Understandably, many sessions at this year’s LOGIN Conference in Seattle centered around game world monetization and payment types. Gaming businesses have a number of monetization models to choose from, including free-to-play, subscription, virtual goods, sponsored branded goods, virtual goods catalog/store front, virtual goods trading, crafting virtual goods, mini games, in-game competitions, and even in-game media assets—such as billboards or sponsored branded events.

To make things even more interesting, there are also different currencies. While the main currency remains to be real-world money as you might expect, secondary currencies include things like player experience, activity and achievement (in other words, gaining points for advancing levels within a game).

One of the presentations we found interesting at LOGIN was Vindicia’s lecture titled: “Payments, Payments, Payments” by Steve Klebe, their Senior Vice President of Business Development. Steve showed how the gaming market has sharply moved from offering players credit card payment (MC, Visa, Discover, AMEX), to a variety of payment choices. There are also monetization providers such as PlaySpan, offering over 85 international payment methods, including credit cards, PayPal, the ULTIMATE GAME CARD ™, and UltimatePoints™, a popular and universal virtual currency.

Well, we caught up with Steve following his presentation to hear his thoughts first hand and here we will share those findings.

Max Anhoury: Steve, we really enjoyed your presentation. It’s exciting that alternative payments will represent 31% of online dollar volume by 2012. When you consult with gaming publishers, how do you decide which payment types to recommend – between the major players, pre-paid, mobile, cash, monetization platforms, or offer-based payments?

Steve Klebe: Max, the most important dialogue to have is to first identify who is the target audience for the game demographically and then geographically. You cannot begin to talk about payment methods until you understand these two attributes. If the game’s player is 18+ and is primarily in the US, then it is simple, the focus should be on Visa, MasterCard and PayPal. However, if the player is likely to be 18+ in Germany, then you have to support something called ELV which is a form of direct debit very popular in Germany. And the list goes on and on and on.

Max Anhoury: How well are new and alternative payment types being adopted by players? If a payment method (or brand) is unknown to the player, are they willing to give it a chance?

Steve Klebe: That is a very difficult question to answer because there is a tremendous amount of noise from vendors in this arena without much substantiation. For the 13-18 year old segment, depending on how desperate they are to play, they will likely try just about any method. However, if they use their mobile phone as a billing method and their parents end up disputing the transaction, which I understand can approach 20%, then the “sale” can be pretty hollow. My guess is that the answer to your question is Yes, primarily because there is a tremendous amount of immaturity in the user population and they are being bombarded with a lot of deceptive messaging.

Max Anhoury: From your experience, how many payments types should be offered in a game? At what point are there too many?

Steve Klebe: It depends on the target audience demographic and geographic, but I would say for the game that is primarily targeted at 18-35 year olds and the primary market is North America, then 3-5 as a general rule. Of course, Visa, MasterCard, Discover, American Express count as 1 of those. So, in addition, one e-wallet, one mobile payment provider and a pre-paid card. These will satisfy 98+%. Is the potential confusion and operational insanity worth adding a dozen more for another 2%? Not if you ask the COO/CFO who has to reconcile them and manage customer service.

Max Anhoury: What are some of the common mistakes that you’ve seen made in regards to payment offerings in gaming environments?

Steve Klebe: There are many. First and foremost, gaming companies are signing up for payment services where they may not understand, that if they ever need or want to leave that provider, the valuable customer information that was handled by the provider, may not be returned to them. There is also an issue of waiting to think through their monetization needs until very late in the deployment cycle, then hoping they can just bolt it on and it will work.

Max Anhoury: Thanks Steve, for your insight and for the hard work that you put into the LOGIN Conference every year as a board member. It’s a strong show and we look forward to sponsoring again next year.

To learn more about Steve’s advice on payment-related issues, visit his personal blog Payment Talk and the Vindicia blog.

This entry was posted on Friday, May 28th, 2010 at 8:06 am and is filed under Online Gaming. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.