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The way we play, and pay for, video games has changed.
First emerging with the growing popularity of smartphones, free-to-play games now dominate the market, accounting for 80% of revenues across all devices. For a time, this genre was largely absent from desktop computers and dedicated game consoles. But this is no longer the case, with four of the top five most popular PC games being free-to-play .
But what has led to this rise? And how can games publishers and platforms use new payment methods to enhance a player’s experience while, at the same time, increasing their own revenues?
The rise of free-to-play
Video game technology has evolved rapidly in recent decades. Where, not that long ago, we were playing Pacman on arcade machines, today gamers spend hours of their day in realistic simulations of gunfights and grand fantasy battles – sometimes in convincing virtual reality.
There has been a gradual shift in the games industry away from the more linear formats of traditional games (where a player may progress through a series of increasingly difficult, yet finite levels) to an industry that invests heavily in nonlinear, “sandbox” style games with practically infinite, often competitive gameplay2.
This style of game encourages players to spend long hours gaming to increase their status, both in the game and among their peer group. Thirty-five percent of players of a popular battle royal shooter spend six to 12 hours a week in the game .
Why do nonlinear games favor the free-to-play revenue model?
With gamers spending more time in one game, the opportunities to offer in-game purchases to a somewhat captive market increase.
To keep leveling up, gaining items or varying their experience in such free-to-play games, players are spending large amounts of real-world money. Via microtransactions made within the game itself, players can purchase digital items, expansions to a game’s story or even in-game currency. Players can spend this currency on cosmetic items to customize their avatar, upgrades to make them more effective and even “loot-boxes” containing a randomized assortment of in-game items.
Microtransactions and regular episodic updates – that can sometimes be accessed via subscription billing – extend the life of the game and encourage players to remain invested in the game’s community. They have also been incredibly profitable for game publishers. One popular free-to-play battle royal shooter generated $1.8 billion in 2019 .
How can payments enhance a player’s experience?
Microtransactions can be integral to gameplay, and that means a disjointed payment journey can mean a disjointed gaming experience.
Consider a player in the high intensity environment of a free-to-play game. Amid the action, they attempt to quickly buy some in-game currency to upgrade their weapons and survive into the next round.
With an inadequate payments system, this player might be required to find their payment card, type in the 16 numbers on the front, expiry date and security code. This would severely detract from their experience and potentially increase the likelihood of the player abandoning the cart.
Providers seeking to encourage microtransaction completion should optimize the payment journey. Convenience in payment is important to players: In fact, our recent Power Your Payments report found that convenience ranked as the most important factor to the payment experience .
The popularity of alternative payment methods (APMs) within the video game sector has grown, perhaps in response to the demand for convenience.
Traditional payment methods, such as debit and credit cards, now account for just 26% of digital video game spending worldwide5, while APMs and digital wallets are the first choice for players in major gaming markets like China and the U.S.5.
Worldpay from FIS® can enable your business to accept payments from more than 300 global APMs, maximizing player convenience and your revenues.
A frictionless payment journey is fundamental to the enjoyment of the free-to-play games now taking up so much of the market. Make sure your business’s payments stregety is successful with Worldpay from FIS.
To learn more about video game player payment preferences and regional trends, read the Power Your Payments report.
1 Felix Richter (2020) Cashing in on Free-to-Play Games. Statista. [https://www.statista.com/chart/20395/worldwide-revenue-generated-with-free-to-play-video-games/]
1Dan Singer and Enrico D’Angelo (2020) The Netflix of gaming? Why subscription video-game services face an uphill battle. McKinsey & Company [https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/the-netflix-of-gaming-why-subscription-video-game-services-face-an-uphill-battle ]
1Mike Brown (2021) Finances of Fortnite (Season 2): In-Game Spending Increases by 21%. LendEDU [https://lendedu.com/blog/finances-of-fortnite-part-two/]
1Todd Spangler (2020) ‘Fortnite’ Revenue Dropped 25% in 2019 but Was Still the Year’s Top-Earning Game With $1.8 Billion Haul. Variety [https://variety.com/2020/digital/news/fortnite-top-earning-game-2019-1203455069/]
1Worldpay from FIS (2021) Video Games. Power your Payments. [https://offers.worldpayglobal.com/payments-video-games.html]
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