[2011] monetizing emerging games markets

Monetizing Emerging Games’ MarketsBenoit Schotte-Daudin, GlobalCollectPeter Warman, Newzoo August 2011

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GlobalCollect is the world’s premier Payment Service Provider of local

e-payment solutions for the online Video Gaming industry. While most

providers limit their services to a technical link with payment acquirers,

GlobalCollect is a full service partner providing you with online game

monetization market metrics and best practices based on years

of experience with international online gaming leaders. Through a

single-interface platform, we offer access to an unrivalled portfolio of

online payment methods in almost 200 countries and 170 currencies,

including all major credit and debit cards, e-wallets, direct debits,

real-time banking, prepaid, cash at outlets, and bank transfers.

Newzoo is an international market research firm focused completely

on the games industry. Newzoo aims to provide the best independent

consumer market data across all game platforms and business models.

Newzoo also operates the global B2B portal Gamesindustry.com and

publishes the bi-annual Games Industry Black Book.

www.newzoo.com.

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1 Game platform popularity 4 1.1 Emerging versus Western markets 4

2 Who plays and who pays 6 2.1 Spending on social and MMO games 6 2.2 Demographics 7 2.3 Emerging markets 8

3 Business models 10 3.1 Virtual item sales versus subscriptions 10

4 Payment preferences 12 4.1 Country ranking 12 4.2 Payment methods 13 4.3 Processing payments 14 4.4 Transaction value 15

Table of Contents

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Emerging versus Western markets

In emerging markets like Brazil and Russia Internet penetration and use is relatively low,

but growing at an enormous pace. Of the active internet population - 46 million in Brazil

as well as Russia - at least 75% plays games. The uptake of online and mobile gaming

has pushed the number of players and “payers” to a level comparable to major

European markets. The number of people actively playing games ranges from 16 million

in Mexico to 35 million in Brazil to 38 million in Russia. Equivalent to Western countries, on

average 50% of these consumers actually spend money on games.

1 Game platform popularity

26M

Casualwebsites

Socialnetworks

Mobiledevices

MMOgames

The average Brazilian gamer plays on 4.6 of the game genres/platforms above

Number of gamers per “platform” in BrazilActive internet population 10-65: 46 million | Gamers: 35 million | Spenders: 17 million

Consolegames

PC/Macboxed

PC/Macdownload

24M 24M 24M19M 21M 23M

11M

Casualwebsites

Socialnetworks

Mobiledevices

MMOgames

The average Mexican gamer plays on 4.8 of the game genres/platforms above

Number of gamers per “platform” in MexicoActive internet population 10-65: 22 million | Gamers: 16 million | Spenders: 9 million

Consolegames

PC/Macboxed

PC/Macdownload

12M 12M9M

12M 10M 11M

5

The average game genre/platform is more or less the same for Western and Emerging

markets. Mexico is leading with 4.8 game genres/platforms played per gamer. Followed

by Russia with 4.7, Brazil with 4.6, and Spain with 4.2. Overall the graphs show that

Mobile is a popular platform across different countries - in most countries it is among the

top three in terms of number of gamers per platform. This definitely contributes to the

average game genre/platform played per person, as players play more games on the

move these days.

1 Game platform popularity

29M

Casualwebsites

Socialnetworks

Mobiledevices

MMOgames

The average Russian gamer plays on 4.7 of the game genres/platforms above

Number of gamers per “platform” in RussiaActive internet population 10-65: 46 million | Gamers: 38 million | Spenders: 20 million

Consolegames

PC/Macboxed

PC/Macdownload

28M 29M26M

14M

25M 25M

8.6M

Casualwebsites

Socialnetworks

Mobiledevices

MMOgames

The average Spanish gamer plays on 4.2 of the game genres/platforms above

Number of gamers per “platform” in SpainActive internet population 10-65: 24 million | Gamers: 15 million | Spenders: 6 million

Consolegames

PC/Macboxed

PC/Macdownload

8.9M 10.2M6.0M

12.2M9.3M 8.1M

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Spending on social and MMO gamesWhen looking at the payers vs. players ratio for MMO games, it becomes clear that

the US not only has the highest number of MMO payers but also by far the highest

percentage of MMO payers compared to Spain and emerging markets. 43% of

all MMO players in the US pay for MMO games. In emerging markets, the average

percentage of MMO payers is about 35% of all MMO players. Zooming in on social

game payers vs. players ratios, it can be said that the percentage of payers amongst

social players is on average (almost) equal when comparing the US with emerging

markets. Social payer’s percentages vary between 25 and 27% in these countries. With

only 16% of social players actually paying for social games in Spain, it becomes clear

that Spanish social gamers are not keen on paying for it. However, when looking at the

actual social payers, Spaniards are in fact spending the most on average per month on

social games (€7,62 per month).

2 Who plays and who pays?

Paying Social gamers in absolute numbers and ratio

25%

16%

27% 27% 26%

in US, ES, RU, BR, MX

Payers (absolute)

19.0M 1.4M 7.2M 6.4M 3.2M

19 million Social gamers in the US spend an average of 8.5 USD per month.

Paying MMO game players in absolute numbers and ratio


43%

31%

37% 34% 35%

Payers(absolute)

22.3M 1.9M 9.2M 8.1M 3.4M

31% of MMO gamers in Spain make an average purchaseof 5.90 Euro per month

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DemographicsThere are significant differences between these countries when looking at the

percentage/ number of MMO and social gamers as well as the payers vs. players

ratio across platforms. However, looking at the graph with the age make-up of social

and MMO gamers, it can be concluded that the US and emerging markets are not

so different for social and MMO players and payers. Social players are most often

between 10 - 35 years old: 74% in the US and 82% in Brazil.

2 Who plays and who pays?

Demographic profile of payers vs players for social gaming - US Social Players: 76M – Social Payers: 19M

23% of the social payers is 26 to 30 years old, which equals 4.4M social payers

16% of the social players is 10 to 15 years old, which equals 12.0M social players

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Emerging marketsFor Emerging and Western markets alike, the largest group of paying players can

be found in the age range between 20 and 35. In Brazil for instance, 32% of social

gamers are between 26 - 35 years of age, representing 42% of paying social gamers.

To underline the similarity in age make-up between social payers in the US and Brazil: in

both countries, 23% of all social payers are between 26 - 30 years old. For MMO players

and payers the same kind of trend can be identified.

Demographic profile of payers vs players for social gaming - BR Social Players: 24M – Social Payers: 6M

23% of the social payers is 26 to 30 years old, which equals 1.5M social payers

16% of the social players is 10 to 15 years old, which equals 3.8M social players

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18

20

23

17

19

15

9

7

5

7

3 3 3 3

2 Who plays and who pays? (continues)

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Demographic profile of payers vs players for MMO gaming - US MMO Players: 52M – MMO Payers: 22M

21% of the MMO payers is 26 to 30 years old, which equals 4.7M MMO payers

17% of the MMO players is 10 to 15 years old, which equals 9.1M MMO players

10

17

16 17

21

18

21

18

16

14

7 8

65

1 12 2

Demographic profile of payers vs players for MMO gaming - RU MMO Players: 26M – MMO Payers: 9M

17% of the MMO payers is 26 to 30 years old, which equals 1.6M MMO payers

18% of the MMO players is 10 to 15 years old, which equals 4.7M MMO players

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13

16

17 17 17

15

13

11

9

7

8

6

2 3

6 6

2 Who plays and who pays? (continues)

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Virtual item sales versus subscriptionsOnly in Spain, subscription based payments are used more often than buying virtual

items within social games. The difference between paying via subscription or virtual

item is more significant when looking at Russia, Brazil, and Mexico. For MMOs this is

different, where subscriptions are in higher demand than virtual items for the US and

Spain. For emerging markets, the difference between the two payment methods is less

for MMO games than for Social games. These numbers do not indicate the amount

of money spent but the absolute number of paying gamers via subscriptions or virtual

items.

3 Business models

Popularity of virtual items within social gaming

Popularity(absolute)

70% of Russian paying social gamers spend money on virtual items.

17.2M 1.2M 5.0M 5.3M 2.7M

90% 88% 85%83%

70%

for US, ES, RU, BR, MX


89% of Spanish paying social gamers spend money on subscriptions.

15.9M 1.3M 3.7M 4.4M 2.1M

84% 89%

67%68%

52%

Popularity of subscriptions within social gamingfor US, ES, RU, BR, MX

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3 Business models


91% of Mexican paying MMO gamers spend money on virtual items.

18.5M 1.5M 7.0M 7.1M 3.1M

83%

79%

91%88%

76%

Popularity of virtual items within MMO gamingfor US, ES, RU, BR, MX


59% of Russian paying MMO gamers spend money on subscriptions.

20.3M 1.6M 5.4M 6.6M 2.5M

91% 85%

74%81%

59%

Popularity of subscription within MMO gamingfor US, ES, RU, BR, MX

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Country rankingEmerging markets like Brazil and Russia were already in the top ranks of GlobalCollect’s

online video gaming merchants in 2010 and have risen a little bit over the past

12 months. Their potential was seized by early movers and is now being aggressively

tapped by all major players. To be successful in Brazil, Spain, and Mexico, online

publishers need to monetize via “low-commitment” models (traditional F2P and social

gaming), enabling local players to spend what they can when they can. Russia shows

a different profile because of its strong hardcore player base which is more prone to

targeted purchases of high-value productions (AAA MMORPG’s and downloads).

Country ranking per monetization model (# of payments) (source GlobalCollect online gaming payment processing data, 2010)

Overall AAA Downloads F2P virtual F2P premium Social

rank MMORPG currency subscription gaming

(subscriptions)

1 1 1 1 1 1

5 25 15 9 5 2

9 6 9 26 54 86

13 9 12 8 15 17

25 43 33 39 11 11

4 Payment preferences

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Payment methodsWhen asked how social and MMO players pay for their games, it becomes clear that

credit cards are the number one payment method in the US and Brazil. As much as 42%

of the Brazilian MMO payers state that credit cards are one of their preferred payment

method. Overall, credit cards and online payment services are the most popular

payment methods amongst social and MMO followed by text messaging. Whereas

credit cards perform best in the US and Brazil, online payment methods are more

popular in Russia, Mexico, and Spain.

4 Payment preferences

Ranking

No. 1 Credit Card (39%)

Text messaging service (24%)


Credit Card (40%)

Online payment service (29%)

No. 2 Online payment service (29%)




Credit Card (29%)

No. 3 Text messaging service (13%)

Credit Card (20%)

Credit Card (21%)

Online bank account (19%)


Top three payment methods and their popularity (in %) for social gaming Amongst paying social gamers, Respondents could tick max. 3.


Payers (absolute) 19.0M 1.4M 7.2M 6.4M 3.2M

Ranking

No. 1 Credit Card (34 %)



Credit Card (42%)


No. 2 Online payment service (23%)

Credit Card (22%)



Credit Card (23%)

No. 3 Online bank account (21%)


Credit Card (22%)

Online bank account (15%)


Top three payment methods and their popularity (in %) for MMO gaming Amongst paying social gamers, Respondents could tick max. 3.


Payers (absolute) 22.3M 1.4M 9.2M 8.1M 3.4M

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Processing paymentsEven if cards are dominating most markets, each country shows quite specific local

payment preferences. Brazilian players have less access to credit cards and PayPal

than American ones. Consequently, they rely on cash-based payments like Boleto (21%

local market share overall; up to 40% market share for fully localized online gaming

merchants). Russia is all about local eWallets (WebMoney and Yandex are leading and

leaving little room for PayPal) and terminal payments like Qiwi. If Mexico is under the

influence of its heavy-weight eCommerce neighbor, local prepaid scheme Todito offers

an attractive proposition. Premium SMS (available soon at GlobalCollect) also presents

a compelling offer for players in emerging countries, while prepaid card issuers invest

heavily in these markets and start getting good traction.

100%

80%

60%

40%

20%

0%

89%

■ Credit Card ■ eWallet ■ Cash ■ Direct Debit ■ Prepaid

11%

79%

21%

53%

47%

80%

7%3%

10%

75%

25%

Payment methods per country (source GlobalCollect online gaming payment processing data, 2010)

4 Payment preferences (continues)

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Transaction valueIt should come as no surprise that players from emerging countries have a lower

purchasing power which is reflected in their average spent per purchase (25% less than

American players on average). That explains why F2P and social gaming monetization

models have enjoyed great success in these emerging markets. This structural

characteristic also forces publishers of AAA products to be more creative when trying

to enter these territories and gain local market share. Localized offers are usually set at

a lower price point for both game clients and services - sometimes with Western pricing

strategies sustained via multiple monthly installments (such as 1/6 of the price per month

over six months).

$20.00

$18.00

$16.00

$14.00

$12.00

$10.00

$8.00

$6.00

$4.00

$2.00

$0.00

$18.97

$14.71 $14.61$13.64

Average transaction value per country (source GlobalCollect online gaming payment processing data, 2010)

4 Payment preferences (continues)

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www.globalcollect.com

GlobalCollect Video Gaming Team:

Benoit Schotte-Daudin

Global Market Leader, Online Video Gaming

[email protected]

Mobile: +1 (415) 987 6937

Bob Voermans

Sr. Business Development Manager - EMEA

[email protected]

Mobile: +31 (0)6 5060 2050

Stuart Mann

Business Development Manager - EMEA

[email protected]

Mobile: +31 (0)6 1353 9982

Andrew Monroe

Account Manager – EMEA

[email protected]

Mobile: +31 (0)6 3016 3437

Jay-o Hyon

Business Development Manager - Asia Pacific

[email protected]

Mobile: +(65) 9852 3245

Matías Fainbrum

Business Development Manager - Latin America

[email protected]

Mobile: +54 (9)11 4083 3730

GlobalCollect PresentsLinkedIn Groups for Gaming Industry To engage with merchants and other stakeholders

in the gaming vertical, GlobalCollect has launched a couple of LinkedIn groups.

Enabler for this bring added value to discussions by sharing knowledge and expertise.

Case in point, as the exclusive commissioner of a survey performed by Newzoo, an

industry leader in market research on gaming, GlobalCollect facilitates the collection

of data not yet available to the games industry in emerging markets such as US, Brazil,

Mexico, Russia, Spain, China, and Korea. Content published will focus on a different

topic each month: three interesting facts per region plus vision and data. Exclusive

content - so hear it here first: http://www.globalcollect.com/LinkedIn-Gaming-Groups

[2011] monetizing emerging games markets

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