16 MAY 2019

4 digital trends impacting the gaming ecosystem

POSTED UNDER Direct Carrier Billing Games and Gaming Payments Web Payments
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Mattias Liivak

Head of Marketing & PR, Fortumo

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The gaming market has reached a tipping point with more than half of the total revenue coming from mobile games in 2018. Mobile gaming also continues to be the largest segment maintaining a decade of double-digit growth – this is quite an accomplishment for a whole industry.

With the audience shifted to mobile platforms, game developers should also overlook their payment strategy and what changes need to be made in monetization on mobile platforms. Here are the main trends in the digital ecosystem that explain why direct carrier billing is growing to be more critical than ever for developers.

Trend #1: The majority of new potential gamers are located in mobile-first emerging markets

Smartphone ownership is growing the fastest in emerging markets. While internet adoption is slowing down in Western markets, it is accelerating in growing economies like Malaysia and Indonesia.

How does it impact developers’ ability to generate revenue?

Lower income markets are challenging for game developers. Converting users with less disposable income means additional resources need to be invested in localization, including payment methods. Traditional payment methods (credit cards) are simply unsuitable for gamers in emerging economies:

  • US & US credit card ownership: approximately 65%
  • India & Indonesia credit card ownership: approximately 2%

Where does carrier billing fit in?

Unlike bank cards or mobile wallets, carrier billing is by default available to any mobile phone owner, whether they are playing on their mobile, PC or on a console. Carrier billing is already deployed by a large number of game developers and is among the most popular alternative payment methods for digital gaming (SuperData Research):

  • 17% in the Asia Pacific
  • 21% in Eastern Europe
  • 14% in Western Europe
  • 21% in Latin America
  • 15% in the Middle East & Africa

Trend #2: Mobile games have overtaken PC and console games

Mobile gaming accounts for more than half of the gaming market by now and shows no signs on slowing down, being the largest market with a decade of double digit growth.

How does it impact developers’ ability to generate revenue?

Desktop game developers thus have two options if they wish to profit from mobile platforms: either create a completely new game for mobile or port their existing game. Fortunately, modern smartphones are becoming powerful enough to support lighter versions of traditional PC games as well which means both options are viable.

Where does carrier billing fit in?

As digital content is more and more consumed on the mobile devices, the payment solutions have to keep up with the users’ needs. Credit card checkout flows are inconvenient on mobile devices, negatively impacting conversion rates. With carrier billing, the user only needs to provide their phone number.

Trend #3: More casual spending in gaming

The Game Profitability Index reveals a major shift in the core business model in F2P games. There’s a trend towards a more balanced monetization model as the number of casual gamers is going up. As the game developers can’t rely only on a small number of “whales” for revenue, it’s even more important to make in-app payments and impulse spending as simple as possible.

Below, you can see typical price and revenue distribution for one of our game developers: as you can see, most transactions happen at lower price points:

Carrier billing pricing breakdown for game developers

How does it impact developers’ ability to generate revenue?

The trend is positive news for developers but only if they are quick to harness its potential and offer convenient solutions to the casual players. 83% of U.S. PC gamers pick a payment method because of the ease of use.

Where does carrier billing fit in?

Carrier billing is a natural fit for mobile content because transactions can be initiated and completed on the mobile device without any payment cards or entry of additional details. It’s also universally accessible to people in emerging markets and its simplicity and convenience also makes it a popular in Western countries. It’s fast, safe and enables user to pay with just a few clicks.

Trend #4: Stricter regulations for card-based payments

The European Banking Authority started requiring stronger authentication process for card-based payments. The technical standards on strong customer authentication and common and secure communication under the PSD2 were implemented in September 2018.

How does it impact developers’ ability to generate revenue?

Due to strong authentication requirements that PSD2 imposes on developers, conversion rates are negatively impacted because the checkout flow with credit cards becomes even longer.

Where does carrier billing fit in?

The regulations don’t apply to carrier billing. This means the simplicity of the process remain unaffected.

Want to learn more about carrier billing and its benefits for game developers? Download our recent special report on the topic below.

Revenue calculator
Do the math: how much would your revenue increase with carrier billing?
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