A critique of micro-transaction logic

SO BASICALLY THIS ONE POST A TRIPWIRE DEV MADE HAS BEEN BOTHERING ME.  I'VE REPOSTED THE POST BELOW, AND BELOW THAT I'LL BE PICKING AT THE BITS THAT BUG ME.

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To drop a bit of knowledge into this thread from the game developer side of things:

Micro-transactions are still fairly new to most development teams as are their impact on both the team (stability/finance) as well as the community. You will likely see many teams experimenting with them as game development moves forward. I am not here to say what is or is not good practice for this, just to put forth some information from the game developer side of things.

Why Micro-transactions over DLC?

Fees, fees and more fees. When a dev sells a piece of DLC everybody takes a cut. The store (often Steam), the credit card company, other third parties that may be part of your licensing agreement on revenue sharing. This tends to mean DLC prices have to go up for the cost to be worth it for the dev team (some may recall that KF 1 DLC prices went up at one point.....). With micro-transactions those fees tend to be taken up front when the money is "loaded" into the system (in this case Steam wallet) and any further purchase via the game store does not include any more fees taken out and thus more revenue for the devs.

Why sell things at all?

Yes, game companies are businesses and not charities. They exist to make a profit for somebody (or bodies especially when the company is a publicly traded vehicle for stock). But this also is true for smaller outfits as well. Sadly goodwill does not keep people employed or food on the table. With RO 1 we kept updating the game with free content to the point where we realized we were almost bankrupt as a company because we were not seeing a return on investment from new purchases of the game.

With KF 1 we were at a point were we were paying much closer attention to that money flow and were ready to drop support of the title when we decided to experiment with the character DLC's. Those DLC's and those that followed allowed us to support KF 1 for an additional 3 years which included tons of free content, features and fixes.

Why aren't you working on the core game?

For most development studios, you will end up with people or teams that have little to no work left on a project as it progresses through development. You can either move those people/teams onto different projects (if you have them) or let them go. Letting people go is bad on several fronts. It loses you talent (that you may have worked hard to acquire) that most likely will not come back and work for you, and it also makes it harder to hire new talent if your company is known to let people go when a project ends (You can read some great corporate BS on aligning teams with profits or some such on Gamasutra, almost all the big publishers have said something on the subject at one point or another).

We at Tripwire are often slow to grow so we never end up in a situation where we've hired somebody we need to let go. This often leaves most of our team tasked at somewhere between 90 and 120% of their capacity. We do this so we do not overextend ourselves but it does mean that sometimes development does not go as fast as we (or the community) would like. But due to the nature of game development we also have people who have finished their scoped work for a game before the rest of the game is done.

Why do you need all that money?

See the above. To add to that, games cost A LOT of money to make. And while games are being made they usually generate no profit. This can mean millions and millions of dollars of dev/publisher investment before there is a chance at a return (and not a guarantee). Between a companies burn rate (what it costs to keep the lights on and the staff sitting as their desks. Let us say for the sake of argument the average dev makes 5k a month. With 50 staff it costs $250,000 just to keep our existing staff sitting at their desks at a minimum) as well as other expenses and fees (such as engine and middleware and much more - which can often add up to be just as much as your burn rate - see the previous example) a game can take a long time to actually turn a profit (as those expenses are on going and usually need to be paid first out of any return from game sales).

As we grow (I was employee number 6 I believe, we are now 50 people and have once again outgrown our current office space, another major investment) to be better able to handle both our existing titles as well as new ones our burn rate and other costs only grow with us. Most devs do not have a title that sells 50 million copies (Minecraft) or receive 90 million in "Free" funds from crowdfunding (Star Citizen).

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Alright, so.  In short, this is more or less the argument we usually hear from game devs, albeit slightly better expressed: they use micro-transactions because it makes them more money, which will then be put back into game development in a way DLC can't.  Ultimately, this is better for everyone: we get more content, they get more profit out of their games and are thus motivated to make better games, since they can milk them for longer.  There are a few issues here, and I'm gonna address them as they appear in the argument above.

1. Why the logic for 'micro-transactions' over DLC isn't too solid.
According to our friendly dev, micro-transactions get them more money because they avoid fees that DLC are subject to.  The three types of fees mentioned are: Credit Card Fees (evil banks), the store (evil Steam/Valve) and any third-parties that they'd have to pay for licencing.  First, let's look at credit cards.  It's true that the banks will be taking a cut, but there's no reason to think people will use one payment methold for DLC and not use the same type of payment method for microtransactions.  The dev further suggests that microtransactions are free from these fees because the store carries the burden: we buy steam dollars, they take the hit, and then later we use that bank-and-apparently-other-fee-free-steam-dosh in their microtransaction shop...but not to buy DLC, of course.  Even if this were true, ultimately all that will happen is steam (not to mention the third-parties who are apparently getting ripped the fuck off by this deal) will push back on the game dev, either demanding a cut of the microtransaction money or simply imposing greater fees up-front for the use of the service.  Suddenly, Tripwire has to pay 40% of its game sales profits in fees to steam, instead of 20% (for example).  Still, the possibility that microtransactions are a more efficient way to monetize continuing support of a game exists.

2. The "microtransactions > DLC" argument starts to fall apart.
Ignoring the rather patronizing tone of the following section, I can't help but zero in on a single statement:

>with KF 1 we were at a point were we were paying much closer attention to that money flow and were ready to drop support of the title when we decided to experiment with the character DLC's. Those DLC's and those that followed allowed us to support KF 1 for an additional 3 years which included tons of free content, features and fixes.

I translate that to 'there isn't actually a problem, but this fixes it and makes it better, promise <3'.  We've heard this sort of 'you're just too entitled!' shlock before.  Yes, we act entitled to an absurd value for our dollar, while you act entitled to do very, very little and still charge a good deal of money for your game.  Then, we'll work together and establish a price that neither of us is happy with, but that we're willing to pay and you're willing to accept, and then we'll go our separate ways.  That's Capitalism!  And wondering why we should believe you when you say that selling non-content items will inspire you to make more free missions, characters, etc is just us being responsible consumers.  Remember: we've heard that promise before, and it doesn't often come true.  Frankly, I'm in doubt there was ever a time when selling thing x lead someone to produce more of thing y for free distribution, when y's distribution wasn't directly tied to the ability to sell more x.  In less abstract terms, when you tell me you're selling 'hats' for 4 dollars a pop, or worse yet a chance at one for 4 dollars a pop, I don't believe that you're going to suddenly start releasing 2 15-dollar DLCs a month for free when previously you released a single 15-dollar DLC every 4 months.

3.  Microtransactions as 'free time monetization'.
This is actually a very persuasive argument for the inclusion of cosmetic microtransactions.  It's also an argument for using that 'free dev time' thing that many companies, such as Google, use-if your employees have nothing to do, let them work on their own thing with the understanding that if they make something neat you have rights to first refusal.  Still, this doesn't sound like something that would produce enough material to cover free DLCs, it sounds like the game company equivalent of selling things you knit/paint/craft at a local arts fair, since you make them as a hobby and you don't want to keep them yourself.  If your staff are at 90%-120% capacity working on the 'core game' (DLC and major additions) why is your revenue coming from 10% to -20% of the work you're actually doing?

4. "We need that money because MONEY for THINGS!!!1!"
Yes, we are aware you are a company.  We are aware that a modern dev budget has ballooned out of control.  And yet, strangely enough, the game's budget often seems entirely divorced from the quality of the game.  Tripwire is one of the few devs I'd take seriously on something like this.  When Ubisoft comes to me and whines about how AC:U was a flop and cost billions to make, I'll point out that they could have spent some of that on having talent in game design and programming, not simply blowing it on pretty art and an overabundance of advertising, to say nothing of executive salaries which I'm sure are jaw-droppingly enormous.  Yet even with tripwire's lack of graphics-whoring and talent, there's still issues here.  See #3, for instance: why are they staking the budget for a future game on revenue from 10% of their manhours?  Of course, they're not, they're probably doing something more like 60% new game, 20% content for old game, 30% new micro transactions stuff.  This isn't to say they're wrong about the idea that Microtransactions can make more than DLC, this is to show how they're clearly misrepresenting the amount of effort they'll put into microtransactions 'content' vs free upgrades to the game vs developing a future full-price release.  Of course, studios need to fund future projects, but that's not what microtransactions are being sold as.

5. Most devs do not have a game that sells 50 million copies (minecraft) or gets tons of money on empty promises (Star Citizen), so we need microtransactions to shore up the gap!
CRY ME A RIVER.  You should not be making business plans in comparison to a miracle smash hit or a scam.  You're also a business.  If you think that microtransactions are the best way for you to monetize your games, do it, but don't try to convince me you're only doing it because you're going broke.  You're not going broke...or you are, and it's because of poor planning/shoddy products.