Micropayments look small, but are stacking up
by James Ransom-Wiley 
{ Jan 25th 2007 at 4:25PM }
A new study by ABI research estimates that the combined revenues of console micropayments will total more than $833 million by 2011. While $833M is a hefty pocket of change, that's really all it is; pocket change. Consider that software sales alone generated $6.5 billion just last year. So by ABI's calculations, four years from now, total micropayment transactions will have grossed less than 13% of one year's worth of software sales.Still, micropayment revenue is almost pure profit (split between distributors, publishers, and developers). The content is inexpensive to produce, and is often created pre-release (heck, EA's basically been selling "cheat codes"). So while micropayment revenue might look insignificant compared to software sales, the mechanism is still pulling the change out of our pockets (which adds up) and dropping it into the industry's hands. The exchange is quick and cheap, and likely to make a few company heads even more obscenely rich over the next four years.
Reader Comments (Page 1 of 1)
Jake @ Jan 25th 2007 4:38PM
Micropayments are fine for anything except content necessary to a game that should have been included. If people are dumb enough to buy horse armor, cheat codes, and walthrough's then I am not going to get angry at EA for putting it out.
Most payments are for things that you can sorta demo and know what you are getting. If you like it, you buy the full version. If you don't, at least the demo was free.
And while the sales of micropayments are only %8 as much as software, the profit margin is much higher. I would bet the profits are nearly 15-20% that of software. That is a big chunk, considering it is relatively new.
Captain Obvious @ Jan 25th 2007 5:21PM
I would like to know what exactly is included in this figure. Does "micropayments" only include horse armor, additional game content, new cars, and the like? Or, does it also include sales of Geometry Wars, Heavy Weapon, and Tekken 5?
The reason I ask this is because I have never considered the purchase of a complete game a "microtransaction." It is a transaction. Microtransactions, to me, are the horse armor, the additional outfit, the new car paint, for $0.50 or $2.00.
Can anyone clarify?
Marc Leveille @ Jan 25th 2007 4:51PM
It's called willpower.
wanted creative @ Jan 25th 2007 7:15PM
With that much more or less free income they should be able to drop the price of "next gen" games. But then again why would you when the gamers seem to be the dumbest consumers on the planet.
Geo @ Jan 25th 2007 4:53PM
Micropayments are a bad road to be going down. If we adopt them, game companies are going to include less and less material in their games.
Down with microtransactions!!
Derbeste @ Jan 25th 2007 5:03PM
This really is a slippery slope that will make few of us very happy in the end.
Virtua Fanboy @ Jan 25th 2007 5:36PM
@5: I'm pretty sure it means all of it.
Geo @ Jan 25th 2007 5:39PM
It should only include the supplements to existing games, not full games in their entirety.
Virtua Fanboy @ Jan 25th 2007 5:47PM
i guess joystiq should clarify. lol
Draco @ Jan 25th 2007 6:06PM
Doesn't the acticle mean that by 2011 there will be 880 million $ per year sales?
I mean they also say this "We believe that video and music downloads to game consoles will reach $1.1 billion annually by 2011.""
are you trying to tell me that combined for the next 4 years there will be 880 million in micro and then in 2011 alone there will be about 1billion in music on the console?
I'm 99% sure that the article is stating by 2011 there will be almost 900 million$ transfered through micro and another $200M in music purchases.
nojok3 @ Jan 25th 2007 6:10PM
Microsoft is making a killing off of the Xbox Live Marketplace