Cushioning the Pain of Paying through Microtransactions in Online Gaming

Abstract

The microtransaction model has been one of the main revenue drivers in the global video game industry in the last half of the 20th century. This study examines the application of virtual currencies implemented in the microtransaction model. We argue that companies can enhance their value by creating t echnology-based interactions v ia v irtual currencies, which in turn could constitute significant revenue streams. Our goal was to prove that the application of virtual currencies would lead to increased spending behaviour, when compared to the application of local currencies. Through an online gaming simulation experiment, we discovered that the utilization of virtual currencies increased consumers’ spending on microtransactions. This relationship was mediated by the pain of paying notion, as respondents reported a lower pain of paying when paying in virtual currencies, and as a consequence, purchasing increased when payments were made in virtual currencies compared to local currencies. In exploring the u nderlying mechanisms of whether implementation of virtual currencies via the microtransaction model could influence spending behaviour, we also controlled for the personality characteristics of gambling severity, impulsivity, competitiveness and reward sensitivity. We were able to prove a positive linear relationship between spending on microtransactions, and the personality traits of gambling severity, and competitiveness. Finally, we discussed how managers can implement the microtransaction model as a reliable means to increase business profitability in the future. Keywords: Online Video Games; Microtransactions; Virtual Currencies; Pain Of Paying; Spending Behaviour; Gambling Severity; Impulsivity; Competitiveness; Reward Sensitivity