Microtransactions as a Business Model in Video Gaming Industry : Its Comparison with Traditional Model and Effect on Other Industries

Microtransactions based business model started with the rise of Digital distribution platforms and as a Game-As-A-Service model (GAAS). Any kind of purchases, from in-game items, DLCs, or even subscriptions that take place after buying the original product is called a microtransaction. While it is a great profitable business for the video game companies, this also led to a predatory microtransaction model in the form of 'Loot boxes'.This paper aims to show the differences between microtransaction based business model and traditional model, while taking a look at its profitability. It also explains the anti-consumer nature of MTX and loot boxes as well as the direct and indirect impact of this model in other industries. Through case studies, surveys and archival methods, all the research questions were answered. Data was collected through online participants in the form of survey. The reason of conducting an online survey was to collect responses of people playing games from different parts of the world. In this way, environmental and cultural factors will have a very marginal impact on the result as it will give an overall view on microtransactions and loot boxes in video games. Games such as League of Legends, Diablo: Immortal, Fortnite were taken as examples and some trend and traffic generating websites were used to generate the required data.It was found that, microtransaction model has definitely increased the profit by a lot as compared to the traditional model. Which is also why, other industries such as automobile are starting to implement this model in their products as well. From the survey that was conducted, it was found out that, a bad monetization practice can easily reduce the playerbase in a very short interval of time and has also reduced the stock prices of the video game companies themselves