When did it all start?
As far as I -personally- remember, the advent of micro-transactions started with Facebook games charging fees for the "cookie-cutter" + "click-and-wait" games (roughly around 2006). In these games you were able to get gems, energy, materials or what have you for a fee. These items were required in order to advance further into the game, they allowed players to grow in power faster or be more time-efficient. This trend was strongly affixed into the mobile game industry. It was here to stay and expand into other niches of the game industry.
However, a quick Wiki search shows Nexon as the creator of the first free-to-play (F2P) game.
The free-to-play business model in online games was created by Nexon in Korea. The first game to use it was Nexon's QuizQuiz, released in October 1999, and made by Lee Seungchan, who would go on to create MapleStory ("Free-to-play", n.d. in Wikipedia. Retrieved November 20 2017 from https://en.wikipedia.org/wiki/Free-to-play)
Initially this game model was created to target the casual gamer audience. Gamers that seldom play games or that play within restricted schedules. This model grew to also fight video game piracy. If the game was free it encouraged players getting it from official, canon and up to date sources. But with a fully fledged game that was free micro-transactions became a necessity in order to sustain the game itself.
Not all F2P games have micro-transactions in them, some rely on adds for support or some follow other subscription models. Also not all micro-transaction games are free to play - Ludarx
The groups of items purchased through micro-transactions are called virtual goods. Doing some research shows that they started as the ability to add cosmetic customization to your online avatars. Then they shifted in nature and started to provide simple temporary boosts in power before it jumped into the last two stages, which were first a permanent boots in power. In the next section we will explain 3 categories of these virtual goods: The good, the bad and the just plain ugly.
But before we dive in a quick disclaimer. On this article I am specifically talking about the distribution and monetization model behind the games. Not whether any given game is good or bad, fun or boring, or discussing the inherent narratives or mechanics behind them.
As mentioned previously there are several kinds of virtual goods that depending on the games can be acquired through micro transactions. I believe that generally speaking micro-transactions are good for:
1. Cosmetic permanent: Modifications to your avatar that have no influence in your avatar's abilities or efficiency in the game and are purely aesthetic. These are simple to understand you are paying for exclusivity and differentiation, you are paying for fashion. These skins that you apply to your tools, weapons, character you apply for a matter of personal identity or fashion. Games that got it right? Overwatch (PC) and Mabinogi (PC).
2. Temporary boost: These virtual goods generally come in the form of a time-limited or single trigger action that allows a player to reduce the farming required to get a certain outcome (in other words reduce the number of monotonous repetitions). These temporary upgrades have a value that I am willing to pay for. They are like paying for VIP access at a venue. I get the skip line or better sitting. Ultimately we all get the same service but I get a more refined or high quality experience. Immediate gratification is very easy to capitalize on. Games that got it right? Castle Clash (mobile) and Mafia Wars (Facebook).
3. Downloadable Content (DLCs): I was hesitant putting DLCs under the good column. The thing to consider is that DLCs are fantastic when used as a form of feeding new life into an otherwise dead video game or community. Think of a game that you LOVE! Any game that you are passionate about, be it the mechanics, story, characters, voice acting, anything! Would you not pay to have more of that? I know I would pay for DLCs for FFVIII and Stardew Valley. Games that got it right? Borderlands 1 & 2 (PS3, PC & Xbox). These were whole gaming experiences that would have otherwise ended but DLCs gave us more.
4. Unlock content (Specifically for a free to play game): In this case you are playing a demo or incomplete version of the game and you want to get access to the full game. That is fair, you didn't pay for the game so you should pay for the complete experience. Games that got it right? WoW (PC) free until level 20 and Planetside 2 (you have the ability to try all classes, all vehicles and all weapons). It is easier for WoW to do this since the subscription model allows them to support new players through the current subscribers. However, I don't support the charging for expansions on a subscription-model game.
1. Pay to Win: A strategy where "free-to-play" (f2p) or "non-paying" players simply never have a chance to catch up with paying players and are basically permanently overpowered by them. Arguably playing more would grant you rewards in the form of power ups that allow you to catch up. The problem with this "concept" is what we call the snowball effect. Players that already payed for power ups earn more rewards and earn them faster. The free players simply never stand a chance. Games that failed? SW Battlefront II, Lineage II GoD (initially a subscription game, when the game became f2p it also became pay to win.
2. Unlock-able content (For a paid game): This I find unacceptable when a game gives you no reasonable way of unlocking the content through playing. Either the content is entirely locked behind a pay-gate or requires extraneous amounts of time and effort to unlock. Specially when all content shipped together in the first place.
A. Character: The inability to access all avatars in the game or of an avatar that cannot access all of its abilities. Games that failed? SW Battlefront II (until they corrected their mistake after the rage was voiced). Planetside 2 to advance in the game and get the more specialized weaponry (which is extensive) you will have to either pay or to grind for months. A commitment that most players won't have with as many options for gaming as there are available.
B. Story: The inability to access all game narrative. Games that failed? (all of the Telltale games) it is inexcusable for a game to hide content in "seasons". Any producer/publisher that plans for the game to be release in pieces is focused more on the profit than in the deliverance of a satisfactory product. For clarification, this is not to say the games themselves were bad games.
This particular group is the things that personally as a gamer I have difficulties accepting or find hard to justify but are not inherently EVIL or BAD. In other words, not game breaking.
1. Cosmetic temporary: Like cosmetic permanent, but these are limited usage items restricted by either number of uses or duration limited by time. I don't favor these ones. Personally I have a problem with paying for digital/virtual fireworks. Things like temporary name colors, chat colors, sprays, icons, badges and literally virtual fireworks (often purchased during certain localized holidays). Mabinogi (PC) the game offers several 30-day cosmetic items that disappear at the end of the period.
2. Consumables: Items that are required to play the game as a whole. There are ways to get them for free but these ways require time/effort, and are not necessarily locked behind a paywall. In PokemonGO (mobile) you have the ability to play the game for free, and to collect the items required for capturing Pokemon by simply paying. I have a difficult time justifying spending money on a virtual good that I could otherwise get by walking to a hotspot.
3. Inventory Space: Simple to understand, a game that charges you for your enthusiastic and "collector approach" at playing the game. Mabinogi is one to lead the list here. Pets, bank upgrades, VIP service, etc. are required to be able to say collect the game weapons or simply carry around all the materials needed for professions, other ganes that follow suit are: Vindictus, Warframe and Path of Exile.
4. Additional lives: Games that charge you to continue playing the game. This was okay in the time of arcade machines where you were basically renting the game but in a world where a game is actually installed and running of the power and from your personal device this is just not right. Candy Crush entire business models depends on your inability to succeed in the game.
Micro transactions are not evil or good. They are simply a way to commercialize portions of a video game. How fair they are depends on the eye who is doing the judgement and on the satisfaction perceived by those who purchase the product. Ultimately no one is forced to participate in the purchase of virtual goods. And you should apply your own personal criteria on whether something is worth investing your money and time on.