The connected nation that brought us “Squid Game” is a video gamer’s paradise, showing other nations and companies how to regulate and monetize gaming for high scores in commerce.
With its overall video gaming sector worth an estimated $15 billion and mobile gaming at $7 billion and growing, regulation and innovation are joining forces to make South Korea a game-friendly nation that wants to level the field between Big Tech, gamers and game makers.
Speaking with PYMNTS’ Karen Webster, Worldline Global Head of Gaming and Media and Digital Commerce Andrew Monroe pointed to the 2021 legislation known as the Telecommunications Business Act, which stopped Apple and Google from forcing game firms to use Big Tech billing and payments systems, opening up new possibilities. The act took effect on March 15, 2022.
Monroe said, “If you look at the way in which they’ve grown their technical economy, their digital economy, they’ve adopted regulation that has been easy for the incumbents, the domestic merchants, but it’s also made it friendly for cross-border commerce.”
He added, “Now we see similar legislation proposed in the U.S., in the U.K., in Europe, but South Korea was the first one to take that step. For those of us that may be unfamiliar with that legislation, it’s looking at mobile payments. That $7 billion figure, almost all of that right now is going through the app stores themselves.”
That makes the app stores into arbiters and accountants of revenues, due to video game makers and fees that go to app stores.
“This legislation came in and said that it’s unfair to the consumers because the app stores themselves, according to the South Korean government, shouldn’t have the right to dictate what payment methods are used by those consumers,” he said.
See also: South Korea Is an eCommerce Eden for Those Fluent in Local Payments
Letting game companies, merchants and digital goods and services providers decide on payment methods and systems is where this legislative trend is heading globally now.
Monroe told Webster, “What it means potentially is that video game merchants would be able to either offer a payment page within the mobile game that they could then offer their own payment options, the ones that they think speak best to their consumer and their business model for their game. Or they could even embed the payments into the actual game so there’s no redirect, it could be a true in-game payment experience.”
Playing the Payments Game
The power of maintaining that in-game magic while enabling in-app purchases is the budding monetization model that makes the gaming world mimic the real world, in terms of the digital goods and experiences available to buy and how they’re paid for.
It opens the door to new possibilities and untapped potential, especially when South Korean gamers are in the middle of the action and want to buy an avatar with a local payment method.
He said, “If I’m playing a game, I’m much more focused and I’m much more intimately involved in that game than I am if I’m browsing for a good or service that I want to buy online. The last thing that any game company wants to do is to break that focus and take that person out of the game. You definitely don’t want them to physically have to get up out of their chair and go get a wallet or something like that to enter in a payment method.”
That’s where embedded payments and seamless in-game purchases preserve the experience, monetizing the moment without breaking the spell of that gaming world.
Monroe told Webster, “The gaming companies that are really going to succeed are the ones that truly embed the payment into the gaming environment to make it as much a part of the game as the game itself. Worldline has these technologies right now to embed payments into a mobile-based game so you’re not redirecting them to a different webpage.”
He added that by keeping users engaged and loyal with a constant stream of new content, the average revenue per user “is going to skyrocket if you can keep them engaged and create as little friction as you can to give them what they’re looking for.”
Monetization and the Metaverse
Freed from using proprietary app store payment systems, gaming platforms must choose the right model to match their user profile, extracting maximum value from game time.
With local merchants providing access to local cards, monetization decisions revolve around questions like, “‘Are you a subscription-based merchant? Do you need to offer recurring payment methods? What is your average transaction value? Are you monetizing via microtransactions?’ If it’s a microtransaction model, you don’t want to offer payment methods with high fixed fees because that eats into your overall margin,” Monroe said.
That’s all a foretaste of the strategies that will come to bear on gaming and payments in the metaverse, which, for all the excitement it generates, is still in the future. It doesn’t help answer pressing questions of the now, like figuring out how to best enable in-game payments.
Read more: European Payments Services Company Worldline Launches Virtual Showroom in Metaverse
Noting the amount of experimentation now with digital currencies and ways to pay in-game, Monroe said, “I don’t really know if there’s a best practice per se. I think a lot of it depends on the goods and services that are being purchased. A lot of it, too, is just do some A/B testing and figuring out what results in the highest consumer satisfaction and doesn’t eat into the company’s bottom line. That’s the one I believe companies should continue to run with.”
He added that those who crack the code on seamlessness will win.
“The ones that still can’t figure out that true frictionless embedding of those transactions are going to have a hard time,” he said. “A lot of it too has to do with payment method choice, because some payment methods cannot be tokenized or cannot be used in a recurring fashion.”
Whether these experiences happen in Roblox today or in the metaverse tomorrow, “The core foundation of that is the understanding of the consumers that are going to be using it, and what technology they’re going to be using within that virtual world. Then, what are your options to engage and monetize their activity within that virtual world?”
As all of this is going on, security remains a key consideration. Given the sensitivity to friction and distraction among gamers, he added, “You don’t want the people trying to generate revenue being blocked by those who are trying to protect it and vice versa.
“It’s all about continuous improvement and the ability to, in an agile manner, make change decisions or kind of pivot or change small things without interrupting the game itself.”
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