From pay-to-play and in-app purchases to microtransactions via smartphones, internet-connected devices, and fintech developments, the gaming and eSports industries have undergone an intriguing monetization evolution.
The concept of microtransactions — payments for purchasing additional features within a system (i.e., in-app purchases for video games) — is relatively recent and has only been adopted by a few industries.
Microtransactions exist in multiple shapes and forms, but most are monetary operations in exchange for randomized rewards and performance or cosmetic enhancing upgrades.
Human biology is predisposed to support the efficacy of microtransactions, as they provide dopamine hyperarousal, cravings, feelings rooted in status signaling, and other effects similar to gambling addiction.
The microtransaction market is growing in step with the expansion of the gaming industry. In the last decade, Activision Blizzard and Electronic Arts — two of the top players in sports gaming — have substantially increased their revenues through microtransactions, downloadable content, subscriptions, licensing royalties, and other means.
Data expects the microtransactions market to grow in 2022 at a compound annual growth rate (CAGR) of 13.6%.
Some other major players in the market and companies with a high impact on eSports are Riot Games, Tencent, Ubisoft, and Take-Two Interactive.
Microtransactions opened a new business model for game developers and have been lucrative for the video game industry, but they weren’t always appreciated. Several companies have been facing investigations, lawsuits, and social backlash from their microtransaction-powered digital assets.
But as long as companies can preserve a good reputation around microtransactions, they are in a prime position to leverage new up-and-coming trends — such as NFTs, the Metaverse, and augmented and virtual realities — to continue the expansion of this business model.
Want to learn more? Check out the full microtransactions report here.
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