Google has launched its cloud gaming platform, a service called Stadia, with the introduction coming as payments is commanding a bigger role in online and mobile games.
Boasting that “the future of gaming is not a box,” Google said players using the Stadia cloud-based streaming service can “play across multiple devices, including laptops, desktops and select phones and tablets.” That negates the need to have specific and often pricey gaming hardware — players need only to access games via the Google Chrome browser or YouTube. Stadia users can also watch a clip of a game and then start playing from that point.
“Google is leveraging YouTube to lean heavily on the popularity of gaming clips and creators who regularly stream games to millions of people on services like Twitch,” one report said. “These communities and games like Fortnite have turned into virtual places where kids hang out to chat, play, and watch streamers. It’s a big business, too. Fortnite made around $2.4 billion alone last year.”
Online games and eSports are becoming an important segment for payment providers: At last count, gaming accounted for more than $12 billion of PayPal’s total payment volume worldwide, for example. That figure marks an increase of more than 23 percent year over year in 2017, PayPal reported in a blog post.
And according to one survey, in-game spending is higher among older gamers in the U.S. players, with those aged 35 and over shelling out $50 on average, compared to $40 for those aged 18 to 34. But younger gamers tend to spend more money on full game downloads: $63 compared to $48 for gamers 35 years and older.
Overall, according to the Global Games Market Report from Newzoo, “2.3 billion gamers across the globe [spent] $137.9 billion on games in 2018,” a growth in spending of some 13 percent compared to 2017. “Digital game revenues will take 91 percent of the global market with $125.3 billion.”
That report also found that mobile gaming stands as the largest gaming segment, with revenue from that channel reaching an estimated $70.3 billion in 2018, up nearly 26 percent year over year. Smartphones will account for 80 percent of this, or $56.4 billion, with the remaining 20 percent coming from tablets, the report said. “Console gaming is the second-largest segment generating $34.6 billion in 2018, while PC games will bring in $32.9 billion.”
That doesn’t mean payments faces no challenges when it comes to the further growth of gaming.
Another recent analysis of the gaming industry and payments found that “Unlike in many other sectors where mobile apps and payments work seamlessly, such as on Uber, Tinder and Airbnb, mobile payment processing on gaming sites is generally not such as great [an] experience. Conventional payment processing methods involving redirects to payment pages and multiple fields to fill, are far from seamless and for the mobile gamer present [a] specific challenge.”
A payment experience filled with friction, that report noted, is likely to have the same impact in gaming as in other areas — customers will jump ship. That said, according to the report, gaming operators are getting better at offering more payment options, including methods popular among specific local markets, mirroring the trend in the larger world of digital commerce.
As well, the report noted, “We’re seeing payment service providers adopt a more proactive approach to maximize transaction rates for gaming operators [such as] … Helping them understand decline codes and why transactions fail, and providing them with alternatives that are better for everyone — operator and customer.”
Google is not the only large global tech firm that wants to do more with games and capture more of that market. As PYMNTS covered, Apple could be starting a subscription service for gaming. The service would operate like a streaming service, where users pay a fee to get access to many different titles. Apple began discussions with game developers in the latter half of 2018, according to the people familiar with the plans, who all declined to be identified.
The new Google gaming entry, along with possible moves by Apple and others, promises to not only bring changes to online and mobile games, but to the payments that power them.