Fixed One-Time Cost vs. Microtransactions/Loot Boxes vs. Subscription Fee

By LUDWIG VON KOOPA - Shigeru Miyamoto has his opinions. I have mine. How do they compare?

Right now, the Computer Entertainment Developers Conference 2018, a Japanese version of the Game Developers Conference hosted by the Computer Entertainment Supplier's Association (they also host the Tokyo Game Show), is concluding. Nintendo's Shigeru Miyamoto was a prominent speaker. You can read a write-up of his speech as reported here by Bloomberg, but I'll summarise the relevant points that I want to commentate on for this article.

• One-time fee games: Like Super Mario Run and the majority of Nintendo's games to-date. You pay one cost up-front, and you get the whole game and you're happy with it. Miyamoto is a fan of this, since it's the most friendly for game developers
• Free-to-play games with micro-transactions and loot boxes: You get the game for free, and then continue to pay small costs as you continue to play the game in order to access the rest of the content. Miyamoto isn't a fan and thinks this isn't sustainable (and it's akin to gambling). Examples include Nintendo Badge Arcade, Swapdoodle, and Pokémon Shuffle
• Subscription: You pay a fixed fee every time period (month, year, whatever). Miyamoto thinks that there should be more of this in the gaming industry because it creates a relationship between developer and player where you keep them engaged, but he simultaneously in his speech said that he doesn't want to develop an MMORPG (massively multiplayer online role-playing game), which is where subscriptions are more prevalent. An example will include Nintendo Switch Online, but software examples include the MMORPG World of Warcraft

Miyamoto's views on this are interesting, because, in a way, subscription is the middle-ground between micro-transactions and a fixed-fee cost model. While free-to-play games often extract money from players based on value-destroying techniques (waiting to play, stopping you with paywalls, etc.), and the one-time up-front fee lets you never have to worry about pleasing your customer post-sale, subscription means you need to keep providing your customer with value every year or they won't renew it.

Often times, subscription is not worth it if you have the option to just pay a one-time fee. Take Microsoft Office. Office 365 is a terrible deal for productivity software. That is the kind of software that you'll be using for several years, if you plan to keep using the same computer.

I don't care about having Office on a Mac, tablet, or phone.
I don't want Skype, OneDrive, Outlook, Publisher, or Access.
I plan to be using my future-proofed computer for many years.
THE OFFICE 365 SUBSCRIPTION VALUE ISN'T VALUABLE.

It's sort of clear to me that Shigeru Miyamoto was speaking well of subscription because Nintendo Switch Online is going to be a thing in a month. As far as I'm concerned, the benefits of that aren't worth the $20 (or $35, since I'm paying for the whole KoopaTV staff via the Family Group — a benefit of being a staff member). The online quality of the Nintendo Switch will always be crappy because of the Switch's Wi-Fi hardware being sub-par. (A laptop's is better. The Wii U's is better.)

But ideally, subscription is how games-as-a-service should be run. Right now, they feed you the game updates as micro-transactions or as season passes (sometimes more than one season pass). Nintendo has a recent trend where they release a content-sparse game for a one-time full price, and then drip-feed content updates to fatten it up over time. Quite frankly, Nintendo's content delivery model doesn't make sense with their pricing model.

That said, I don't like subscribing to things. I like ownership. Subscription means you're renting the product. If I had to subscribe to all the games I've bought over the years, I wouldn't have a backlog of games. I wouldn't have an archive of games. All of those games-on-the-shelf shrines that people have wouldn't exist. I wouldn't be able to decide, in 2018, hey, I want to go play the GameCube game Kirby Air Ride that I got over a decade ago. Because I wouldn't want to pay $20 a year or whatever for it for 15 years.

Be careful when you want your gaming library to be like a Netflix library. Sometimes, Netflix titles expire, and then you'll never be able to watch them again. While that's unlikely to happen for Nintendo-produced content, it could happen for third-party or second-party games. It also devalues the worth of individual games.

That said, I don't think that's what Miyamoto means when he mentions subscription. He means, hey, let's charge $20 a year for Splatoon 2, but we're constantly going to be releasing more stuff for it to keep you engaged so you'll keep paying that fee. Miyamoto himself doesn't want to do that because he likes working on (and ruining) different things rather than the same game for the rest of his development career. Well, no, there's always a point where there is enough natural churn that updating the game no longer makes sense... and since you don't own it, they take it away from you... And then you won't get to play it 5 years later.

Again... Be careful.


Ludwig wants to go play Kirby Air Ride after writing this article, but he's not going to since he's going to go to sleep. He's currently seeking ways to get around the Nintendo Switch's Wi-Fi capabilities being terrible. He can discuss this in detail in the comments section below, but it's more preferable for you to talk about which of the three gaming payment schemes you like the most.


Based on how uncompelling Nintendo Switch Online is, don't trust that Nintendo will make subscription a valuable experience for customers.