In-App Buyer’s Remorse : Will It Kill Mobile Games?

My friend told me a story yesterday about an iPhone app that his young son loves to play.  It’s a virtual fish-tank.  You must use credits to feed your fish, and those are obtained by downloading “free” apps or by paying real money.  Some of those “free” apps have very easy ways to download virtual goods, some that cost as much as $9.99 or more for things like “a virtual skull”.  His son wracked-up 100’s of dollars of charges because it was so easy to just buy these goods and the charges went directly to his PalPal account.   The result was that his son is no longer allowed to play iPhone games or download anything. Furthermore, my friend, who has a was a huge Atari 800 fan, has a degree in computer Science, and has developed entertainment web sites for the past 12 years, now tells me that he now “hates the internet.”  “I think it’s over” he told me.

Yes, this is just an anecdote, but how many times do people need to get burned before they react the same way?  When every game or app acts like a Trojan Horse: a free gift at first  that eventually holds the player hostage until they pay a ransom to continue, what will the reaction be?  What happens when “virtual money” is blurred with real money?  when spending $9.99 in “game money” on a virtual skull is indistinguishable from spending $9.99 in real money that could use to buy gas, food, or an physical video game at the local Target?

When you look at the perceived value of what you get from a traditional game, and what you get from some of the more “over the top” Microtransactions, there is no comparison. For instance, I paid $29.99 for Dragon Quest IX for the DSi back in July.   Essentially the same price as three of three virtual skulls my friend go charged for.  Since July, I have played the game for 60 hours, and I’m only about 1/2 done.    That’s $.50 an hour.  However, the more I play, the better the deal gets.  If I make it to 120 hours that will  be $.25 cents an hour.  With microtransactions, it’s the exact opposite.  The more you play, the less perceived value you get because the more you play, the more you pay.

We have heard in the past about “Premium Purchase Programs”,  shadowy, alleged arms of large social games companies that targets addicted players who will spend large sums of money in-game currency.  Some rumors place the value of single transactions at $500 or more.    You can buy an XBox 360 and many of the best games, both physical and downloadable for that amount.   If social games companies are doing this (and no one really knows for sure), there is nothing “illegal” about it.  Just like there is nothing “illegal” about selling people three virtual skulls for $9.99 each.  However, it can only work so many times.  As people get “burned”, they lose their taste for the game, and for similar products.  Kids are disallowed from using the devices. Parents get more intelligent about the purchases.  Once you blaze a trail through all your perspective customers, who is left to pay for your games?

And what about fraud?  There is not much difference between “tricking” people into spending money, and outright fraud.  Stories of iTunes  fraud, abound, and while they may appear to be a separate issue from web games, are they really?  Even though the iPhone has a fancy interface, it is still essentially a web device, and the fraud seems to come from classic web based services like iTunes and PayPal.   Most people don’t know or don’t care to tell the difference.

Even the good guys will probably get caught-up in this.  Mochi Coins appear to be fairly fraud-free, mostly because you can’t trade them.  However,  if the public is already exhausted from protecting themselves against the predators, how will they be able to tell the good from the bad?  Most people only need to be fooled once before they shy away from something altogether.

Furthermore, how long will it be before the  “Computer Security” vendors start targeting these types of transactions in their tools?   It’s easy to imagine MacAfee, Trend Micro ands Norton all adding the heuristic footprints of microtransactions to the list of other risks they currently track.  Heck, if they have Google Analytics cookies marked as security issues, what keeps them from scanning HTTP transactions for calls to Mochi Coins?  Once a game or service is branded as a security risk, it is extremely difficult to change the public perception of it.  What would happen if a MacAfee warning appeared on a player’s  computer screen every time a server call is made to Mochi from a web-based game?   It would be devestating.

I think the mobile/web games industry needs to get together  immediately and and create standards and practices and how and what people will be charged for games, gaming services and virtual goods.    We need to stop rewarding and lauding companies who have found the latest “trick” to take money from consumers.  Download and game distribution services need to take responsibility for the games they distribute, both the quality of the products, the content, and the ways they are being monetized. As developers, we need to stop following the latest monetization trends (i.e tricking people into big charges)as if we are always trying to find the latest Holy Grail to quick riches and profitability.  There are proven ways to make money: ads, subscriptions, shareware, reasonable microtransactions, but they all require superior products of a lasting quality that will keep your customers coming back.  That is the only way to retain the perceived value of your products, and not exhaust customers into fearfully shutting out web games for good.

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