Micro transactions

Speaker A: 00:00:00

Hello and welcome to the Cognitive Engineering Podcast produced by Tell Me Studios for Aleph Insights. In this series of podcasts we take a look at interesting topics and discuss what we think they tell us about analysis and decision making. I'm Fraser McGruer and I'm here with Peter Coghill, Nick Hare and Chris Wragg of Aleph Insights and this week we're talking about microtransactions. Nick, why are we talking about microtransactions?

Speaker B: 00:00:29

Well there's a recent internet controversy, a storm, an internet storm of outrage. So a company called EA who are a very successful computer game company, very successful but widely despised, produced a game called Battlefront 2 which is a Star Wars themed fighting game where you wander around and you know you're a stormtrooper or you're Darth Vader and you're fighting people and it's full price I think it was $60 or something for this game but it turns out that in the game there are microtransactions where you can effectively spend more real money to have a chance of getting better stuff right so you might get an upgrade to a cooler character like you might get Darth Vader or whatever. A longer lightsaber. Yeah stuff like that. I'd quite like a longer lightsaber. Yeah indeed. I think there are other solutions. People who want to play the game but not spend extra money on it are kind of annoyed that other people who've got loads of money to burn can immediately get themselves as it were levelled up you know and be able to fight in better battles simply because they've got extra money. So that's the, anyway the outrage kind of intrigued me because you know most people's reaction you might think would be well you know just don't buy the game fine now you know there's microtransactions in it don't buy it but people I think have microtransactions one of those things that exposes that we sort of under certain circumstances don't seem to like the idea that firms are trying to get money out of us. So that's that's my question really is why do we react that way almost with a moral outrage rather than just saying well this is a product I don't like.

Speaker A: 00:02:19

So we don't get annoyed with coca-cola for charging us money to buy a can of fizzy. No people were

Speaker B: 00:02:25

happy to have coin op machines you know back in the old days where you'd put in you'd have to pay extra 10p to continue playing your game you know to some extent people are happy with football teams being able to you know the rich ones being able to buy better players and being more likely to win. It's totally not uncommon that you know people with more money get a better experience people have first class tickets on trains which are more expensive you know it's just a part of life but in certain circumstances we almost expect something egalitarian to happen and I just sort of wonder why. So let's explore that question why is it

Speaker A: 00:02:58

that in this particular situation we expect something that's more egalitarian. Peter. I think

Speaker C: 00:03:04

it's probably that computer games traditionally you buy the one-off cost and that EA Battlefront 2 is what they call a premium game it's sort of the 40 50 pound mark. There's an expectation a historical expectation if you buy something you then own it and it's yours and there isn't an expectation after that to pay more money to keep using it. But of course

Speaker B: 00:03:29

it is voluntary I mean EA would say you don't have to spend that money you can still enjoy what

Speaker A: 00:03:35

you get. But also sorry to interject I think one difference here is let's say you get for free a game on your iPhone that's app based and you expect you to be given you expect there to be given options for you to buy extra stuff because you recognise that okay well I got this for free but I recognise this company's got to make money somehow okay this is how they do it. What seems to me and I would feel this is a bit out of order is that if I spent 40 50 quid on a game well I've spent that so why should there also be on top of that. Yeah but it's voluntary and I mean

Speaker B: 00:04:06

you're right this has come from the mobile market and microtransactions. I know we don't get too heavily into the whole economics of microtransactions but they're only about seven or eight years old microtransactions and they exactly arose exactly because of that because people didn't want to spend two dollars on a full mobile game they wanted to download a supposedly free game and then they would potentially spend hundreds of dollars more on add-ons and extras and you know and little bits of advantage and firms of course you know have absolutely gone to town on microtransactions in fact you know something like 50 percent of the revenue of a game is from about 0.2 percent of the players so you know it's kind of geared towards these what are known as whales i.e very big fish people who are going to pay hundreds of dollars to play a game. Is there

Speaker A: 00:04:54

just by the way a whale isn't a fish but anyway let's go on. You tell that to the people in Vegas

Speaker D: 00:04:59

who made the term up. Is there an element of why it's seen as underhand in some way is it about the expectation of parity in a competition so you sort of said well yes look Man United could spend more money on their football players than you know another team but fundamentally relative competition in those sorts of settings you're expecting people it's not like the other team then have to tie their shoelaces together to play or that Manchester United get two balls to play with or something along those lines. What you're trying to compete on is human skill in the game in the endeavor and the fact that somebody can bypass that by getting better equipment I mean it's one thing to have a better tennis racket but it's another thing to have you know a star destroyer

Speaker B: 00:06:00

rather than a than a land speeder. No but it's not in the context of this game it really is more like the tennis racket thing you know people who can buy a better tennis racket are going to do better at tennis despite their skill levels. If we were really if we wanted to make it egalitarian we'd force people to use the same tennis racket now why do we not get too worked up about that?

Speaker D: 00:06:22

Well I suppose it's more like actually the comparison with Formula One is probably the where you know a lot of people don't engage with that as a sport because of the disparity because so much of it is not about the skill of the the driver I mean obviously they're all highly skilled but the differentiating factors are the cars and the technology. I think this is

Speaker C: 00:06:45

probably very one is not a race it's not a racing event Formula One is an engineering event so the person with the most money back in the team is going to win because they can afford the best

Speaker A: 00:06:56

engineers the best technology. So therefore why do we feel okay with that in in Formula One but we don't feel okay with that in in a game that we purchased? Yeah so just before we answer that

Speaker B: 00:07:06

just to seal off this sort of issue of micro transactions because I think that's very close to an analysis of where that reaction comes from but it's interesting that EA games have made a lot of money off this model and they're universally loathed and at the same time highly successful their share price has gone up by something like a factor of nine in the last five years so something weird's going on right. Who wants to come in on something here? Peter

Speaker C: 00:07:31

haven't heard from you in a while. Yeah well I think there's a part of it is to do with the opacity of business that you may not fully realize that the micro transactions are going to be a as big a thing as until you've bought the game so you're already invested in it and you then you find you find these the noobs come along with their extra long lightsabers and you get you lose a bit of social standing in losing out to people who just got more money so I think it's that but also I think there's also people don't like finding out about things that they hold near and dear so that people really like Battlefront game and Star Wars and so it's been tainted by this sort of this underhand practice and I think another example I want to sort of segue into is the Paperchase Daily Mail debacle and that Paperchase ran some promotional ads in Daily Mail and it was derided on social media as a result and I think there's a parallel

Speaker A: 00:08:42

here because... Wait hold on can you explain that a bit more so Paperchase is a stationary company

Speaker C: 00:08:48

stationary company yeah doing small gifts and greetings cards so tell me what was for promotion and why was there a so they so well they they they ran they ran some promotional ads in Daily Mail which is a this is a red top paper in the UK and often derided for its particular sort of political stance on things and there was an outpouring not a huge outpouring but an outpouring on social media of people of Paperchase customers saying this is terrible I'm not a Daily Mail reader I don't agree with anything they say and then Paperchase stepped back and and and cancelled the promotion. Now I think they probably did it for good reasons they've probably done their analysis and worked out that actually they've got quite a lot of customers who read their mail and doing a deal a big deal with the Daily Mail for this this promotion would get them more customers um so back fine but then what's it but I think it's the I think it's the sort of lifting the lid on big business is part of the objection to this how how these big deals

Speaker B: 00:09:53

Why should anyone give a shit about where the company they're buying a card from advertises and I think you know you can ask the question of where there's lots of companies who advertise in the Daily Mail why do people get worked up about uh Paperchase and I think it comes from the fact that Paperchase has a sort of fluffy kind of friendly image it is sort of the branding of the shop is is one of those slightly kind of 90s you know third space come in and browse our cards and you know they don't have coffee shops in in Paperchase but you can imagine them having coffee shops in Paperchase and it's all very sort of you know crafty and and sort of nice and and people see the Daily Mail as very much the opposite of many of those things and and it's interesting that people have a certain attachment to the Paperchase brand which means you know if if both has advertised their armoured personnel carriers in in um you

Speaker D: 00:10:47

know in the Daily Mail no one would mind yes yeah I mean I I think I think this comes down to um you know what what constitutes uh brand loyalty or what constitutes um sort of people's investment in in a brand and a lot of it comes comes down to um you know that you feel they reflect your values you know you feel the company and the products reflect your values and when uh when that is shown not to be the case uh it affects people's emotional attachment to a particular product or or service provided by them um you know it's there's an element of group identity if you look at you know sort of Apple uh fan boys and Apple fan girls you know that there's a there's a group identity about that it's it represents uh values you know it may be um personified in in a particular you know business leader like Steve Jobs or somebody like that but there's a sense of being part of a group and when something discordant with that group mentality comes in um it's it causes controversy it shakes you know shakes the system up and uh can cause quite a

Speaker B: 00:12:02

visceral reaction yeah there's and I think there's a certain bunch of brands which uh well they'll be different for Britain and the U.S. for example but in Britain I think there are brands like Marmite and HP Source um uh you know which we we sort of feel very attached to and Cadbury's and whenever there's this the story the inevitable story that some foreign company has taken over you know I think HP Source is now produced in in Holland or something there's

Speaker D: 00:12:27

this sense of outrage well look at the the Coco Pops and uh Choco Krispies fiasco uh all right what tell us more what happens well so um Coco Pops is a is a a British branded breakfast cereal but it's made by Kellogg's so it's not as if it ever pretended to be British but um and it's

Speaker B: 00:12:47

they're so they're so chocolatey they even turn the milk brown exactly uh and they've got a nice

Speaker D: 00:12:52

rth uh and in the sort of mid-: 1990

Speaker A: 00:13:18

well that actually reminds me kind of in a reverse of that or not quite reverse but I remember was it in the 80s or 90s the in America um well not just in America but um Coca-Cola they came up with a new kind of Coca-Cola that was called Coca-Cola original or something okay

Speaker B: 00:13:33

yeah new coke so this was the this is a very famous I mean business people look at this yeah well and I think this there's an element to which so the things I've described about um about Marmite and HP Source I think in the U.S. you could say the same things about brands like McDonald's and Coca-Cola that's surprising as it might seem to us because we see those companies as very mercenary uh in the U.S. they're held with quite a lot of affection and yeah they brought out a product called new coke which after lots and lots of consumer tests you know they'd worked out was tastier than classic coke they phased out the old coke and brought in the new coke and uh there was absolute horror and outrage and um to the extent that that coke then brought the old coke back as classic coke and phased out new coke and there was some conspiracy theories that they'd done it deliberately so that they'd get publicity but um but yeah okay so I think you know the fact is that there are these brands that we have feel like we have relationships with and they are not I think there's there's an interesting uh idea in in um psychology social psychology which is the um uh the relational models theory which a guy called Alan Fisk came up with where he said there's sort of four kinds of ways that you can relate to to other people in in groups so you have communal sharing which is like a family uh or when you're in a restaurant you're going to split the bill where you you just accept that you're all just you know gonna share stuff and no one's trying to keep tabs then there's authority ranking where you have a kind of linear hierarchy um where you expect the guys at the top to get the stuff and to give stuff to you so that would be like uh bosses and workers uh equality matching where you're uh which is getting slightly more towards the mercenary end where you're keeping track of the difference in some way so that would be things like buying rounds in a pub or taking turns at you know uh using a computer game or something and finally you have market pricing which is the the relationship where you are there is an absolute set type of exchange and both parties um you know stick to that and you pay the money and the shopkeeper gives you the goods and what I think we could analyze this as is is that people enter into market pricing relationships but while they're doing it often they want it to feel like a communal sharing relationship because that's nicer so when you you know you ask why do pubs feel like houses why do restaurants feel like houses you know why does a school feel like a family a private school feel like a family they're all just businesses but they want you to they don't want you to feel they want to remove the sense that you're that you're involved in a market pricing relationship because they know that people are actually after a communal sharing relationship and I and I think this might explain you know how where these sorts of there's a sense of violating a kind of relationship and um you know the example that's often used is if you went around to someone's house for dinner and then you offered to pay them at the end of the evening they would be offended because that you've misunderstood the kind of relationship you're in

Speaker A: 00:16:25

I've actually had that happen to me in reverse and I was really annoyed which was a friend invited us around a bunch of people around to their house and he's quite a wine connoisseur and had laid on lots of different wines for us to to taste and it was and that was more what was driving the evening it turned out rather than eating a meal and then the next day presented us all with a bill for the wine that we're drunk which I thought I thought I thought was quite suitably outraged at and uh but paid anyway rather than cause a fuss are you sure he was a friend

Speaker B: 00:16:56

not a restaurateur no but I think that's a good that's a good analogy uh to perhaps how people feel when they're in a relationship with someone who's making uh them a game a computer game you know to sort of feel like oh god this guy's charging me uh whereas I want him to want me to like to play the game and I don't mind giving him some money but you know yeah so it'd be

Speaker A: 00:17:18

interesting I mean we need to wrap up but just very briefly and very briefly turning going back to the original point I just wonder if it'd be interesting if you could do a generational analysis of people who would be happy or unhappy about getting charged on micro transactions if you could take slots of two years of people at a time um but I want to wrap up but before I do uh I want to talk about brands and affinity to brands um on a personal basis um can you name a name one brand that you're particularly um you feel a particular affinity to and why I've got one in my head I'm ready to go but I don't know if anyone's got one Peter you know I'm a huge fan

Speaker C: 00:17:59

of Wikipedia as a thing may not think of it as a brand but that I honestly think if I was going to nominate a sort of wonder of the world Wikipedia would be top of my list so are you going to pay because are you getting served with loads of yeah they seem to be on a bit of a uh spurge at the funding I guess they're running out of money and I have I have paid in the past I have paid small amounts in the past and I will probably again as a sort of charitable donation um I see it as being such an enormously powerful resource and I think it's one of those I would compare it to something like the NHS being free at the point of use um kind of thing that's extremely uh important yeah

Speaker B: 00:18:41

I think everyone ought to donate to Wikipedia now if you've used it at all think about how much you'd have to pay if that was a book you know so you already have donated as well yeah I do every

Speaker D: 00:18:50

year every time the nag comes around right I'm impressed uh Chris brand uh probably Monster

Speaker B: 00:18:57

Munch I think it would be for me and I and I think you want to feel that the people at Monster Munch HQ are kind of zany flavor professors who do it for the pleasure of it and go right here's here's oh we've come up with a new exciting Monster Munch it would be horrible to think that Monster

Speaker D: 00:19:14

Munch was designed by focus groups yeah wouldn't it they are produced by monsters aren't they I

Speaker B: 00:19:18

thought that was the whole point yes they are absolutely yeah um Nick yeah well um you're holding one right now uh my one of my favorite brands is the Mitsubishi Pencil Company who make a pen called uh Uniball I and uh it's absolutely brilliant fulfills all my pen needs and they're very sort of unobtrusive the Mitsubishi Pencil Company and I like to imagine that it's run by Japanese pen artisans who spend hours assembling each pen with some with a sort of water feature trickling away in the background and uh you know I know it's not like that but I you know I feel like um they just are really really good and that's the only marketing they need and can you

Speaker A: 00:20:01

only become a designer if your father and before him as well yeah it's a 900 year old business I like to think yeah um my brand is Brompton Bicycles um I really like them because um they do seem to appeal to that quintessentially British side of things in this sort of wonderful engineering and if anyone doesn't know they're folding and unfolding bicycles and just they're technologically very innovative um and they've got a beautiful design to them as well they sort of are and they

Speaker C: 00:20:29

sort of aren't innovative because they haven't really changed they've tinkered with the design but they nailed it about 15 20 years ago and it's not changed since right okay but I mean that in itself in the first place was quite innovative like the Mitsubishi Pen that's not changed uh for 15 years yeah they got it right they don't need they don't need designers anymore they just churn out the same thing over and over again so yeah and create brand loyalty in order to um yeah

Speaker A: 00:20:57

yeah yeah okay uh thank you gentlemen I'm Fraser McGruer we've been here with Chris Wragg, Nick Hare and Peter Coghill of Aleph Insights and you've been listening to the Cognitive Engineering podcast thank you and until next time bye