Virtual currency (gems, coins, credits)

What you're actually buying

Not items, but the currency itself. You buy gems or credits with real money, then spend them in the game. The exchange rate, the bundle sizes and any second 'free' currency make it hard to tell what anything really costs.

How it works

Virtual currencies sit between your card and the shop. The platform sets the exchange rate, balances don't convert back to cash, and 'dual currencies' split an earned kind from a bought kind. Currency is sold in a few fixed packs while shop items are priced in other numbers, so buying one item usually means buying a pack that overshoots it. The leftover is too small to buy anything else, which leaves a balance sitting in your account and a reason to top up. The biggest pack, or an extreme price, is often shown first or labelled 'best value', so the smaller packs look cheap by comparison and the shop's preferred option looks like the obvious choice. Platforms such as Roblox, Fortnite and Minecraft sell Robux, V-Bucks and Minecoins that convert back to cash for creators only at a rate the platform sets, after it has taken its cut.

When it's fine

When the shop shows the real-money price next to the currency price, you can buy exactly what you want without leftovers, and parents control the balance.

Where it came from

Early forms were everywhere. Facebook proved players would buy virtual goods against a card already on file, with Zynga drawing 93% of its revenue from virtual goods in FY2011 and Facebook Credits sitting between players and Zynga until the special revenue-share deal ended in November 2012. Microsoft Points, used on Xbox from 2005, priced even a horse's armour (200 for $2.50 in 2006). Mobile free-to-play (from 15 October 2009) made 'dual currencies' standard, and Clash of Clans sold gems to skip its own queues. Grand Theft Auto Online's Shark Cards, in-game cash bought with real money, reportedly out-earned story DLC so completely that Rockstar shelved expansions. Platform currencies (Robux, V-Bucks, Minecoins) put the same trick at the centre of children's games. In Curiosity (2012) the diamond chisel cost 3 billion in-game coins, about £47,000 in real money, and Guinness listed it from 6 November 2012 as the most expensive in-app purchase.

Historical prices and revenues are in US dollars at the time unless marked A$.