Microtransactions are central to today’s exciting gaming world

The evolution of the video games industry has always been closely linked with payments.

From coin-drop arcade cabinets to in-game purchases for massive multiplayer games, the connection between video games and the player experience simply wouldn’t be the same without payments.

Today’s gaming landscape looks very different to those early arcade days. Studios have been moving away from packaged media over to digital downloads. And now they have embraced microtransactions, in-game downloadable content (DLC) and freemium business models.

But video game microtransactions have in fact been around for nearly 20 years, ushered in by PC-based games and brought to the mainstream by social media in 2010.¹ Now, microtransactions almost define the gaming landscape, giving consumers access to a wide range of in-game wearables and weaponry, backpack items, skins, loot boxes, season passes and more.

But if microtransactions are built into your game, they need to deliver a seamless experience. Players won’t want their gameplay interrupted to input card details. That’s where payment technology comes in.

Why the big buzz around tiny transactions?

It’s estimated that up to 20% of gamer communities take part in microtransactions.² Our own research shows 41% of video game shoppers make an in-game purchase at least once a week.³ And it’s not just about the DLC. Microtransactions have a wide variety of uses, from purchasing in-game currencies to unlocking cheats and shortcuts.

In-game currencies can make your games ‘stickier,’ encouraging people to come back later, as well as pushing them toward specific actions. They’re the fuel that keeps your revenue engine ticking over.

For example, one popular battle royale game with in-game microtransactions has contributed to its owner’s USD$30 billion worth despite being free to download and play.⁴ Meanwhile, another free role-play-based game generated an estimated USD$1 billion within its first six months.⁵

Looking to the wider video gaming market, global app revenues from purchases are estimated to have risen by 23.4% year-on-year in H1 2020. And of the $50.1 billion generated by in-app purchases, $36.6 billion came from within games – a 21.2% YoY increase.⁶

This points to huge revenue generating potential for microtransactions, particularly as the practice moves even further towards the mainstream, altering perceptions and normalizing these in-game behaviors.

Thanks to this, and the growing interest in the concept of the ‘metaverse,’ paying for virtual items may soon become as common as shopping for groceries.

How do gamers pay for microtransactions?

As the gaming audience continues to expand and games offer more choices for players, payment preferences are also becoming more diverse.

For example, our research shows that 49% of players prefer to pay using a credit or debit card, while over half prefer to pay with some form of alternative payment method including digital wallets.³

Globally, there is a vast number of digital wallets, some unique to a particular country or region including MercadoPago in Argentina, Alipay and WeChat in China and Mexico’s BBVA Wallet.

Digital wallets are the premier method of payment in video games in many territories with significant percentages of gamers preferring them:

- Australia 48%
- China 83%
- Germany 68%
- Mexico 37%
- Spain 54%
- USA 39%3

Critical to payment choice is convenience. 38% of gamers choose their payment method because it’s the most convenient,³ and 43% of gamers are more likely to purchase if they can safely store their payment details in their account.³

Video games are designed to be accessible, fun and immersive. Interrupting the experience to carry out long, complicated transactions is less than ideal.

If your aim is to keep players playing, building loyalty and advocacy, then you need to offer a wide variety of payment methods and make it simple to use them. We’ve found that 47% of players drop out of a checkout if they can’t find their payment type.³ That could mean significant drops in player base and revenue.

Keep your players playing

With the potential for so many gamers to make regular repeat in-game purchases, the payment system you use needs to be as seamless and secure as possible. You can’t leave anything to chance. If the process is too complicated, it’s likely that you’ll lose sales.

To begin, ensure security is in place and use logos to reassure players. Up to 68% of players are more likely to purchase if they see authentication logos.³

With such a strong gamer preference for APMs and digital wallets, developers should seriously consider implementing a suitable solution.

Worldpay can provide all the tools you need to optimize and accelerate in-game payments.

From our Account Updater tool, which stores and updates details for expired cards automatically, through to our extensive support for over 300 APMs, Worldpay maximizes your ability to offer subscription billing and in-game microtransactions.

And when you get your payment system right, your gamers keep on playing, and those microtransactions almost take care of themselves.

Talk to Worldpay today to learn how we can help your video game business level-up its payments infrastructure.

¹New York Times (2020) FarmVille Once Took Over Facebook. Now Everything Is FarmVille https://www.nytimes.com/2020/12/31/technology/farmville-zynga-facebook.html

²Colagrossi, M. (2021) How Microtransactions Impact the Economics of Gaming. Investopedia https://www.investopedia.com/articles/investing/022216/how-microtransactions-are-evolving-economics-gaming.asp

³Worldpay (2020) Power Your Payments: Video Games Report https://offers.worldpayglobal.com/payments-video-games.html

⁴4Gilbert, B. (2021) 'Fortnite' maker Epic Games is worth just shy of $30 billion after raising another $1 billion in its latest funding round. Business Insider. https://www.businessinsider.com/fortnite-maker-epic-games-worth-30-billion-dollars-2021-4?r=US&IR=T

⁵Tassi, P. (2021) Genshin Impact: $1 Billion In Mobile Revenue, And The Seven Highest Earning Characters. Forbes https://www.forbes.com/sites/paultassi/2021/03/24/genshin-impact-1-billion-in-mobile-revenue-and-the-six-highest-earning-characters/

⁶Wurmser, A. (2020) App Developers See Revenues from In-App Purchases Outpace Advertising Revenues. eMarketer. https://www.emarketer.com/content/app-developers-see-revenues-in-app-purchases-outpace-advertising-revenues