While digital payments have already taken the e-commerce and brick-and-mortar retail space by storm, they are only just beginning to disrupt the gaming industry–both online and live sporting events. Gaming is one of the hottest markets around, and engineers are still working on cracking the massive opportunity that this space presents.
Gaming industry is comprised of more than 2 billion gamers across the globe who doled out more than $130 billion on gaming purchases last year. That’s 10% more than in 2017, which suggests that the size of the market is only expanding. Newzoo’s Global Game Market Report suggests that “Digital game revenues will take 91 percent of the global market with $125.3 billion.”
Not surprisingly, Apple Pay and Google Pay are among the leaders for payments in this space given the brand recognition that they both enjoy. Customers are accustomed to using their mobile device for everyday purchases already, and this mindset spills over for in-game purchases, for instance. Aside from these providers, gamers might also use their stored credit or debit card details to transact.
Even though both companies are already out front, Google and Apple are investing more in the gaming space to maintain their dominant positions. Their interest extends beyond payments and into gaming services.
‘Netflix for Games’
Google recently announced a game-streaming service dubbed Stadia, which has earned the nickname as the “Netflix for games,” according to reports. Stadia will be rolled out across North America and Europe including the UK this year. The idea behind Google’s streaming gaming service is for users to gain access to any game on the “connected device” of their choosing.
Stadia also introduces an opportunity for payments because developers will be introduced to a whole new world for selling their content. For instance, they can sell their games directly to users via livestreams on YouTube and Twitch. Gamers can access the livestream in a matter of seconds. Google is partnering with gaming engines Unreal and Unity for the streaming service.
Google is up against some stiff competition. Apple is reportedly exploring its own subscription-based gaming service. Gaming is attractive to the iPhone maker because most of the activity in this space occurs on a mobile device. Apple has a lot to do with this trend thanks to the influence of the iPhone.
Mobile gaming is the fastest-growing segment in the industry, with revenue surpassing $70 billion last year, reflecting a year-over-year increase of more than 25%. The lion’s share of mobile gaming revenue was generated on mobile devices with less than one-quarter of it stemming from tablets.
SuperData breaks down the details further, saying that of PC games’ revenue in 2018, $17 billion was generated from games that are zero charge to play while more than $4 billion originated from “pay to play” games. Console gaming segment is broken down into more than $11 billion generated from “free-to-play” games while $2 billion came from “premium.” Incidentally, Fortnite reigns supreme, with the highest revenue of any game of all time.
The thing about Google and Apple making a push into the gaming space is that they are sure to disrupt the market for other payment providers.
Not to be outdone, PayPal also has a piece of the gaming and e-sports pie for payments. A SuperData report commissioned by PayPal revealed that U.S. gamers made purchases from more than two dozen “gaming storefronts.” There was a similar ratio in Russia, Australia, and Canada.
In addition to online gaming, live sporting events also provide a growing opportunity for payment providers. Before the rise of digital payments, cash was king everywhere including sporting events. But with the rise of the digital age, new stadiums are being built with the latest technology and this spills over into payments. At last year’s FIFA World Cup, for instance, more than half of Visa in-stadium purchases were completed with contactless technology. Poland led the way with nearly three-quarters of its payments transacted via contactless tech across “cards, mobile devices, and wearables.”
From mobile device games to esports to live sports, payment providers have a tremendous opportunity to make the experience as seamless as possible for participants.