I wrote a much longer version of the question in a comment to Arnold so being lazy I will copy the comment here:
Great article Arnold full of interesting information and insights. My knowledge of game development and marketing is very limited but I am a long time game playing customer. I am still trying to work out what impact the apparently unstoppable rise of micro-transactions is going to have on my hobby from a customer’s perspective.
I can see several good things about micro-transactions: They offer a business model that allows smaller companies to compete with the industry giants which increases the choice and variety of games on offer. In theory free to play with micro-transaction offers the customer all the choice. Customers can sample a wide variety of games at little or no cost and once they choose to play a game they can pay as much or as little as they like.
Unfortunately the reality in many cases does not seem to be as customer friendly. My two biggest concerns are i) The impact on game design (games will be designed as grind fests order to maximise item shop revenues rather than customer entertainment) and ii) Micro-transaction systems which are designed to squeeze excessive amounts of money from a small number of addicted customers. I call this “customer abuse”.
You mention four types of item commonly sold in an item shop:
1) Faster advancement, 2) tedium shortcuts, 3) appearance selection and 4) Item access.
To me 1) and 2) are almost always problematical. If a game is fun to play why would people want to pay to skip parts of it? There is a moral hazard here encouraging designers to design grind fests in order to encourage people to spend money to bypass the grind. As these items are usually consumables they are also a prime vehicle for customer abuse. We read about addicted customers spending hundreds of dollars a month in item shops and I imagine a good deal of this goes on pots and other consumables.
I don’t have a problem with 3) even though I think Blizzards $10 for a non combat pet is just bad value.
I have mixed views about 4). I don’t really have a problem with people paying for items but I can see dangers. If getting powerful items is one of the main objectives of the game then allowing people to buy powerful items for cash may be game breaking. One common form of customer abuse is to introduce a gambling system where you buy a box with an unknown item in it. It may be high quality or it may not. I have read of addicted players spending large sums opening such boxes in the hope of gettign a good item.
I am perhaps most surprised that you don’t mention a 5th item shop category: 5) pay for access to content. This is very unproblematic and in my mind provides the best deal for the customer – you buy the parts for the game you want to play. The incentive on developers is to make an interesting compelling game so that customers want to buy more of it.
I have recently broken my own micro-transaction taboo and have started playing Dungeons and Dragons online. I have even bought stuff in the item shop. I am happy enough with Turbines implementation because a lot of the item shop stuff is “pay for content” and I also think that the existence of a monthly subscription option limits the potential for customer abuse.
My question for the future is this: given the apparent inevitability of micro-transactions for everything will this mean a descent into grind-fest games surviving on the revenues from a small number of their most addicted customers or will market forces ensure that only interesting, fun to play games with non abusive item shops survive?