Micropayments in Online & Mobile Games: a Growing Industry Opportunity

There has never been a better time to be a gamer. As we move into 2013, gaming technology, the devices we play them on and games developers’ business models all now concentrically focus on satisfying the consumer demand for high quality, addictive games and making sure these are seamlessly available, whenever we want them. Of course, this also means that the gamer has developed extremely high expectations from games, conversely making it increasingly difficult to be a games developer. The ‘freemium’ model has expanded exponentially, especially throughout the mobile and online gaming industry, with many consumers now regarding ‘free’ as the staple requirement for most pick up and play games.

So if this is what the gamer wants; free, fast but increasingly fun games on both mobile and online platforms, then how can developers make sure they are getting their just, financial reward for all their hard work? The perfect recipe for a successful, ‘viral’ game is often debated, but how much consideration is put into the best way to gather this financial re-numeration once a game takes off?

In-game purchases within the freemium game have redefined the way that consumers engage with games content, with 40% of those who have played a freemium game having made an in-game purchase (IYOGI) and a staggering 51% of revenue from freemium mobile games coming from transactions over £12 (Flurry).

Freemium games are also now pulling in wider demographics and also presenting new challenges for content discovery and billing on the move. It is now essential to consider and understand a fast, constantly developing suite of micropayments, as well as consider how consumers find and engage with games content and the different monetisation strategies available for Games Developers and Publishers.

Taking a quick look at the available payment options, it’s easy to draw out the main benefits behind each one, seeing why it is so crucial to choose the right payment mechanic, as well as developing a high quality game. Card payments, the stalwart of the payment industry, offer developers wide access to the market and a robust, trusted infrastructure to go with it.

But what about that margin of unbanked customers who fall within the demographic that many Games target? Considering the benefits of using a Prepaid solution would help Games Developers and Publishers to access this untapped demographic of gamers, with Prepaid enabling the conversion of cash into online payment and potential for the use of Prepaid cards as an outsourced gift voucher system. And what if the game requires a snappy, seamless payment mechanic to minimise abandonment of an in-game purchase? Well then it may be useful to consider direct-to-bill payment mechanics, whereby gamers could make the decision to purchase in-game and have the charge put directly onto their phone bill, all in just a few clicks.

Of course, this is a simplified view of the payment mechanic spectrum and there is a much deeper discussion needed to iron out which payment mechanic would be best for freemium or even premium games developers.

If you are a Game Developer or Publisher and interested in entering this discussion about which payment mechanic is right for you, then AIME is running a joint panel event with Games Industry trade body UKIE, which will focus on this discussion and answer other crucial questions such as:

What best motivates a premium purchase; removal of ads, additional features, more rapid in-game advancement, or prestige items?   

Is the freemium model working and will there be a return to upfront paid content?

The event takes place at UKIE’s central London premises on 24th January, 2013. To get involved in this Industry debate and or if you have any questions, please contact David Ashman by email on davidashman@aimelink.org.