Implementation of microtransactions in videogames and its effects on videogame demand

Abstract

The purpose of this study was to identify how the implementation of microtransactions affected the demand for video games as a consumer product using regression analysis and duration analysis. Microtransactions are a new monetization strategy that is being adopted by the videogame industry at large. Using regression analysis on two study groups, one composed of video games with implemented microtransactions and another without microtransactions, demonstrates the immediate impact of said implementation, while duration analysis demonstrates the impact on a longer period. The results demonstrated that the implementation of this monetization strategy has no effect whatsoever on demand when comparing the two study groups. However, when comparing two groups of videogames, both with microtransactions but divided by the way said microtransactions were implemented, there was a marked difference in the demand of these two groups. Negatively implemented microtransactions called predatory microtransactions had a faster decrease in demand than those with non- predatory microtransactions.