Big Data & Big Money in the Online Gaming Industry

Online gaming is big business. Gartner values the industry at over $90 billion, with more currently being spent on games than movies at the Box Office.

gaming

Apart from eCommerce, few other industries are capable of generating as much data, either. Electronic Arts, with over 275 million active users, creates 50 terabytes of data every day.

Online players leave vast data trails, with every interaction recorded and analysed. Understanding what players want helps games designers increase conversions, upsells and make new games more appealing. After all, users only have so much free time and money. This makes online games a fiercely competitive market.

Online games, which includes apps, and the leading gaming platforms, PlayStation and Xbox, is a $20 billion revenue industry. A parallel sector, one with an equally loyal customer-base, is online gambling, worth over $40 billion. Both are growing, complex and generate huge amounts of revenue and data.

Online Games: No Longer A Gamble

When it comes to creating new games, data is everything. Designing a game, even for small, independent studios, can cost a small fortune. The larger the studio and expected audience, the more they will invest. Nothing about this process is a gamble or taken on a hunch.

From concept to completion, new games are influenced by game-play data from current titles. Gamers expect more than ever before. Graphics need to be movie-style realistic. Levels that are too difficult at the start, or too easy toward the end, can cause players to abandon the game. These expectations, like the games themselves, are constantly evolving and improving.

Within the games the industry has taken a page out of the eCommerce playbook, with the chance for players to buy weapons, tools, supplies and other digital essentials. The resulting data informs designers how to increase conversion rates since in-game purchases dramatically increase the lifetime value of customers and brand loyalty to specific studios and platforms.

Monetising an Audience

Traditionally, games were a single or multi-player experience in the privacy of (predominantly) teenagers and young adults’ bedrooms. That was before social media.

Games now have to be social, as developers have found this increases revenue, time players spend in the game and virality. Microsoft’s Xbox Live is a games platform with a social layer built in, allowing players to interact with people playing the same game all over the world. Other games, such as the once popular, Angry Birds, require a highly social ‘sticky’ element, encouraging users to share with friends, resulting in higher downloads and in-game purchases.

The data trail makes monetising an audience significantly easier.

Within games where players are seeking information, weapons or supplies, there is the ability to place a premium on certain digital items: depending on the audience and how the game is designed. Zynga games, such as FarmVille, played through apps and social networks, are more heavily monetised, with the social-centric nature of the game designed to encourage users to spend more to beat their friends.

Monetisation within multi-player interactive games works in much the same way, encouraging players to spend more to gain the competitive advantage.

An unexpected consequence is the thriving sale of digital goods on eCommerce platforms such as eBay. During the peak of its popularity, Western gamers were paying people in China to up-level them on FarmVille and other social games, whilst at work or sleeping.

These are the unexpected consequences games producers hope for, much in the same way that a movie director dreams of cultivating a loyal fan-base across the world. Every so often, that’s exactly what happens. Except games, unlike movies, have even more customer information than cinemas do. They know what they like on social media, making games companies are more deeply interconnected with the lives of their fans.

With their finger on pulse this explains why Rovio Entertainment, creators of Angry Birds, quickly monetised products for children. Data showed children, as much as adults, were playing Angry Birds, even if it was their parents’ cards being charged when they were eager to progress through the levels. Shortly after, keen to cash in on the popularity, Rovio had cut deals with retailers across multiple platforms and countries, releasing ranges of clothes, hats, lunch boxes, toys, even a TV series and books.

During 2013, when Angry Bird merchandise was at its most popular, these products accounted for around half of Rovio’s $216 million revenue.

Monetisation: Keeping Games Secure

Digital games represent a complex payments ecosystem, similar to online gambling.

Often payments are processed through a third-party, such as Facebook, Microsoft or Apple. As such, a high level of encryption and security is expected.

For games producers, this means providing customers with seamless and secure payments processing, regardless of the platform and device they are using.

Depending where customers are located, also means ensuring you comply with legislation on tax, cross-border trade and the sale of digital goods. Working with a payments company with experience in these matters will save you a lot of trouble later on. When processing payments from games players, here are a few things you need to remember:

  • Players need seamless and secure payments, with high levels of encryption;
  • Adhering to relevant laws and tax guidelines will save you a lot of trouble, especially if a game archives global popularity quickly;
  • Smooth social and multi-platform integration is essential, keeping friction to a minimum, especially when games are played across devices.