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I was looking at various lists of MMO games etc the other day when I noticed that a lot of them claim to be entirely free, but then accept payment by microtransaction. In computer security, etc, microtransactions are very small amounts of money transfered in real time for services (ie for torrents and traffic routing, though that's not actually implemented in public p2p networks)

What are microtransactions with reference to games, how much do they cost, and why are they important in 'free' games?

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In the context of online games, a micro-transaction is the exchange of real world money for some in-game good or service. Most often these are small purchases in the range of $1 to $5.

Some game designers use micro-transactions as a way for players to further customize and personalize their characters, leaving out the purchase of in-game items that may affect a players stats and game balance.

Micro-transactions are popular among free games because they provide the developer with a source of revenue, while allowing players to play through much (or all) of the game for free. One benefit of this model is that it can lead to a larger player base than would be possible with a standard pay to play model.

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Microtransactions give you the ability to spend real-world currency to purchase things in-game. They're "micro" because individual transactions are usually fairly inexpensive (compared to, say, a monthly subscription). The actual price will vary depending on what game you're playing and what exactly you're purchasing.

In some games, microtransactions are limited to items that do not affect the power of your character. For example, World of Warcraft introduced microtransactions recently, but the only items available for purchase are non-combat pets.

Other games may allow you to purchase consumable items, equipment, pets, mounts, and other types of in-game items. You might also be able to purchase services or effects, such as temporary increases to experience gain.

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    Another example is purchasing content that would otherwise be earned over a long period of time through free play. League of Legends, for example, offers this type of service by allowing you to buy "Riot Points" with real money, which can be spent to purchase individual champions. These same champions can be purchased with "Influence Points" as well which are points earned through standard play, but are accumulated at a fairly slow pace and are used for other things which Riot Points cannot purchase, making it a substantial trade off. – TheQ Oct 1 '10 at 16:50

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