Should PC Gaming Embrace Microtransactions and DLC?

The traditional business model of the PC gaming industry has always been one of a shared development/distribution process: typically, a game developer creates, designs, tests, and polishes a new game; when this game is finished and ready to be "published" (e.g. the game has moved from an alpha, then beta stage to a "gone gold" stage, where the final cartridge or disc has been mastered, and then duplicate copies are stamped and processed), the developer, being as they are typically small business with anywhere from five to twenty-give employees, will shop around for a publisher. A publisher is a company who will take on the financial and marketing burdens of paying to actually put the game on a disc, create the packaging, market the game through advertising, and finally distribute the game to various established, brick-and-mortar outlets, which range from national chains such as Wal-Mart, Target and Best Buy, to boutique shops that exist only for the gaming genre like GameStop, to lesser-known establishments. When the game is sold, the SKU is checked, and the profits are distributed accordingly, with typically the lion's share going to the publisher, as even though the developers did all the work of actually creating the game, the marketing and distribution of the game is far more costly. This has been the standard process for more or less the inception of the PC gaming industry, and is still the favored model at work today.

Yet perhaps not for long. For about the last four to five years, and in ever-increasing numbers, more and more developers are taking a different approach in the way they produce, market, distribute, and sell their games: through an online, downloadable service. Examples of these online digital stores can be found through services such as Steam, Good Ol Games, Impulse, Gametap, and others. The concept is simple enough: instead of going to any of the major or minor outlet stores, let alone even leaving your home, you can just hop online and navigate to the virtual store, where, after creating and account and putting in your credit card through a secure server, you can immediately begin to purchase and download new, complete games to your computer, and begin playing right away.

The benefits and draw to this "new" type of business model are clear. For one, this cuts down immensely on the costs involved with bringing in a second party for developers, namely the publishers. Now, a small, indie game developer can either create their own online service, or use an already established store such as Steam, and sell their game immediately, directly to the public, without any of the hassle of the contracts and costs that are inherent with working through publishers. What's more, they can retain all rights to their created product. Additionally, this method of game distribution cuts down on the costs of not only shipping your product to physical stores, but on packaging: you no longer need to produce paper manuals or plastic disc holders, let alone discs - this can all be distributed digitally, including the manuals. Games can still have artwork, so brand recognition will still be involved. This process also clearly cuts down on the waste that is produced, which is a good thing for our landfills. And owning games this way opens up shelf-space at home, reducing clutter. Finally, making games available digitally, and online, essentially makes them available anywhere there is a computer and Internet connection, which allows former consumers who may have lived too far away from a retail store to be able to readily purchase the product from their home, thereby increasing the games market influence and percentage.

As is typical in online accounts, this digital transaction can require one to connect to the company's servers, login, and "verify" the game, essentially acknowledging it as "legitimate". Having only digital copies of a game available through an online service drastically cuts down on the piracy of the game, which in turn allows developers to sell their games cheaper, and still make a nice profit margin. This also allows games to be automatically updated with necessary patches, to fix game bugs or balancing issues, when the online service is started, making it much easier for a consumer to keep their game updated and running smoothly, all automatically and without any work on his or her part.

The drawbacks are also prominent, however. For starters, not everyone has an Internet connection, or if they do, it may not be broadband, thus potentially cutting down on your potential customers. Additionally, the online service must be set up in such a way as to always have the customer and their purchased products in mind, first and foremost, for when something is purchased digitally, e.g. there is no physical product, what happens when a customer's computer crashes? Will the service hold saved games, let alone have records that you purchased a game, and can download it again if the need arise? And what is to happen if the service or game company itself goes bankrupt? How will this affect the customers who purchased the games online? There needs to be many established contingency plans in place for potential scenarios such as this, so the customer won't be left cold if a game company folds. Finally, there are many still who do enjoy filling a bookshelf with a boxed package, thereby displaying a proud collection of games, which would not be optional with digital distribution.

There is a final caveat to this process, however, which has many people taking sides, and producing vitriolic comments: I speak of "microtransactions", and "DLC", or downloadable content. Essentially, both practices would allow a game developer to sell their game, presumably for a drastically reduced price in accordance to "normal" established current prices (new, Triple AAA PC game titles are $49.99 retail, console games $59.99 retail), in the hopes that the customer would pay for additional transactions of extra content in the future, thereby offsetting the costs of both the game, and for selling the game at a vastly reduced price.

Many companies are even considering giving their game away for free, such as the game Battlefield Heroes, by DICE, and rely on microtransactions wholesale. The idea is that a game will be released for a price far lower than market value, say, $9.99 for example, and then offset in the future for DLC through microtransactions that may range in price from mere pennies, to perhaps one, two, or three dollars. Examples of DLC may be additional outfits for your character, unlockable weapons, new maps, new quests, additional vehicles, additional character attributes, more spells/items, etc. These optional purchasables will, in theory, provide not only the additional revenue needed and desired by the bean counters, but perhaps even provide more revenue than would have been made had the game simply been available for the initial one-time fee of $50. The idea is that a price of ten dollars, or free, is much more desirable to a consumer than fifty, and then, much like MMO's (massively multiplayer online), the temptation to further acquire new components to the game will be too good to pass up, and he or she will make further purchases for something they've already purchased, albeit at a reduced price. And with a slick, downloadable interface, it should be very easy and painless, as much of today's younger consumers are used to.

This type of business model will additionally help grow a franchise and/or brand, creating a larger fanbase, and additionally prolong the life of a game, which may have been playable in six to ten hours, but might now be stretched out to double that, or even indefinitely, should that much more content for the game continue to be produced, and available. It's even conceivable that the game developers will open up their servers for fan-made content that will be able to be uploaded and purchased by other fans for a nominal price. Strauss Zelnick, executive chairman of Take-Two Interactive agrees, when he said at the recent BMO Capital Market's conference in New York, "The holy grail is taking a business, already a very large and successful business that's focused on packaged goods...and turning that into a subscription business or a semi subscription business where we have an ongoing relationship with consumers, giving them products that they want."

There are certainly many critics of this approach, but I for one am for it, especially if it means cheaper games, better games, more games continued to be supported by their developers, and a longer life-cycle of a great game. And I'm certainly behind it if it also means that this practice will cut down on, or altogether stave off in-game advertisements, something of which I abhor, and makes my skin crawl (the last thing I want to see in any game I play, which is by definition a fantasy, made-up world, is an advertisement for a real-life product.) But there definitely needs to be some moral guidelines with this practice, especially if it is to be taken seriously, and allowed to grow.

For starters, this should not be viewed as an "easy out" for game developers, in the sense that they create half-baked, semi-complete games with the intention of "finishing them" later, for a costly download. It'll be tempting, to be sure, for a developer to see the "holiday date" looming near and want to simply push their product "out the door" unfinished, in an unpolished state, to grab that holiday cash, but this would certainly have a very large negative impact if games continued to be released in such a poor state, only to be finished electronically later; customers would certainly begin to distrust companies that offered games in such shambles. Secondly, when I pay for a game, even if it's a low-cost game, I expect it to be a complete game - that is, I would not expect to pay via DLC and microtransactions for anything that should be "normally" included in a game. For instance, having no multiplayer maps in a shooter, when normally anywhere from 5 to 20 maps are included, would be an egregious omission. Or, take for example an RPG (role-playing game), which typically ship with the minimum choice of three archetype characters (strong, ranged-combat, and magical); if a game shipped with only two, or one, with "more to be purchased later", this would be unacceptable. Games should be finished in their entirety, and have all components that previous similar games have had, and these should be fully available for purchase from the onset. The idea is to make NEW content available for an optional purchase, not standard.

Finally, balancing issues need to be considered - it won't do to have a certain type of in-game weapon, or unit (for strategy games) available for purchase only that are incredibly powerful, only to have those willing to pony-up extra cash then have an unfair tactical advantage. The transactions should all be focused on either neutral ideas, such as cosmetic wear, or having the ability to upload a team or guild photo/icon/flag, etc, or else extensive, like addition new, but similar units or vehicles (things that act and do the same as the standard units, but look different) or additional maps, quests, stories, etc. This way, even if one chooses not to buy additional content, they won't be left at an unfair advantage for those who open their pocketbooks.

In the end, I believe that if handled correctly, the concept of microtransactions and DLC could be a huge boon for the PC gaming industry, save massively on productions costs and distribution, grow a platform that has always been traditionally open-source and harder to sell on, provide increased piracy protection, allow more indie developers to create and sell games, and provide an arena for fans and developers to grow a game together, through constant feedback, new ideas, and caretaking of games via a longer life-cycle. And for that, I'm truly excited, and am willing to open my pocketbook.