According to a media source Business Insider, Microsoft plans to include ads in free-to-play games available on its Xbox console. These advertisements would be credibly integrated into video game environments. It could be billboards along the circuits in car racing games for example.
A model with fewer microtransactions?
Even if the American giant has not yet expressed itself officially on the subject, the anticipated objective would be to allow publishers to sell advertising spaces to diversify their sources of income. Free-to-play games mainly depend on the sale of microtransactions, such as character costumes, which are very popular in Fortnite-type games. By expanding into the advertising market, developers could review the economic model of their games, in particular by reducing the presence of “pay-to-win” microtransactions (Editor’s note: Pay to win), often subject to controversy among players.
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In this logic of improving the economic conditions for free games on Xbox, Business Insider reports that Microsoft would not want to earn any commission from these advertisements. All revenue would go to developers and ad networks. The creator of Windows is also aware that players are extremely wary of seeing ads appear in their favorite titles.
To address these fears, the company plans to select advertisers very strictly so that they match the profiles of the players. Added to this is the promise to secure Xbox user data to prevent other entities from using it. This initiative would also make it possible to target a very specific young audience, which would not be found on other platforms.
Video games as a service
Microsoft’s approach seems to be full of good intentions: to allow developers to have more means and to reinvest them in their games to make them better. Gamers who tend to take a dim view of in-game digital purchases might find Microsoft’s idea appealing.
However, the tech giant is aware of the importance that microtransactions represent in the share of revenue generated by video games. As Century Digital reported last year, free-to-play games brought in $22.7 billion compared to $17.8 billion for premium games in 2020. The business model for free-to-play games is therefore unlikely to change overnight.
It is also essential to remember that the Xbox Game Pass, Microsoft’s flagship on-demand video game service, is largely profitable thanks to the presence of microtransactions and other downloadable content in the games available on the catalog. ” Xbox Game Pass members spend 50% more and spend 2.8x more on post-launch monetization (microtransactions) “, explained last March our colleagues from NetCost-Security. With Sony, which has also announced its competing offer to Microsoft, the video game industry is seeking to diversify its sources of income.