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Microtransactions in the Auto Sector

In the video game world, microtransactions are ever-present. While not especially popular, developers work them into games to make money (continuously) over time. Take the popular game Roblox, for example. Signing up and creating a user profile to play is free. But as the game progresses, to gain access to new things, or purchase items that will boost your ranking or “status” in the game, those cost money. Most Roblox players are between 9 and 13, and guess who ends up getting asked for money every week – Mom and Dad.

This is annoying to adults, but for Roblox, it works like a charm. Kids cannot simply stop with one new item. They progress through the game and naturally want more and more. They wear Mom and Dad down, and another $10 on the credit card ends up going to Roblox. Word is BMW is considering this concept as part of a new overhaul to their digital system. A new navigation system, map, and digital assistant are among the upgrades, but to tap into these, the driver will need to pay.

This is not new with cars, as Tesla has also been engaged in a similar practice. Tesla sells features to drivers (post-sale), and initially even shipped cars with battery packs with a pre-defined range on them. To extend the range, the driver paid a fee. But the big difference is how granular BMW is taking this. They recently announced that all vehicles with their “Operating System 7” software will receive an update allowing BMW to tinker with functions such as adaptive cruise control, automatic high-beams, and even heated seats. The user can pay for certain features that they didn’t initially purchase with the car, or they can cancel and turn them off.

Now, to offer this BMW will need to outfit all their vehicles with these “on-demand” features. If a client wants them, he or she pays. If they don’t, they are simply never switched on. This will cost BMW more on the manufacturing end, but where they expect to make their money is on the re-sale market. Say you buy a 2021 X3 and decide not to purchase any of the features. But you then sell it to someone who in turn does. Or the better case scenario, you buy the 2021 X3, purchase all the features, and then sell it in 2025 and the subsequent owner also purchases them as well. In this instance, BMW will be earning handsomely, on a monthly basis, for a decade or more.

The price point is going to be the deciding factor here. BMW used to charge for CarPlay access. The price varied, and BMW never got it right. Yet, if other brands like Tesla and now Ford (who is also wading into these waters) decide to follow, eventually all car owners will be placed in the same dilemma – to purchase or not. In the gaming world, this is how microtransactions became so commonplace. Every developer latched on and in the end, it became normal. Parents aren’t thrilled to continue paying $10 per week for their kid’s games, but it’s been “normalized.” Don’t be surprised if the same doesn’t occur in your car.

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