Video games and microtransactions: Business model based on your kids

Published in El Pais, 29 January 2019.

I have always been a huge fan of video games. For me they were a great way to have fun by yourself and with friends. Of course, with the progression of technology video games are becoming more sophisticated and readily available on multiple devices including phones and tablet computers. This is not lost on the youth as they love playing games on theirs, or their parent’s phone which causes problems besides to too much screen time.

Growing up the business model for these games is quite simple, the developers made a game which we would pay for. Once the game was purchased there was no other way for developers to increase their profits. Today the landscape has completely changed. Many games now come free of charge to attract a wider audience and attempt to make money with premium features that users pay extra for. For teenagers and adults such an arrangement is quite clear and those not wanting to pay can easily avoid doing so, the same cannot be said for children.

Ever since this pricing system has been widely adopted there have been problems of children unknowingly charging large amounts of money to their parent’s credit card through in game purchases. This resulted in many lawsuits as Apple paying $32.5 million, Amazon $70 million and Google $19 million in refunds. What makes things worse is that while these companies eventually gave refunds it is becoming clear that they do not see this as big of a problem as you do. In the latest lawsuit against Facebook it was revealed that they rejected many recommendations to reduce accidental spending as they worried it would impact their overall growth.

To those with children there are steps you can take yourself to preventing this from happening. Like it or not it will involve playing the game a bit yourself. Try playing around with the app to understand how the game makes money. Often they create a fake in game currency that must be purchased with real money which is the source of confusion. Once you understand how it works you will have an easier time explaining to the children when they are and are not spending money.

It is a shame that tech companies are not playing a larger role to prevent this. But if we educate children on how they are spending real money it should hopefully reduce the amount of accidental spending.