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August 3, 2023

The Dynamic State of Video Games.

“Games are big business” is no longer news. Once a niche hobby for kids and teens, gaming has gone mainstream in a big way. And of course, alongside that push to the cultural forefront comes a massive consumer draw – and subsequent industry revenue. So immense is the market for gaming that revenue opportunities extend far beyond the electronics and intellectual property of the games themselves. Here’s a snapshot of the industry today and what merchants should know about gamers and the payment solutions that match their style of play.

Bigger than Hollywood

Games have gone mainstream in a big way. You don’t have to look far to find recent examples, such as the first season of the game-based television series The Last of Us, which became a critical hit on its way to attracting 8.2 million viewers for the series finale.[1] Or the long-awaited Super Mario Brothers movie, which grossed $1.3 billion this spring, setting box office records while becoming the second-biggest animated film in history.[2] Gaming was already a force leading up to the pandemic in 2020, at which point the industry’s revenue rose 20%, exceeding the movie and sports industries combined as consumers gravitated towards interactive entertainment while stuck inside.[3]

Gaming’s crossover to big and small screens is far from news within the entertainment industry, but many are unaware of the staggering scope of the numbers. The value of the gaming industry in the U.S. market is estimated at nearly $65.5 billion for 2021.[4] Globally, revenue was $159.3 billion in 2020[5] with a projected value of $384.90 billion in 2023; that number is expected to continue climbing with projections exceeding $500 billion by 2027.[6]

From Tokens to Touchscreen

Part of the reason for those big numbers is the increasingly widespread accessibility and variety of options available. The dynamic nature of modern gaming is evident in the customer journey alone. In the industry’s fledgling days, gamers either slid coins into arcade machines or purchased individual cartridges or discs that were compatible with their home console(s) of choice. There were a few add-ons, like controllers, joysticks or early haptic equipment, but transactions were linear, physical and relatively infrequent.

Flashing forward to today, the gaming ecosystem has matched pace with our connected world. Some console gamers purchase monthly subscriptions to play with others online; others buy cosmetics and skins (essentially costumes) to give their digital characters their own personality and unique flair. Some games offer in-game purchases that give players advantages or allow them to bypass difficult spots, and many offer downloadable content for sale in the hours, months or even years after the initial release, with said content ranging from additional characters or outfits to playable experiences so rich they could be considered entirely new games.

All this to say, the current gaming models often encourage or even require a level of digital connectedness that would be astounding to those who remember stretching behind the TV stand to fiddle with coax cables. Today, mobile gamers can play a round or two on their phone during their lunch break, while getting their oil change, or any other spare moment they have. Some games run 24/7, descendants of the late-90s Tamagotchi craze, with players checking in periodically for updates, upgrades and new developments. Augmented reality games like 2016 phenomenon Pokémon Go even encourage gaming while exploring the neighborhood or traveling globally. Meanwhile, home consoles, PCs and virtual reality headsets continue to push the boundaries of graphics, depth of story and interconnectedness in the gaming sphere.

In short, gamers represent a broad range of demographics today, and they are routinely connected to always-on or always-available action. Which means dedicated and casual gamers alike may have a variety of transactional needs – often catered towards small, frequent payments. With all those

Leveling Up

A single game can now have its own economy, with downloadable items/elements available for purchase a la carte and/or sold and traded among users at market prices. Games themselves range from major releases that can cost over $100 to apps available for as low as just a dollar or two; many popular games even follow a free-to-play model (making their profit through in-game content and/or advertising).

Given these evolving parameters, gamers looking for the full experience require seamlessness in their transactions. They want uninterrupted online access, they want to buy and play new games on their timeline, and they don’t want in-game purchases to break up the flow. Just like movies and TV, on-demand is now the name of the game.

For cash-preferred gamers, this could mean an account-funding solution that lets them convert cash into a digital account used for online spending. Budget-conscious hobbyists may rely on account funding or the self-use of third-party gift cards branded to their specific game or platform, allowing them to load a set amount and ensure easy access while sticking to a strict spending limit. Overall, self-use gift card shoppers purchase an average of 8.8 cards per quarter, according to our research. However, those who purchase branded (or closed-loop) cards for self-use specifically for gaming reported purchasing an average of 13.1 cards per quarter over the past four quarters.

Gift cards can also help parents, who may want to give their children some freedom within their video games but also aren’t comfortable sending them into an online market with an unlimited budget. They’re also great, of course, as gifts, with cards for consoles or distribution platforms allowing redemption for a broad range of games, content accessories or online subscription services without gift-givers having to worry whether the recipient wants or already owns a particular game or content. Over the last four quarters, gift card shoppers reported purchasing an average of 10.8 branded gaming gift cards for others per quarter.

Conclusion

Gaming has come a long way since its inception in the late 1970s, and it isn’t going anywhere soon. As video games become more mainstream, accepted, connected (Metaverse, anyone?) and dynamic, the in-game economy will continue to adapt to consumers – which means payments and purchase processes will have to keep up. From sure-to-satisfy gift cards and budget-conscious products to seamless cash-in solutions supporting omnichannel connectivity, InComm Payments is staying ahead of the trends and ensuring our partners have the right inventory to succeed in supporting their customers’ latest pixelated adventures.

[1] Campione, K. “‘The Last of Us’ Season 1 Finale Draws 82 Million Views, Another Series High.” Deadline, Deadline Hollywood, LLC., 13 Mar 2013. Available: https://deadline.com/2023/03/the-last-of-us-season-1-finale-ratings-hbo-1235284144/

[2] Rubin, R. “’The Super Mario Bros. Movie’ Hits $1.3 Billion Globally, Surpassing ‘Frozen’ as the Second-Biggest Animated Film of All Time.” Variety, Variety Media, LLC., 4 June 2023. Available: https://variety.com/2023/film/box-office/super-mario-bros-movie-surpasses-frozen-second-biggest-animated-film-1235632448/

[3] Gilbert, B. “Video-game industry revenues grew so much during the pandemic that they reportedly exceeded sports and film combined.” Insider, Insider, Inc., 23 Dec 2020. Available: https://www.businessinsider.com/video-game-industry-revenues-exceed-sports-and-film-combined-idc-2020-12

[4] Clement, J. Video game industry – Statistics and Facts. Statista, Statista, Inc., 15 June 2023. Available: https://www.statista.com/topics/868/video-games/

[5] Gilbert, N. “Number of Gamers Worldwide 2022/2023: Demographics, Statistics, and Predictions.” Newzoo,  FinancesOnline, Accessed 18 May 2023. Available: https://financesonline.com/number-of-gamers-worldwide/#:~:text=Newzoo%20reports%20there%20were%202.69,market%20an%20estimated%20%24189.3%20billion.

[6] Statista Market Insights. “Video Games – Worldwide.”  Statista. Statista, Inc. Accessed 19 May 2023. Available: https://www.statista.com/outlook/dmo/digital-media/video-games/worldwide

Interested in learning more? Check out the key takeaways from our annual gift card study or our 2022 Payments Report – or visit our webpages for more about our financial products and gift card capabilities.

Let’s talk payment solutions. Contact us today!

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