Killing Gaming’s Golden Goose: The Ethical Quandaries of In-App Purchases

Edward A Thomson
6 min readSep 12, 2023

tl;dr: the ethical and regulatory problems of the IAP revenue model.

Contents:

  • The gamification of spending
  • Problems for vulnerable players
  • Government regulatory efforts

Previous blog in this series:

The Price of Progress

In the realm of gaming, in-app purchases have become both a beacon of progress and a source of contention. They have transformed how games are monetized, democratized access for millions of players, and created incredible revenue streams for developers. However, like Icarus flying too close to the sun, the industry’s rapid embrace of this monetization model might be leading us into treacherous territory.

While the financial allure of In-App Purchases (IAPs) is undeniable, as explored in the first part of this series, there is a darker side to this ‘Golden Goose’ that is becoming increasingly hard to ignore. Tales of players, both young and old, sinking thousands into virtual goods, stories of predatory practices, and growing concerns over the psychological tactics used to drive these sales have started to overshadow the initial enthusiasm.

Mario Kart Tour — premium currencies, subscription, limited-time offer (source)

This blog dives deep into the ethical maze of in-app purchases, dissecting the concerns, and exploring the real-world consequences for players and the industry at large. The gaming world stands at a crossroads, and the decisions we make now could shape its future for generations to come.

The Ethical Minefield: Are Developers Being Predatory?

While particular attention has been drawn towards ‘loot boxes’ (players pay for a random chance at obtaining a desired item) in recent times, and rightly so, the psychological pressures across all IAP monetization channels warrant further attention.

The seemingly endless array of enticing deals, time-limited offers, and flashy visuals, one can’t help but wonder: are game developers stepping over the line?

Psychological Tactics at Play

At the very core of most successful free-to-play games lies a sophisticated understanding of player psychology. It is what drives gamification in other products and services. The tactics employed are often designed to tap into human behaviours and impulses:

  • Urgency and Scarcity: “Limited-time offers” or “flash sales” create a sense of urgency. Players make purchases they might otherwise postpone or avoid.
  • Social Pressure: By showcasing items as status symbols, games can exert a form of peer pressure, tempting players to buy just to keep up with their friends or to gain recognition in the gaming community.
  • Random Rewards (Loot Boxes): The unpredictability of rewards can be likened to gambling, with players always hoping the next purchase might bring that coveted item.
  • Sunk Cost Fallacy: After investing time and money into a game, players often feel compelled to continue spending, believing that ceasing now would waste their previous investments.
Monster Legends — discounts for spending more (source)

By investment, naturally I mean it in a loose sense of the word. The money spent is never coming back. The notion of ownership is fleeting.

The Impact on Vulnerable Players

While many players navigate microtransactions responsibly, specific demographics may be more vulnerable to the psychological tactics employed in games:

  • Impressionable Audiences: Younger players, still developing their understanding of financial responsibility and value assessment, might be easily lured by the flashy visuals and perceived value of in-game items. They may not fully grasp the concept of digital goods having no tangible value or the long-term implications of overspending. Moreover, since they often aren’t the ones paying, they might not immediately understand the consequences of their requests for in-game purchases on parents or guardians.
  • Addictive Personalities: Players of all ages with addictive tendencies can find themselves continuously chasing the next in-game reward, the next level, or the next exclusive item. This relentless pursuit might lead some to spend beyond their means, chasing the high of the next big unlock.
  • Individuals Experiencing Social Isolation: For those who use games as an escape from reality, the appeal of in-game purchases can be potent. When real-world interactions are limited, the draw of digital accomplishments and status symbols within a gaming community can become a significant source of validation.

While the potential pitfalls are evident, it’s crucial to note that the onus doesn’t solely rest on the player. Developers have a moral obligation to implement responsible transaction mechanics, especially when their audience includes impressionable or potentially vulnerable groups.

In truth, there’s probably a continuum, ranging from non-intrusive to aggressive monetization strategies. Simply offering in-app purchases doesn’t necessarily create pressure or aggressive encouragement; they can just be available as choices. On the flip side, some games employ relentless tactics to incessantly promote spending.

Government Scrutiny: Current Regulations on IAPs

The in-app purchase revenue model hasn’t just raised eyebrows among gamers; it’s also garnered the attention of governments around the globe.

In recent years, the line between gaming and gambling has blurred, leading to regulatory interventions in various jurisdictions:

One has to wonder if developers might inadvertently ‘kill the golden goose’. Over-reliance on IAPs could not only alienate a section of their player base but also invite regulatory challenges. I don’t think regulatory changes will kill this revenue model, but will necessitate an increased cost of doing business.

While I have personally invested in free-to-play games and appreciate their appeal, my three-decade journey through the gaming world tells me there’s room for innovation. It begs the question: is there a way to strike a balance that satisfies both the commercial needs of developers and the concerns of players and regulators?

Gardenscapes (source)

I can’t help but feel there’s a better path forward.

Navigating Tomorrow: Ethical Choices in Gaming’s Future

It’s crucial for both players and developers to remain vigilant, constantly reflecting on their roles within this ecosystem. Developers face the challenge of finding a balance between profitability and responsibility. Meanwhile, players should strive to understand the mechanics at play and make informed choices.

In the next post, I’ll explore how a player might justify significant spending on games. However, even with these justifications from both player and developer perspectives, I believe there remains a perceptible gap in “fairness.”

I remain hopeful that a middle ground can be found, reconciling the undeniable financial allure of microtransactions for developers with a more player-centric approach. You might guess from my earlier writings that I see player ownership as a potential solution, which I’ll delve into in a subsequent blog. Yet, I acknowledge that this avenue isn’t without its challenges.

The future of gaming shines brightly, but navigating the ethical complexities is essential for ensuring that light doesn’t dim.

Acknowledgements

Thanks to ChatGPT for the debates and copy-editing this piece. Ultimately, I do the final editing.

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