This February, The Fintech Times is taking a deep dive into the world of gametech. Grab your headsets and controllers and plug in to hear about the latest tech and celebrities influencing the market to the development of eSports and much more.
Our next topic shifts on to one of the most important aspects in gaming: payments. A large reason for the success in the gaming world, back from the days of Atari‘s Pong to a Fortnite BattlePass, is in large parts due to paytech innovation. But why?
Firstly, and probably most importantly, the market is booming. As stated by John Mitchell, CEO at Episode Six, “There is plenty of money to be made in the global gaming market. It was valued at $173.70billion in 2021, and it is expected to reach a value of $314.40billion by 2027 – and paytech can help support this growth.”
Mitchell continued, “Gaming is all about the experience, it’s escapism in its finest form. Paytech can enhance the user experience, supporting cross platform digital assets for example, resulting in gaming companies seeing increased customer growth.
“Now more than ever, fintechs are reshaping how we pay after seeing the huge potential the gametech market has to offer and how it has become a primary form of entertainment for people across the world.
“As we become more interconnected yet more decentralised, and our payments habits evolve, more emphasis has been given on the journey to boost customer loyalty and to make the gaming experience as seamless as possible. As a result, fintechs are looking to reshape how we pay and what we pay with.”
Replayability and loyalty to brands
Having a game that loses its fun after a single playthrough is not good for business. The initial influx of a successful game likely won’t be enough to garner a second game, as what is popular in the sector can shift in a matter of weeks and months, long before developers have even considered what their follow up game may be. As such ensuring that payments within a game for extra content are fluid and seamless. Without these, gamers will get frustrated and leave, spending their money elsewhere.
Justin Giudici, Head of Products at Telos Foundation said, “Payments are inherently part of the gametech industry, as it is the merging of two industries – gaming with fintech. Like most industries, not too long ago games were bought and sold in traditional storefronts. But since then, the gaming industry has rolled out a robust payment structure, and unique digital marketplaces designed to streamline gamers’ transactions. As such, millions of consumers are now utilising digital wallets in coordination with unique payment models (freemium, pay to play, play to earn) established by developers to find ways to improve player experiences and maximise purchases per player.”
Supporting Giudici’s point about the digisation of gametech are Statista. In 2018, a record 83 per cent of all computer and video games were sold in digital form, meaning that, once the game is downloaded, it is immediately ready to play. In contrast, only 17 per cent of video games were sold in physical form. Interestingly however, Game Sales Data found that while physical game sales increased by 218.2 per cent, the UK digital game downloads increased by 67.4 per cent.
A sense of progression
Crucially, in order for a game to have a long shelf life, its users must feel like they need to return to it. To this extent, bringing in a small fee to unlock progressive content is a widely successful strategy. Kamran Hedjri, CEO of PXP Financial, said, “Most games are now purchased online rather than from physical retailers, and many of these payments involve microtransaction or subscriptions. A recent survey by PC builder Chillblast and cybersecurity expert BullGuard found three-quarters of gamers are spending more money than ever on gaming, with nearly one in five paying £100 extra every month on in-game purchases, new games, hardware or other related items.
“The need for robust systems that accept both one-off and repeating payments is clear. But crucially, the payment process can make or break a successful player’s experience, which is so immersive that the smallest interruption can cause frustration or trigger a user to leave the game altogether. Simplified, one-click checkouts, a tailored set of APMs (e.g. voucher-based or digital wallets), local currencies and other features that reduce friction and facilitate instant payment can all help drive transaction conversion while gaming.”
Further developing on the idea of progression, cheqd CEO, Fraser Edwards, discusses reward this progression. “The rewards that players get for playing and participating in the game are essential for the replayability and longevity of that particular game. For this reason, the balance of in-game payments and progression is imperative to get right. When playing a game, you want to feel that you are earning your rewards and that it is not too easy, nor too burdensome.
“Payments and progression systems may soon, however, evolve with the advent of new technology, such as what cheqd is building: interoperable payment mechanisms tied to verified digital identities. Currently, In-game currencies are largely siloed to that particular title or a particular game, making them short-term assets worthless in the long run. What we want to ask is, what would the gaming world look like with an interoperable, cross-game currency model powered by metaverse?
“Players could be rewarded for completing milestones in various games. And rather than this currency only being usable in one game, it could have wider utility, cross-game and in the real world. As we transition towards a metaverse, this type of innovative thought could revolutionise payments in gaming in general.
“This transition could be facilitated partially by an emerging technology standard, ‘Verifiable Credentials’, which have the capacity to tie verified records of the players’ accomplishments in a game to a digital identity, giving that player a permanent, verifiable copy of their in-game accomplishments and rank. Almost like a non-fungible token (NFT) for verified accomplishments or rank. On the journey towards an open metaverse, the addition of Verifiable Credentials to establish trust in avatars, profiles and in-game items will become an essential piece of the metaverse toolbox.”