141. Microtransaction Miasma
In 2012 and 2013 I was advising much if not most of AAA to be wary of MTX based business models. Here I explain why that advice was ignored, and how 12 years later AAA realized that was a mistake.
I was first alerted to the data coming out of Runescape three weeks ago by Reinout te Brake’s post about it on LinkedIn. Today Bellular picked up the story on YouTube. The story has gotten enough traction that I feel it is time for me to weight in and explain how this happened.
Early History
MTX were officially initiated in Nexon’s Maplestory game. This product mostly catered to an Eastern audience. That launched in 2001, the same year that Shattered Galaxy, the first MMORTS, was launched by Nexon in the USA. I was working intensely on SG, for Nexon, for 2 years prior to its launch. Maplestory was doing very well with pay to win mechanics, while SG struggled with Korean players that regularly hacked the game in attempts to disrupt play for Americans. This ended up being such a politically charged thing that Nexon abandoned SG and focused on their core audience playing Maplestory.
Before pulling the plug, Nexon experimented with an MTX called (appropriately) “The Abomination” in SG. It did not go over well. Pay to win was not something that Western players wanted. MTX was also something they did not want, as Westerners could generally afford subscriptions and the advantages of discriminatory pricing that F2P provided were not as critical in the USA. In the East in 2001, gamers had much smaller budgets and being able to make small purchases was a big business model advantage.
From 2001 to 2005 I did dual work as an international gaming journalist strictly covering MMOs, and had access to almost every project world-wide because I had a large daily readership. If I liked the games, I would often volunteer to assist the developers as I was building up a lot of expertise in game economies and meta systems. The developers would always agree. I would say I had unusual access to Eastern projects for an American, and I learned a lot. One of the key lessons was that the same business model might perform well in Asia but be rejected in the USA and Europe.
During the 4.5 years it took me to produce a written solution to the “gold farmer” problem (2005 to 2009) that was plaguing World of Warcraft and other MMOs, I also started to focus a lot of attention on advanced business models that would be well accepted in the West. I feared that Eastern models would be forced on Westerners and that’s exactly how it went down.
The major catalyst for bringing Asian models (F2P + Pay to Win + MTX) to the West was Zynga, which started to build influence in 2009 with Farmville. That studio and especially lead designer Roger Dickey doubled down on what we now call “Dark Patterns” to literally and explicitly torture players into spending. I published an objection and warning about this in 2011 when Dickey started hosting training sessions on how to torture gamers, and studios were treating this as mandatory education. Admission was quite expensive and studio heads were paying for this.
In 2011 I was asked by 2K leadership to do research on Zynga and determine if 2K should emulate their business models. After two days of research and two days of writing I delivered Zynga Analysis. The paper is quite detailed, but generally I explained how Zynga was misrepresenting the efficacy of their business model and even their company valuation. I offered to not publish it if 2K wanted to buy the paper. They declined, which was good for me, because that paper ended up being the only published source that predicted the record breaking loss during the Zynga IPO. After that business leaders started taking me seriously and in 2012 I became the first game economist for Microsoft.
One of the many studios that were asking me for help in 2012 was one called Jagex out of the UK, which makes Runescape. They were asking the same questions that 2K was, but they didn’t know me as well as 2K did and felt willing to risk acting against my advice, adopting a Zynga-similar business model.
I managed to find my follow-up message to Peter Lovell at Jagex who had asked me for help in 2012. The follow-up was in early 2013.
The other three companies were Microsoft (Project Spark), 2K (CivWorld and Civilization Online), and Nickelodeon (various children’s products). I stopped working with Nick when they asked me to deploy tech that I thought was inappropriate for children.
Jagex would end up making money for years, but a lot less money than they could have been making. It wasn’t until things started to turn negative that they took an absolutely desperate action to determine why: They asked their players.
Surveying Gamers
One of the most important things a developer can do is talk to their customer community. One of the core business philosophies that Zynga taught the rest of AAA was that you don’t need to talk to your gamers. You just need to use data analytics to spy on them and anything you need to know can be derived from that information. This would explain why Jagex waited 12 years to survey their players. It’s then that they realized they had made multiple big mistakes in 2012.
It was in 2011 that Firaxis detected me surveying their players on their forums. They found this behavior odd, since I was being very thorough about asking what players liked and didn’t like about CivWorld and it’s business model. I would do a lot of these surveys as I really wanted to understand player psychology. Statistics can tell you what a player is doing, but not why. Without a lot of A/B testing, you won’t know how that player behavior could change if you just altered a few things.
I would regularly survey players in the wild like this, and I got a lot of unsolicited (but welcome) feedback when I was a journalist from 2001 to 2005. In 2012 I was keen on a project called End of Nations by Trion Worlds. It was explicitly described as a successor to one of my previous projects from 2001, Shattered Galaxy. MMORTS is a very difficult genre and one that I had learned a lot about while helping to test and design SG. I was also held by the community as one of the top 3 all time players.
So when I surveyed those players on the topic of “How Would You Like to Pay for EoN?”, the response was shocking. I have never seen a game forum thread go super nuclear like that did. 90+% of all posts on the EoN forums were in that one thread. Players were very outspoken about what they did and did not want. So of course Trion was very keen to engage their players. Just kidding. They acted like almost every other developer and deleted the thread. This was a tragic event because the research data contained there was invaluable. Of course I read it, and it taught me a lot.
I believe developers don’t ask their players how they want to be charged because:
Their relationship with the consumers is intentionally weak because they don’t really respect gamers all that much,
They bought the Zynga Kool-Aid, and believe that secret data mining is superior to dialogue
They wouldn’t have the expertise to implement the desires of the community.
Can you imagine a relationship with your Significant Other where instead of talking to them every day, you set up secret cameras and recorded everything they did? Which relationship do you think would last longer? I practice what I preach and set up at least an hour of reserved time every day to walk and/or bath with my partner and to discuss important events. Generally no electronic devices. The stalker approach that Zynga proscribed and which was widely adopted is not a best practice for healthy relationships. Its focus is on control, not cooperation.
Thus by 2012 I was a walking repository of tens of thousands of passionate comments from gamers on what they wanted to pay for and how. Comments that AAA were busy deleting almost as fast as they were posted.
I would imagine that the situation at Jagex must have been quite severe if they were willing to take that radical step and survey their players.
What Players Want
Their subscription revenue was going up, but their MTX revenue was dropping rapidly. Does that mean that MTX was bad? Wouldn’t they still lose $23M if they had dropped MTX in 2024? Well the problem here is that data only tells you what happened, not what didn’t happen. If a proper A/B test had been done, they would have seen subscription revenue go up if they removed the MTX. Better yet, they could have kept the discriminatory pricing bump if they had more than one subscription option.
In 2013 I deployed Project Spark (Microsoft, Class 3 F2P+Sub model), World of Tanks Blitz (Wargaming, Class 3 F2P + Sub Model), and in 2014 World of Warships (Wargaming, Class 4 F2P + Multi Tier Sub Model). Each successive model was a huge bump in monetisation. With WoTB, WG was afraid to remove the pay to win premium ammo (an MTX), as they didn’t want to lose a revenue stream. They didn’t believe me that they would make more money from other sources without that stream. After the huge success of WoTB, WG trusted me and they removed premium ammo from WoWs. The results were staggering. The monetisation increase was massive compared to WoTB.
When you remove mechanisms that players dislike, they are more willing to play and pay on the systems they do like. Bad systems lead to churn. It may sound intuitive, but it is extremely difficult to explain this to industry leaders who have been conditioned by over a decade of Zynga misinformation that propagated across the industry.
When Jagex finally got around to asking their players what they wanted to spend on, this was exactly the feedback they received. Players were quitting because of the heavy MTX, and were quite willing to pay for the subscriptions as long as they were in turn treated fairly.
Final Thoughts
World of Tanks Blitz did very well, especially for a mobile game. But World of Warships performs so much better that it is rare to see an ad for WoTB. I get a LOT of ads for WoWs, their marketing budget seems pretty high. If Jagex had made the effort to A/B test their game with the model they went with, vs. the model I would have proposed (that other developers got instead), they would have gotten the data they needed when they needed it. Not all data is of the same quality, it helps to know what sort of data you should be collecting.
Involving your community in not only your content choices, but also your business model choices can raise player morale a lot. This in turn leads to better and longer conversion.
Meaningful changes can be tested with a proper A/B test of both versions running in parallel. It doesn’t make sense to run A/A tests and say “A is better!” because you were “saving money” by “cost cutting”. If you don’t know how to do this, find someone who does. Not someone that says they do, catfish are everywhere. Someone that has actually done it. This is standard practice in science, but scientists are rare in game dev. Likewise, scientists typically don’t understand games.
My most important feedback, which I repeat often, is that it doesn’t help your bottom line to have an adversarial relationship with your customers. Stalking them instead of talking to them is an obvious symptom of this adversarial relationship that AAA has adopted.