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This page includes some jargon that hasn't been added to the site's glossary yet. I'll be around to fix this later, but sorry for the inconvenience in the meantime.

What are in-game purchases?

A quick answer

Many games allow the player to purchase in-game goods or services for a small amount of real money. These exchanges are known as in-game purchases or microtransactions.

Often, players don't purchase what they want directly. Instead, they trade cash for a fictional currency or credits, and then use these credits to buy things at the in-game store. For clarity, we'll call these credits "premium currency", as it's a different fictional currency than what the game uses for everything else.

One advantage to the credit system is that games can allow players to slowly earn this premium currency through normal gameplay or by viewing a short advertisement. This lets everybody get something useful from the in-game store, but it might obscure how much money you've been spending on a video game.

To help give you an idea of how this all works, the rest of this page will cover some of the pros and cons of this relatively new addition to video game mechanics.

How can in-game purchases benefit players?

Ideally, in-game purchases allow fans of a game to get more out of an experience they are already enjoying. At the same time, these provide a little extra income for the developers. There's no limit to the ways microtransactions can be used in a game, so I'll just cover some of the common examples here.

As silly as it may sound, players love to dress up their in-game characters, and are often be willing to pay a small amount of real money to get just the right virtual outfit. It's a surprisingly effective way for games to make extra income, and many games take advantage of this mindset by offering limited edition costumes or special holiday sets.

Other common in-game purchases include "tickets" that give you access to restricted "members only" areas of the game, the ability to change the player's online nickname, or more space to store stuff. I've also seen games require you to buy a "trader's license" before you can sell items in the game's marketplace. This last bit might seem unfair, but it helps prevent bot accounts from unbalancing the game.

Yet another way in-game purchases can benefit players can be seen in ad-supported games. Many of these games offer their players an option to turn the ads off permanently by paying a small fee. Some go further, permanently hiding advertisements if you buy any virtual item, not just the ad-free package. This arrangement benefits everybody, as it lets the players try the games for free, and the developers get paid either way.

How can in-game purchases be abused?

Put simply, games can be designed so that players are forced to spend money in order to continue playing. Games that abuse their in-game purchases like this are often known as pay-to-win games, a derisive nickname inspired by free-to-play and pay-to-play games. Thankfully, it's usually easy to if you're playing one of these games -- the usual clue that you've discovered a pay to win game is that as you progress, items from the in-game store slowly become the only way to complete levels.

For our example, let's look at a common mechanic found in most city building mobile games: time delays.

In real life, it takes time for a construction crew to build a new structure. Games often mimic this by having new structures appear as scaffolding or crates that eventually open to reveal a shiny new building. How long it takes for them to open can range from a few seconds to a few hours, but the general idea is that you'll need to wait for the structure to be built before you can use it.

Or at least, that's the way it usually works.

Many of these games offer a way to bypass the construction time, making your new building available for use instantly. Usually, this is done by spending a small amount of the game's premium currency or by using an item purchased from the game's store. But remember: you probably purchased that premium currency using real money. So every time you speed up the construction time, you're effectively spending a few cents.

Now, just because a game uses this concept doesn't automatically mean it's a dangerous game. The determining factor is how often these delays prevent you from making progress. Most mobile games are designed to be poked at when you're on break or between classes, so they aren't expecting you to play them for hours on end. If they have quests, they'll either never expire or give you a reasonably long time to complete them. But, if you're constantly failing quests because the game isn't giving you time to do them, then you're being herded towards those bypass mechanics and the developers are abusing the microtransaction concept.

Unfortunately, this does actually get worse.

Since these games are expecting the player to leave periodically, players will eventually reach a point where there's nothing more to do but wait for things to finish whatever it is they're doing. The catch is that a lot of children end up playing these games, and children aren't generally known for being very patient. Giving them an option to pay a small fee and skip wait times is just asking for trouble. And a quick check of news outlets have shown that the inevitable has happened, with parents making the horrifying discovery that their toddlers have been able to rack up several thousand dollars in bills using these in-game purchases.

Adding to this problems is the fact that young children aren't always able to understand when they're spending imaginary money or real money. Studies are showing that children don't recognize that requests for passwords, warning screens, or other alerts are a signal that they're about to make a real purchase. Similar problems have been spotted regarding children and online advertisements, so this is possibly a conceptual issue, sort of like Piaget's Theory of Conservation or the Theory of Mind.

Summing it up

To recap: in-game purchases involve spending real money on virtual goods. This can make games more enjoyable or provide players with useful advantages, but it can also be a serious problem. Be sure both you and your children understand when games are asking for real money, and watch out for games that push their in-game shops a little too much.

On the plus side, you're probably only going to encounter in-game purchases in free online games, such as MMOs, MMORPGs, or mobile games. Other genres tend to get their funding through a retail fee, and provide their "premium" perks through DLCs.