Jennifer Schulz is the global head of commerce at Visa.
Nearly one in 10 Americans has purchased a digital good in the past year. Today’s gamers have an unprecedented range of platforms, payment options and preferences to choose from, and there is little doubt that the digital goods economy will continue to grow.
If you’re an online game developer or publisher, there are a lot of questions to answer to determine how to best monetize game content — what platform is best suited to the game environment, how to attract and convert players in different countries, what types of goods will gamers purchase and what fee should be charged for these items? While there’s no single answer, the recent growth of global and local payment options have at least made transactions easier to facilitate.
With this in mind, PlaySpan took a deeper look at four key payment trends that will have a positive impact on the future of game development.
1) Gamers are using multiple channels to make payments
In a recent Magid survey sponsored by PlaySpan, gamers purchasing virtual goods indicated using a wide variety of payment methods. Traditional payment options like credit or debit cards continue to be popular, but alternative payments have increased in popularity and are now being used by a much wider audience of gamers. It’s not surprising considering how “global” online games have become and the myriad of payment options that people are comfortable with around the world.
In the survey, closed loop prepaid game cards, smartphone payment apps, and electronic transfers from personal bank accounts proved to be equally popular to traditional payment methods with more than 10 percent of respondents. In-game credits and virtual currency were also popular payment methods, ahead of services like PayPal.
The data shows there’s no single alternative payment method that stands above the rest. With such broad payment preferences among gamers, developers should be careful not to limit themselves to a single currency type. Without multiple payment options, publishers risk turning away gamers who might not have access, the means or desire to pay with a particular tool.
2) Alternative payments offer appealing features and benefits to gamers
There is already a significant number of gamers who are using alternative payment options, but that number is expected to increase sharply.
The survey data indicates gamers prefer to use alternative payment methods that allow them to pay without entering credit card information each time they make a purchase. Some of the advantages uncovered in the survey results include: alternative payments gave gamers easy access to perks such as loyalty points and rewards, they eliminated the risk of lost or stolen cards and offered easy access to tickets for things like movies, buses and airlines.
More than half of all respondents to the survey revealed they were either “interested,” or “very interested” in these features, which bodes well for greater adoption among mainstream consumers.
3) In-app purchases dominate the growing mobile platform
When smartphone and tablet games began to move into the mainstream, mobile apps fundamentally changed the pricing structure of the gaming industry. In many cases developers could earn more charging $1.99 for a single game than they had charging $10 in the past. However, this model is quickly eroding.
Currently, on the iPhone App Store, of the top 10 highest-grossing games, only one (Angry Birds) is not free to play. And according to Newzoo, a gaming industry market research firm, in-app purchases make up a staggering 91 percent of Android and iOS game revenue (not counting advertising).
Thanks to the growth of the mobile games market, it’s projected that revenue from in-game purchases will increase from the 2011 global total of $2 billion to almost $5 billion by 2016. By then, integrating in-app purchases will be a necessity for any developer wanting their game to succeed financially.
4) Digital wallets gain acceptance, but there are strong differences between genders
Along with other forms of alternative payments, gamers are showing a growing acceptance towards digital wallets and payments made by smartphones. In fact, research shows that 77 percent of gamers are now open to the idea of using digital wallets like V.me by Visa, whether for purchases online or at the point-of-sale.
There are notable differences however when it come to the sexes and the appeal of digital wallets. Awareness of digital wallet payments is almost 50 percent higher among men, and among non-digital wallet users, men showed that they were much more likely (41 percent) than women (31 percent) to adopt them in the future.
What do these trends signify for game developers?
Mobile, PC and console platforms are converging, and there’s no longer a single, one-size-fits-all solution. As consumers move between games, devices and environments, they need their payments to move seamlessly with them and work reliably from any device. Preferred methods of payments are as divergent as players’ interests and tastes in games themselves. As player behavior evolves, so too must developers tailor their games to target these users. In the adoption of new technologies, gamers have historically offered a fertile testing ground for developers. Now developers have the power to capitalize on this trend and provide the choices necessary to help more effectively monetize game content.
With alternative payment methods and digital wallets growing in acceptance, especially for those games with a global appeal, it’s important for game developers and publishers to consider adapting an open payment platform approach.