The midst of an NPR pledge drive seems as fitting a time as any to talk about how the current "microtransaction" wave that is sweeping the U.S. gaming market is both cheezing people off but also paying people off. Gabe & Tycho discuss how currently downloadable content rips people off in their newest old podcast. Specifically they talk about how EA is offering people the ability to re-purchase the same content they just bought, sitting there dormant on their DVD.
It's just another example of how the U.S. market knows that smaller, content-driven transactions are the wave of the future but, no matter what, they can't shake the idea that people need to pay $60 up-front as well. You can't tax people on both sides of the equation - either pay at the counter or pay at the console. Make up your freakin' mind.
GDC Radio (I love them) had an interview with Joshua Hong, founder of the MMO-ish company K2 Network. There Joshua illustrates how the South Korean market distributes the software for free but then charges for accounts, premium features and in-game items. They've been in the black years with this kind of model, not only because the economics works but also because they grow and nurture a user community. Their primary focus is retention, not acquisition. This is an important distinction... the more a user stays, the more the user pays for content, the more the community grows, the more users jump on, etc.
Linden Labs follows the same model, and it works. Users can join for free. A robust society is nurtured, moderated and encouraged. In-game items and real estate costs cash. And so the circle of life goes.
When you're dealing with something massive and subscription-oriented you can't charge an entry cost. Focus on retention and the rest can follow.