Dear Syl: Microtransactions

This is my latest attempt to convince people that microtransactions (MTs) are (mostly) bad for MMOs. It was encouraged by Syl's comments in my last post.

1)
First, let's talk about immersion, or more specifically, consistency of the game with its underlying simulation. The possibility of using real world money to make an in-game difference bothers me. Period. This is completely subjective. In my opinion, a virtual world should be as closed as possible. To open it up to the vast real world wealth differences is unacceptable. One reason to play these games is escapism and this just doesn't work this way. For me.

This is really something you have to accept, Syl. Because it's not something one can argue about. I mean, sure you can sell a different skin for the client of the game. That would be the kind of microtransaction I could perhaps agree with. But apart from that: I don't like it. Please accept this.

2)
But I also have a more general problem with MTs: They are part of a strong trend in our world towards obfuscated payment schemes and contracts. To understand why this a problem, is not as easy. Take this Wikipedia quote:

In economics, a perfect market is defined by several conditions, collectively called perfect competition. Among these conditions are

- Perfect market information
- No participant with market power to set prices
- No barriers to entry or exit
- Equal access to production technology

The mathematical theory is called general equilibrium theory. On the assumption of Perfect Competition, and some technical assumptions about the shapes of supply and demand curves, it is possible to prove that a market will reach an equilibrium in which supply for every product or service, including labor, equals demand at the current price. This equilibrium will be a Pareto optimum, meaning that nobody can be made better off by exchange without making someone else worse off.

[..]

This attribute of perfect markets has profound political and economic implications, as many participants assume or are taught that the purpose of the market is to enable participants to maximize profits. It is not. The purpose of the market is to efficiently allocate resources and to maximize the welfare of consumers and producers alike. The market therefore regards excess profits, or economic rents, as a signal of inefficiency, that is of market failure, which is to say, not achieving a Pareto optimum.

3)
Payment schemes do not become more obfuscated over time, because it's good for consumers. They become more obfuscated, because this way the suppliers can circumvent one basic assumption of the free-markets theory: Perfect market information.

Many free-market advocates in our world understand this theory very well. They understand the political power the idea of free markets have, not the least due to this mathematical proof. And they understand that the proof, that perfect markets create a Pareto optimum for everybody, can be misused! If you make the free market so incredibly free that you allow the suppliers to obfuscate payment schemes you can gain a lot of economic rent and move away from the Pareto optimum.

The U.S. debate about regulations for the financial markets is one perfect example of this. But so is the complex mobile phone payment packages I recently went through. Or that contract you agree with when installing games.

Nobody reads this stuff. And those who do, do not understand the implications of the §paragraphs. Some of it is necessary for a complex society to work, of course. But a lot exists, because suppliers can get away with it. Because consumers aren't educated enough and not organized enough to make a difference. Oh, and because we have only limited time and calculating the correct decision is not without economic cost. Which is something the perfect market model ignores.
Take the “You don't own your character, you only own the right to access it and we can take that right away whenever we want.”. Do you think that this is the Pareto optimum?

4)
Actually, the Wiki Article forgets to mention rational consumers. They are required for free markets to fulfill their promise. (And for the mathematical proof to work).
But humans aren't rational, of course. And this fact can be exploited. And that's exactly what microtransactions allow the supplier to do really well. I listed many of the ways how this exploitation works in my prior post that you say to disagree with completely. I can't see how one can even disagree with every single point there, Syl.

Psychochild and Tesh simply argued that monthly subs can be misused as well. That's ridiculous. Monthly subs can be misused, yes. But the potential for misuse is very limited. There's no way to make me pay more than the monthly sub per month. And that makes all the difference in the world.

Psychochild likes to argue that he knows perfectly well how much he paid for F2P games, but not for WoW. Now, the only explanation I have for that is that Psychochild wrote down all his expenses for F2P games, but not for sub-based games. Which is already telling.
If he hadn't done that, it would be much easier to find out how much he paid for the monthly subs: He would just have to multiply the months with the monthly sub. While he would have to research his credit card payment history to find out how much he payed for the F2P games. Which of the two is easier to do? (Oh, and don't start to argue that WoW's MTs were used. That supports my point.)

5)
Syl, you wrote just recently:

So, I did it. And again, and again. The first set was shockingly bad and then I bought a wrong one by mistake (it was called Transcendence, what can I say). So I bought one more that I finally liked. And since I have 2 characters I play on different servers, I bought another for my high-level priest, too. This is my story on how I spent 40 Euros on virtual wardrobe until I was out of cash to even buy that bag.

Sorry if that quote is out of context. But did you consider that you bought a virtual wardrobe for an amount of money that you could also had used to play World of Warcraft with all instances, raids, dungeons, all quests, all areas, most items, .. for three months?? I mean, isn't that a bit out of proportion?

6)
Among the things that are 'exploitative' about MTs, is that they are always there. Whenever you play. Humans aren't perfectly rational. We have irrational weaknesses. (And irrational strengths, of course). If you play a game just for two hours a day for one year that makes about 500 hours that year (roughly). Now, if your brain has just a 0.1% chance per hour to spend irrational amounts of money in an compulsive purchase, you have a 39.4% chance to do it at least once during the 500 hours! And that's just one consumer!

Humans aren't perfect, aren't always in control. We are fallible. Just like the communist ideology failed, (among other reasons) because humans aren't selfless beings, the free markets can fail because humans aren't always rational agents inside a perfect market. A societal system needs to respect this and turn our weaknesses into strengths, like the market economy originally tried to do. But the wind is blowing the other way. And microtransactions are one manifestation of the problem.

7)
You are not so smart. Read just this one post by McRaney.

In Seattle in 2001, a 26-year-old woman who had recently ended a relationship held up traffic for a little too long as she considered the implications of leaping to her death. As motorists began to back-up on the bridge and become irate, they started yelling “Jump, bitch, jump!” until she did.

But better read all his posts.

8)
The topic is, unfortunately, vast. I tried to give it some structure, but this post cannot be the final answer that I would certainly like it to be. If this doesn't convince you, there's really not much I can do. There's a chance you will be able to circumvent the traps the psychologists developed for you. But think of those who cannot! If playing a sub-based game like WoW could ruin people's lifes by making them invest more time than they should, what could a microtransactions-based game, that is as compelling as WoW, do to peoples' lifes?
And they wouldn't even speak about it. Shame is part of the plan.