmetic loot boxes are the locomotive of high online in free-to-play games. Different programs will be used with the aim to estimate possible correlation and with the aim to test some hypothesis which will be formulated in the future. However, it is definite that both Excel and SPSS will be used with the aim to analyze data, construct graphics and test hypothesis.

Nonetheless, there is a major limitation in this topic which rises because of the fact that game companies are trying not to publicly announce their annual profit, especially their revenue from microtransactions within the game and it is much impossible to collect official secondary data about the monetization for every type of microtransaction in online free-to-play games. The survey will be done for with the purpose to collected necessary data from DOTA 2 and Counter Strike: Global Offensive players directly about all possible types of microtransaction within these games. However, another limitation is arising, because population is immense in both DOTA 2 and Counter Strike: Global Offensive surveys what creates incredibly high sample sizes. With the aim to dodge and minimize this limitation, the confidence level will be 95%, but the confidence interval will be 10% with the aim to make the sample size with about 100 respondents for both of surveys and not with 384 like it would be in other case. At the same time, it would be impossible to calculate what percent from the overall profit microtransactions have, because this type of data is not public and even the data about the overall profit is private and only some advanced researchers are trying to approximately estimate the revenue in free-to-play games such as Counter Strike and DOTA 2. However, in DOTA 2 the information about the revenue from “The International” battle pass is known and within this work the percent of micrtoransaction from the overall revenue will be calculated approximately only because of the fact that the data about this type of microtransaction is public. In the case of Counter Strike: Global Offensive there will be no calculation, because all the data is closed and none of the revenue is known about any type of microtransactions.

In this work, the emphasis will be done on monetization within DOTA 2 and Counter Strike: Global Offensive. There was no actual detailed research about diverse forms of microtransactions in this game and how they can generate profit and especially there was no detailed study about correlations of players online and amount of sold items. This work looks much deeper on the topic of microtransactions and tries to study it in details with understanding the reasons of possible growth in revenue from specific types of microtransactions in particular period of times.

The results of this study will be significant nearly for every free-to-play game developer and also for players with the aim to clearly understand how in-game microtransactions can monetize the game. Moreover, within this study the effect of microtransactions on different in-game statistics such as players online will be shown and the it will be described if there is any causal link between fluctuation of players online and amount of sold items.

Within this work different abbreviations might take place, such as: F2P what stands for free-to-play games. MOBA stands for Multiplayer Online Battle Arena - it is basically a gaming genre. Moreover, it is needed to provide the definition for such term as “microtransaction”, because it is a substantial point in this research. According to Oxford dictionary: “microtransaction is a very small financial transaction conducted online”.In this research, the concept of free-to-play games are also unique, because Dota 2 will be studied Finally, the definition of loot boxes should be provided and according to Macmillian dictionary “loot box is a kind of in-game purchase where players don't know what is in a box until they have bought it”.

2. Theoretical foundation

2.1 The first microtransaction and types of in-game purchases in DOTA 2

There are plenty types of microtransactions within games. One of the first type of microtransaction was a DLC for the game of 2006 - Elder scrolls Oblivion. What was special for that DLC is that it was not some additional story line within the game or some new locations, weapons that players can craft or find why playing the game, it was only the skin for the horse that costed at first time 2.5 dollars. Gamers were surprised first of all when discovered that they had to pay such amount of money for some cosmetic design that could be applied only for horse. However, that was only a start and rising of microtransaction in games. With time more and more pay-to-play games for solo gameplay offered players to purchase addition in-game content for real money. Completely new way of microtransaction was offered by Counter Strike and DOTA 2. DOTA 2 was released on 2013 and had different types of microtransactions. First of all, it was able for all players to purchase specific cosmetic skins, appearance for different in-game characters. Secondly, players could purchase different treasures in game which were loot boxes in reality. At first time, odds within the treasure for getting the rare, ultra-rare and other items were hidden, but after update in 2018, these chances could be seen by any players and it worked in the way that the more player opens the higher the odds he or she has for getting a rare or ultra-rare item. For instance, on the first graph the odds in the first immortal treasure from compendium 2019 is shown. Therefore, if player would purchase 40 treasures, he would receive a rare item from the treasure with the probability of 100%, however, the highest odd for the very rare item the player would have if he or she decide to open 50 treasures of this type. The rarest item in this treasure - ultra-rare items could have only 5.88 percent chance of dropping in the fiftieth treasure opening.

Figure 1. The odds in immortal treasure I 2019

Therefore, such system of loot boxes and receiving items only encourage players to waste more real money in DOTA 2 in order to get some cosmetic item for particular in-game character. Another type of microtransaction within DOTA 2 is “The International” battle pass itself. It is absolutely unique feature for DOTA 2 and this is for what this game can be even known, because it is tightly connected with one the biggest tournament that gaming industry has each year - “The International”. Since the very start and release of DOTA 2 it has annual world tournament where the best team with the best players compete with each other to get the insane amount of money and to get “Aegis” as the trophy. Every yeah the prize pool is getting higher, because in summer of 2013 the overall prize pool was 2 834 380 dollars and in summer of 2019 the prize pool was 34 330 068 dollars. Thus, the prize pool increase in nearly 12 times in only 5 years. What is more surprising in these prize pool numbers is that they are all coming from in-game microtransactions that goes from purchasing of annual “The International” battle pass. It means that in 2019 DOTA 2 players used to waste more than 100 million of dollars on this battle pass within the period of 4 months (from May to the end of August), because only 25 percent goes to the prize pool and it was about 34 million as it was stated previously. Also, in DOTA 2 it is possible to purchase different bundles which contains diverse in-game cosmetic items and it is way cheaper to purchase such bundles comparing to purchasing every item from the bundle separately. However, DOTA 2 game developers used to launch completely new for such game types of microtransaction - DOTA plus. It was in 2018 and it means that for the period of 5 years this games had nothing like this within the game. The idea is pretty simple - players could purchase subscription on DOTA plus for different period of times and for different amount of money: 1 month for 3.99 dollars, 3 months for 22.99 dollars and 12 months for 41.99 dollars. These DOTA plus has tremendous amount of opportunities: first of all, it enables and motivates player to play more by adding the opportunity of new in-game voice commands that just make the player's character more unique and also DOTA plus adds levels for heroes which upgrades with more games. Once again it motivates players to play more on specific heroes, because in this case the player can show to other players that he or she has high level on a hero what means that he plays a lot and thus he or she can brag about it and look better in the eyes of others players. Moreover, DOTA plus provides players with bunch of tasks for which players receive points and then it is possible for these points to purchase exclusive in-game skin for limited amount of heroes or purchase some voice command, in-game chant. Finally, DOTA plus just gives different tips before the start of the game with suggesting which hero to pick and within the whole game it suggests which items to purchase in the game process itself. Therefore, some players initially thought that this is some sort of pay-to-win system, but in reality it is not, it just can help some beginners with understanding the game and for avid gamers it gives no new hints. However, all these features are ending with subscription on DOTA plus and if the player is not subscribing again, then they will never be back. In DOTA 2 prices are also unstable on in-game items, because it is possible for players to sell or trade them on the Steam market after purchasing. It creates some controversy, because some items cost about 10 dollars in game, but in reality on Steam market they cost only 2 dollars. Therefore, experienced gamers are purchasing items not from the game menu itself, but from the Steam market - from other players. It also means that some prices have its increase in price. For example, for item these days could cost about 3 dollars and after a year it would cost about 15 dollars. It leads to different market manipulation and tactics which traders are using on Steam market in order to gain profit, but DOTA 2 developers are perfectly consider with such system and some items are just not tradable or impossible to sell forever or just in terms of 1 year. It restricts players from the abuse in prices. There are some unique in-game items that differs from typical cosmetic skin in heroes such as various effigies, in-game announcers, loading screens, couriers and even pets which are following some heroes during the whole game within DOTA 2. This game actively tries to increase amount of various types of microtransaction, because in the end it will lead to the higher monetization.

2.2 Types of microtransaction in Counter-Strike: Global Offensive

Within Counter Strike: Global Offensive the system of loot boxes is the most popular, but it is different from DOTA 2. These loot boxes are called “cases” in Counter Strike and there plenty of them with different cosmetic skins for different weapons and always with one random ultra-rare item which is usually either knife or gloves. First of all, chances of item dropping in these loot boxes are hidden and these chances do not depend on different amount of loot boxes opened - chances are staying the same with every new loot box that is opened. Moreover, these chances are completely unknown for all players, what mean that nobody is actually considered with the actual odds in Counter Strike cases. Moreover, Counter Strike differs from DOTA 2 in the points that it does not have any annual tournament with the same amount of prize pool or with the same amount of viewers online and there is no such feature as annual battle pass within the game. However, in the 2019, Counter Strike: Global Offensive for the first time provided players with the opportunity to purchase battle pass for 14.99 dollars and as in DOTA 2 it is possible to purchase levels and get some items from battle pass without completing missions.Finally, Counter Strike has such unique feature as “Prime”. It was free before the December 2019 for all players who used to connect mobile number to the game, but after December 2019, Counter Strike became free-to-play game and “Prime” became free only for players who used to have it before December and all new players had to pay 14.99 dollars to get benefits of “Prime”. “Prime” provides players with new battle royal mode and at the same time it significantly lowers the odds for players to play with or against cheaters. Therefore, at this point it looks like “Prime” applies some sort of freemium model, but in fact it is not, because every new player just can get 21 level within the game by playing a lot and get this “Prime” also for free. Thus, “Prime” can be bought by players who just want full gaming experience in its full right from the start. Same as in DOTA 2, Counter Strike has various types of microtransaction besides skins on weapons such as ultra-rare skins on knives, gloves (which minimal cost is about 50 dollars for knives and about 70 dollars for gloves), in-game skins for characters and even name tags which access players to change the name of in-game skins.

2.3 The encouragement of players for microtransactions in DOTA 2 and Counter Strike

In DOTA 2 there is also a unique system which encourage players for a significant amount of microtransaction in a particular period of time and this is the period when “The International” battle pass is available at the game (from May to the end of the August annually). It works in a way that if a player will get a 1000 level of battle pass, then he or she will receive a unique in-game trophy and, moreover, he would get a unique figurine of “Aegis” after several months from the end of battle pass. It means that players can receive completely free figurine which differs from year to year because it copies the main trophy that the winner of “The International” gets. However, this is not the only thing that motivates players to purchase levels for battle pass, because if some players will upgrade 2000 level of battle pass then they will get a unique figurine of “Baby Roshan” which also differs from year to year and is delivers by the post to every player with level of 2000 or higher. Such encouraging collectible figurines, without any doubt, not free. For instance, in the case of battle pass of 2019, 24 levels costed 9.99 dollars to every player. However, it was possible to purchase 100 levels at the very start for only 44.99 dollars. It means that to get “Aegis” players had to buy approximately 900 more levels and it costed them about 375 dollars. At the same time if players wanted to upgrade level 2000 or higher they have to pay about 790 dollars from level 100. Such unique figurines can be an additional factor of motivation for some players to make more in-game donations with the aim to get collectible figurines, because it is impossible to purchase these figurines via direct transaction in DOTA 2 shop or anywhere else. On the other hand, Counter Strike uses another motivators for microtransactions. For instance, when player gets a new level in the game, he or she gets a random case (loot box with skins for weapons of different rarity) which approximately cost about 0.16 dollars, but it is impossible to open the case without a key which player can buy on a market for about 4.55 dollars. Thus, the price difference is noticeable. The players get case for free and instinctively he or she is thinking about opening it and trying out the luck, but in order to do it, the player has to buy a key. Another example of how Counter Strike encourage its players to make more microtransactions is a system of “contracts”. It works in a simple way - player should utilize 10 skins of any rarity that he or she wants and in the end player gets an absolutely random skin, but with the higher quality that those 10 skins had in average. Therefore, it motivates players to buy cheap skins on the market and at the same time this system motivates players to open more cases in the game, because even if player receive useless skin, he or she can later use the feature of “contract” and utilize useless skins. However, DOTA 2 and Counter Strike has a common motivator that these games are actively using to encourage players to make more in-game microtransactions. Within these games players get a notification which in-game items are on a sale what means that players can get these items much cheaper at some particular day.

2.4 How microtransactions are processing in DOTA 2 and Counter Strike: Global Offensive

In the case of DOTA 2 and Counter Strike microtransactions are processing super quickly in a period of few seconds or sometimes in a period of few minutes and without any additional obstacles. However, DOTA 2 is connected to “Steam” directly what means that players always should firstly add funds to the “Steam” wallet and only then make microtransaction in DOTA 2 or Counter Strike. “Steam” provides several ways of how players can add funds to the wallet. The most convenient one is the credit card payment, because there is no additional commission and it is possible to make a refund in a short period of time before the purchasing of in-game items. Moreover, “Steam” also provides players with other payment methods such as different online wallets like Paypal, Webmoney which also provides an opportunity to make a refund, but QIWI Wallet does not provide this opportunity. At the same time, it is possible to add funds through the mobile payment, but the commission is pretty high in this case and users are usually getting readdressed on another site - XCOLA. This is why commission is so high. Finally, it is possible to add funds directly to “Steam” wallet directly by using nearly any terminal that users can meet in shops, banks and other public places. Usually there is also no commission, but it depends on the terminal. Thus, QIWI terminal have no commission at all. “Steam” also restricts players from adding funds lower than 5 dollars. It is also impossible to transfer money from “Steam” wallet to some online wallets or credit cards, this option only available as refund option.

2.5 Literature review

In this research, analysis of previous studies and literature is playing significant role, because other researchers might have more research tools and it is easier for them to collect closed data about some specifics in game industry.

The first study by Nenad Tomic in 2017 is about “effects of microtransactions on video game industry”. The author used to analyze different points such as the concept of virtual money, concept of microtransactions, payments mechanism, but all his study was focused on video games in general. It means that he studied both pay-to-play games, free-to-play games, games on console, game on computer and even mobile games. Nenad Tomic found out that microtransactions have three major effects: the first one is economic effect and it basically implies that more free-to-play games are using freemium model when players have to pay for additional in-game content or even just to have any progress within the game. However, there are some games that combine both pay-to-play system and costly microtransactions, what only few successful game companies can afford to do. The second effect is social, because there are some multiplayer games which have in-game microtransactions that not only for cosmetic purposes, but also have pay-to-win mechanics within them, what means that a player who donate the most money in game wins the most amount of games. Such unfair mechanic is starting to be replaced by such form of microtransactions when players who do not want to purchase any in-game items can gain them by just playing a lot. The final effect is ethical and it implies that these days some microtransaction suffers from the poor management what can lead to legal disputes. At the same time, aggressive policy of some game distributors such as “Steam”can force children to buy something online using parents card without their attention, because there is no security code or some integrated system of payment verification. To sum up, this study concluded that freemium model is becoming more desirable among game companies majorly because of the possible aggressive microtransactions in games. Moreover, the amount of profit that these microtransactions generate can be doubled or tripled by adding several forms of in-game purchases (for instance, not only for cosmetic purposes, but also for addition in-game content) (N. Tomic, 2017).

Another study by Brian Artz and Alex Kitcheos in 2019 was about:” A study of consumer behavior and virtual goods/services among students at Linkoping university in Sweden”. The main goal of authors was to study the motivation factor of students who are above 18 years old in purchasing in-game items. With this aim authors conducted a quantitative survey and 200 participants were asked same questions related to the topic of microtransactions in different games. First of all, results of surveys showed that 67 percent of participants have not ever purchased microtransactions in games, but other 33 percent of people used to make in-game microtransaction at least once. Other results studied only those participants who used to purchase in-game items. 68 percent said that they were using credit cards with the aim to perform a microtransaction, other 20 percents used for this action such Apple's digital wallet as Apple pay, other 12 percent used such Google' digital wallet as Google wallet and only percent of participants used to use in-game currency for purchasing items. Moreover, for 69 percent of players microtransactions increased the level of enjoyment of game. What is more important in this study is that other participants who did not gain more enjoyment after performing an action of microtransaction, they were asked about their emotions. One participant said that he used to purchase a skin in Dota 2 for his favorite hero and firstly he liked that he made such cosmetic microtransaction and supported the game developer, but it contrasted with more negative emotions such - this microtransaction did not bring more fun within game process, because the game mechanic was still the same and at the end participant said that the purchase was completely worthless. Also within the confines of this survey, participants were asked about 3 primary factors of microtransaction that would impact their purchasing decision. Such factors were: functionality what stands for increasing effectivity of a player in game and for time saving; pricing which mean that the value player receive outperforms the value of microtransaction; social capital that enables players to be unique and to stand out from others. 6 percent of respondents selected all three as factors that might have impact on their purchasing behavior. 27 percent selected both pricing and functionality, 3 percent selected both social capital and functionality. 24 percent of participants selected functionality as the only factor that impacts their purchasing behavior. 21 percent said that pricing is the most impactful factor. Only 6 percent said that social capital is the only factor that can motivate them to buy anything within games and final 15 percent of respondents mentioned another factors. In conclusion, authors found out that 69 percent of participants who used to make in-game microtransactions had enjoyed the results of this purchase. Moreover, authors of this study concluded that enjoyment in games can be associated as tangible concept, because those who did not get any joy from games used to not make any microtransactions at all. Despite the fact that the whole study was focused on majority other details, they will not be described and reviewed in this paper, because they do not play significant role to researched topic of cosmetic microtransaction in Dota 2. Thus, the main output of reviewed work is that even non-obligatory microtransactions determine the level of enjoyment that players get within gaming process.

In another study which was titled as “Free-to-play games: what are gamers paying for?” by J. Riekki in 2016, the business model of free-to-play games was analyzed from the point of monetization. At the same time, also in this this work was done a survey with the aim to examine motivation and behavior of people who are purchasing in-game items. First of all, J. Riekky clarified the concept of in-game purchases and then author started to review how microtransactions work in three free-to-play games such as: Hearthstone: Heroes of Warcraft; Armored Warfare; Star Wars: The Old Republic. Thus, the major form of microtransaction in Hearthstone was in-game currency, in Armored Warfare it was different booster packs which enable players to gain more experience from battles, provide free in-game currency and just get free experience. In the case of Star Wars, the game was initially available only through subscription, but then developers decided to switch to freemium business model, where players can buy full gaming experience for some amount of money. Neverheless, in Star Wars in-game currency plays a huge role. Then the survey was made with the aim to examine the behavior and motivation of people who used to make micortransaction within games. Survey showed that players value substantially microtransactions that help to perform better in-game, that provide in-game experience. However, in games in which social aspect is playing a predominant role, players preferred cosmetic microtransactions which only change the look of the character. Survey helped author to come to conclusion that players who have negative experience of microtransactions or just do not have intention to make any in the future, will not become “core” gamers and will not spend majority of their free time on games. Finally, within this work, the review of games showed that some game developers intentionally restrict free game process and, therefore, force players to buy items or full service in games.

However, previous studies had substantially qualitative purpose and research which was done in 2018 by SuperData is quantitative. It is titled as “2019 year in review. Digital games and interactive media”. Within this study the revenue of different types of games were reviewed, this research provides numerous amount of data which is not publicly opened. First of all, it is stated that free-to-play games outperformed its competitors such as pay-to-play games in seven times - free-to-play games had 21.1 billion dollars of revenue on 2019 while pay-to-play games had only 3.3 billion of dollars. According to the data in this study, spending on free-to-play games accounted nearly 80 percent of all profit in game industry for 2019. It is pretty impressive and even such game giants as Counter Strike Global Offensive and Destiny 2 started to use free-to-play business model and became completely free for all players in 2019. Nevertheless, SuperData forecast slow decline in annual profit of free-to-play games on PC - in 2020 it will be about 20.6 billion of dollars, but much greater decline will experience free games on consoles - only 1 billion dollars of revenue comparing to 1.6 billion in 2019. Also, within this research it is stated that the main reason of abnormal growth in players in such game giant as Apex Legends was according to great marketing campaign - majority of famous game streamers such as Ninja, DrDisrespect and others used to play this game after its release. Therefore, Apex Legends had about 116 million hours watched on twitch only in February. It led to the fact that viewers became players and after the release there was about 50 million of downloads. In free-to-play business model amount of players leads to amount of money and this is why this game generated nearly 91.6 million dollars in revenue for its developers. As conclusion, SuperData research showed that free-to-play games have extremely high monetization and it might be the cause of in-game microtransactions. Finally, SuperData showed that number of players online might lead to the high revenue generation within free-to-play games (SuperData, 2019).

Other study by Mustafa Atahan Yilmaz which is titled as “A study on cosmetic virtual product purchase in multiplayer online battle area games” was focused on researching information and finding possible relationships within games and cosmetic purchases. Within this work by Mustafa Atahan Yilmaz, only MOBA games were studied and two hypotheses were tested. The first one is that there is a significant relationship between product involvement and purchase of virtual cosmetic product with real money. The second hypothesis states that there is a relationship between amount of hours that players wasted on the game and cosmetic virtual purchase. For testing these hypotheses, survey was done and there were 5 groups of respondents: they were divided according to their overall game time within games: very low, low, medium, high, very high. People within very low group had approximately 106 hours in games while respondents within very high group had about 3700 hours. Moreover, statistically for testing hypotheses, author used Chi square independence test level of significance was 0,05. Thus, for the first hypothesis p value was 0,019 what means that first hypothesis was supported. For the second hypothesis, author used same significance level in 0,05, but in this case, p value was higher than 0,05, because it was 0,413 what means that second hypothesis is not supported. Therefore, in the end by testing hypotheses, author found out that there is a relationship between product involvement and purchases of cosmetic virtual product. However, at the same time, Mustafa Atahan Yilmaz found out that there is no strong relationship between amount of hours that player used to waist on games and cosmetic purchases via real money. Finally, author made another qualitative conclusion, because within the survey, it was found out that players more likely to make cosmetic purchases for their favorite in-game characters - for which they are playing the most.

In another study by Edwin L. Phil Tan which is titled as: “Microtransations in AAA Video games - are they really necessary?”, the author made an analysis of how microtransactions work within AAA games. In simple words, AAA games are simply games with high budget and, therefore, they are high quality games. These types of games can be both free and pay-to-play. In the start of the research, Edwin L. Phil Tan makes the clear distinction between microtransaction and DLCs within games. DLC stands for downloadable content and it is more applicable within freemium business model, but not in free-to-play games. Author is explaining why DLCs are less preferable by gamers than microtransactions and the main reason is a price diversity. Indeed, DLCs are some additional content within particular game, while microtransaction, in vast majority of cases, is the cosmetic skin for something within the game. Further in the research, author starts to study how microtransaction works in AAA by reviewing specific examples such as Assassin's Creed Odyssey. First of all, it is solo game, what makes it is way harder for developers to motivate players to perform in-game purchases. However, developers decided that some players would like to buy some in-game items via real money and make their gaming experience much easier. Undoubtedly, some game critics said that there is no point in doing so, because the average game was about 60 hours and with the help of this microtransactions, players had only 30 hours of gameplay what makes no sense in purchasing in-game items. Nevertheless, later game developers decided to add some sort of battle pass within the game and with the help of it, players could gain access to all upcoming DLCs in the game. It is substantial to point out, because it is such form of microtransaction that allows players to get free access to next DLCs and some cosmetic in-game items. Second game that was reviewed within this work was Devil May Cry 5. This game implemented aggressive policy of microtransactions. They are two types of orbs within the game: the first one is golden orbs that can be purchased in-game via real money, but also they can be found in extremely low amount within the game, second type is red orbs and also can be purchased as microtransaction, but every time player dies, some amount of red orbs should be wasted to regenerate health. The main trick here is that this amount increases every time player dies, therefore, if player dies way too frequently, he or she is forced to make in-game microtransaction just to continue playing. Thus, this study showed that even high budget games are trying to copy the model that is actively using within free-to-play games.

Another profound study was done by D.W.J. Laurijsen in 2013. Within this study once again microtransactions were studied and in this case the satisfaction of players was measured. This results of this study plays the key role, because they might show that microtransactions are preferable by the vast majority of players or it is despised. First of all, author decided to study satisfaction of players in such online game as World of Tanks which is mostly popular in CIS countries. Scenario study and survey was used as data collection methods. Within scenario, players had to imagine that they are losing to the player who bought an advantage in the game and then another part of respondents had to imagine that they are winning because of the purchased in-game benefit via real money. Level of satisfaction was measured from 1 to 0, where 1 was the lowest level of satisfaction and 7 was the highest. As expected, results showed that gamers had much more level of satisfaction when they are winning and much lower when losing. However, at the same time, players who used to imagine situation in which they were winning by using their own skill in the game had the same level of satisfaction as those who used to imagine that they are winning by using purchases in-game items. In the second part of survey, respondents had to answer how much they are spending the World of tanks or used to spend. From 160 respondents, only 27 used to never perform a microtransaction in this game, while average amount of money in dollars for other 133 respondents was 328.70. This number shows amount of money that people used to spend during all their game period in World of tanks. Moreover, research showed that 50 percent of players used to spend their money on premium accounts which access players to gain addition experience from battles and gain more in-game money. Same research was done for less popular online game Wizard101. Once again, first of all, scenario study was conducted, but this time all players had to imagine that they are losing the game to players who used to buy in-game benefit in the first case and other respondents had to imagine losing to players who just had higher game skill. Results showed that level of satisfaction was similar to players from World of tanks and it was 4.82 in average, but players who used to imagine losing to more skillful players had higher level of satisfaction in general - 5.43. Second part of survey which was aimed on finding how many players used to spend showed that out of 30 respondents, only 3 used to not to make in-game microtransactions and the average amount of spent money for other 27 players was 416.83 dollars in general what is little higher comparing to World of Tanks. The final online game that was researched within this work is Runes of magic. In this case for scenario, respondents had to imagine losing firstly to players who bought an advantage and then to players who used to spend significant amount of time - to more skillful players. The level of satisfaction in both scenarios was quite similar, but it was lower comparing to respondents in previous online games - 3.17 in average for players who lost to microtransactions and level of satisfaction was 3.54 for respondents who lost to players with higher skill. Interestingly, second part of survey showed that out of 28 respondents, only 18 used to purchase in-game items, while 10 of them never made a microtransaction. The average check was also 364.12 dollarsin general. Therefore, this study showed that players less prefer to lose to bought advantage in online game altogether. However, from 65 to 90 percent of players used to make a microtransaction at least once during their gaming period within one game. What plays more substantial role is that players had quite similar level of satisfaction while losing to bought advantage and while losing to players with higher skill in online games (D.W.J Laurijsen, 2013).

In another quantitative study by J. Hamari, S. Jarvela, K. Alha and J Matias Kivikangas the aim was to find motivation factors for players to buy something in games via real money. This study is unique, because it has pretty immense sample for online survey - 519 respondents. Authors used 7-point Likert scale, where 1 means that this motivation factor is not important and 7 means that this motivation factor plays a key role for respondent. Therefore, survey showed that the most substantial motivation factor for respondents in average was unlocking content (4.963 in average), on the second place was the factor of just supporting a good game (4.765 in average), then the lower result was for reasonable pricing for some in-game items (4.127 in average), then special offers as motivation factor goes (3.809 in average) and so on. The lowest score within the survey appeared to indulge children (1.297 in average), little bit different result showed different social aspects of microtransactions such as showing off to friends (1.584 in average) and showing off achievement (1.855 in average). For the next part of the research authors decided to find the relationship between motivation factor of purchasing in-game items via real money and the amount of money itself. It was found out that such factors as unobstructed play, social interaction and economic rationale had strong relationship with amount of money that players spend in games in general. In the discussion section authors are claiming that majority of microtransaction are not performing because of the pay-to-win mechanics. Indeed, some of free games have such feature as unfair pay-to-win system, however, pay-to-win is not a leading factor for majority of players according to the results of survey in this study. At the same time, economic rationale was the dominating motivation factor for respondents to make a microtransaction, because they were valuing special offers, in-game discounts and, surprisingly for authors, the vast majority of respondents was so altruistic that picked supporting game developers as one of the key motivation factor.Finally, authors making the statement that forms of microtransaction and its effectiveness depends on the type of games. For instance, World of tanks and team fortress 2 have from 20 to 30 percent of conversion rate from players who are not paying to paying players (J. Hamari, S. Jarvela, K. Alha & J Matias Kivikangas, 2017).

Another research by M.C. Toyama, G. Ferratti and M.R. Cortes which was aimed on studying the phenomenon of microtransaction in all types of games. Within first part of the work authors were simply describing different models of monetization in games besides microtransaction and then researched from different perspective the concept of microtransaction as a form of monetization in games. First of all, authors use other studies and even psychological ones in order to claim that there always will be a demand for microtransaction in games, because there always some players with gambling addiction who would love to purchase insane amount of loot boxes in games. However, the uniqueness that this study provides is that it describes some policies against loot boxes and microtransaction itself within games in some countries. For instance, in Belgium loot boxes are banned completely as a part of gambling which cannot be allowed. In China within loot boxes or game itself it should be stated what the percentage chance to receive some particular item from the box. The active fight against loot boxes is happening these days in the United Kingdom. Even in US republican Josh Hawley proposed a ban on all types of loot boxes. Indeed, loot boxes could make from the usual game some sort of casino and this is specifically unethical if keep in mind that majority of games are played by kids of different age. Therefore, within this study M.C. Toyama, G. Ferratti and M.R. Cortes described and summarized a hidden threat of loot boxes and microtransaction itself (M.C. Toyama, G. Ferratti & M.R. Cortes, 2019).