Micro transactions on console "a distant horizon"

Two of the big three console manufacturers aren't likely to adopt micro transactions anytime soon, and are missing out on a market that has changed the games business in social, PC and mobile markets.

That's according to highly-regarded consultancy Games Investor Consulting, which said that Nintendo's social plans are a "dead end", Microsoft is busy knocking back ideas for freemium content and it’s only Sony that has opened up to the micro transaction space.

"It's a pretty distant horizon, sadly, apart from one of the platforms" said Rick Gibson, speaking at the Game Horizon conference in Newcastle today.

When you can monetise that user base, that core male demographic, you're looking at somewhere between $20 and $30 of average revenue per paying user

Rick Gibson, Games Investor Consulting

"There are good reasons but I'm going to throw some easy brickbats at people like Nintendo. While they talk about social and how their platforms are going to be improved in the online front it's probably a dead end and Iwata-san has very clearly 'no freemium' on our platform."

"Although micro transactions do exist in a very limited form on Microsoft [Xbox 360] there's certainly great resistance to freemium," he added. "We've seen several announcements that have been countermanded by senior management."

Leading console micro transactions is Sony, said Gibson, with 100 developers working on content and services for Home, for an audience of 20 million users. He also pointed to CCP's forthcoming Dust 514 which will be add micro transactions on top of the release for PlayStation 3.

"The pathfinder in all of this is Sony. Home is the first commercially viable hub on console," commented Gibson. "You can use micro transactions to pay for goods and services around games and non-games and branded items."

With the games market not likely to reach peaks previously seen for sales of boxed product, format holders are missing out on a potentially huge untapped market.

"There are good and bad reasons why the consoles haven't yet adopted freemium or micro transactions and there is clearly a vast and largely untapped audience waiting to play games and buy them in a different way."

"Xbox Live Arcade has a network that typically converts ten times as many players to payers," he detailed. "And when they start to spend, they spend heavily. That same demographic is spending very heavily on PC. 65 per cent of MMOGs live in the West today rely on micro transactions. When you can monetise that user base, that core male demographic, you're looking at somewhere between $20 and $30 of average revenue per paying user. For some reason it's not actually being exploited on consoles."

He added: "Peak oil is the point in global oil production where it reaches the crest and goes into terminal decline. Now, I'm not suggesting that we've reached peak console in terms of a terminal decline, but certainly it's unlikely that the boxed industry is ever going to reach the same heights that it has before. We think micro transactions are increasingly attractive to a vast chunk of users."