Micro-transactions in Xenon

Micro-transactions in Xenon

Written by Charles Husemann on 5/5/2005 for

One of the more interesting things about the Xenon key note at the GDC earlier this year was the announcement that Microsoft is adding micro-transactions to Xbox Live. If you’re not familiar with the term, micro-transactions are usually financial transactions between two parties with a very low dollar amount, say less than one dollar or so. That’s a bit of an over simplification but you get the point.

Micro-transactions (sometimes called micro-payments) are not a new concept. Scott McCloud raised a ruckus a while ago in the online comic community by advocating a micro-payment system for online comics. A system called Bitpass was even developed to allow the handling of these transactions but it never really caught on. Entire companies during the dot Com boom were built around the concept.

Let me state for the record that I’m not naïve enough to think that Microsoft has any kind of altruistic reasons behind developing this system (Bill Gates didn’t get to be the richest man in the world by giving away things for free) but I think there’s a huge potential for the law of unintended consequences to strike by including micro-transactions in the next version of Xbox Live. This is something I’ll cover in a bit but first I want to address the biggest concern, how the game publishers are going to abuse/use it.

Much of the initial reaction to the announcement was dread in thinking that gaming companies are going to use this as a way wrest additional dollars away from gamers or provide a mechanism for rich gamers to cheat the system and buy their way to higher levels without doing any of the grunt work. While this is something that has shown up in some PC games (*cough*Everquest*cough*), it has yet to show up in console gaming.

This is something we might from the larger companies with established franchises. For example, I think we can fully expect EA to start charging for Madden online leagues in the near future. If you remember the fine print from last year, the fee for premium online play was paid off by a sponsorship. I would guess that sometime in the near future that cost will be passed on to gamers. With a micro-transaction system, EA might start charging small fees for these premium services or for things like updated rosters.

For the most part, though, I think companies will charge for items that directly impact the game play. Why you ask? It’s simple. It’s something I call the “Douchebag factor” (DF). The “Douchebag Factor” is the sum of the negative emotions games have for a company minus the good will of it products. For example, Electronic Arts has a very high DF right now due to snapping up all rights to football franchises and running several franchises and companies to the ground. Compare this with Blizzard who has a low DF due to the general excellence of it’s games combined with continued support of its older games minus little quirks like the new honor system in World of Warcraft.

Why is this important? Because most console gamers are not going to purchase and play games that have a high DF. Would someone play Halo 3 online knowing that they could be at an immediate disadvantage by a guy who purchased the aim-bot gun? Probably not. I just can’t see developers selling gamers things that break up the construct of the game.

However, I can see them including fewer skins and graphical extras so they can sell more of them through the service. It sucks but as long as it doesn’t change the core tenets of the game I don’t have much of a problem with it. These transactions might also allow for gamers to add new mini-games after a game has been released, further adding to the value of the initial investment.

One of the possible side benefits of having micro transactions is the possibility for small gaming companies to sell their games via Xbox Live. While these companies aren’t going to produce monster games like Half-Life 2, it does raise the possibility for small companies to turn out great small games like Gish or Alien Hominid and sell them over the service.

I think this is more likely than before because of the upcoming release of XNA Studio. What’s XNA Studio you ask? It’s the next generation of console game development software that Microsoft is going to launch by the end of the year (check out our interview with Chris Satchell, the Manager of the Game Developer Group here). A lot of programmers are already using the "civilian" version of these development tools and it may open up Xbox Development to a whole new generation of developers (if you believe all the marketing hype).

One of the more interesting topics that is not getting a lot of play is the possibility of gamer to gamer transactions. Imagine being able to buy custom skins and decals for the next generation version of Project Gotham Racing but instead of buying them from Microsoft you could buy them from another gamer. You could have a completely original work of art on your car for less than a cost of a Soy Chai latté. Sure, this might open the door for pornographic images (just visit an unmoderated CounterStrike for an example of this) but there are some cool implications if Microsoft implements some kind of gateway system to prevent this from happening. This could open up a whole new cottage industry of people who create and sell services via Xbox Live, much like the people who now make their living buying and selling trinkets online. Another possibility is if a software company were to release a large Xbox MMORPG, the company could create an online marketplace where gamers could buy and sell items game items much like Sony is doing now with Everquest 2. Is this cheating the system a bit? Yes. Is it going to happen anyway? Probably, so why not create a secure environment for this to happen.

There’s also nothing preventing eBay from creating an Xbox disc that allows you to buy and sell items online. This creates a more secure system in that both the buyer and seller have existing relationships established with Microsoft which could protect against the basic levels of credit card fraud.

We really won’t know what the possibilities are until at least next week when Microsoft releases the first details of the system and, even then, I don’t think we’ll know everything until the launch of the system. There are tons of little details to drive out between now and launch but I think this could be Microsoft’s secret weapon in the next round of the console wars.

* The product in this article was sent to us by the developer/company for review.


About Author

Hi, my name is Charles Husemann and I've been gaming for longer than I care to admit. For me it's always been about competing and a burning off stress. It started off simply enough with Choplifter and Lode Runner on the Apple //e, then it was the curse of Tank and Yars Revenge on the 2600. The addiction subsided somewhat until I went to college where dramatic decreases in my GPA could be traced to the release of X:Com and Doom.   I have been a Microsoft Xbox MVP since 2009.
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