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[2012] Key facts and insights on Cross-Screen Monetization of Games in Europe and the US 2012
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[2012] Key facts and insights on Cross-Screen Monetization of Games in Europe and the US 2012


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  • 1. Key facts and insights onCross-Screen Monetization of Gamesin Europe and the USFeaturing market overview of growth markets Poland and TurkeyNathan Salisbury, Global Market Director Gaming - GlobalCollectPeter Warman, CEO - Newzoo August 2012 Powered by
  • 2. GlobalCollect is the world’s premier Payment Service Provider of cardprocessing and local e-payment solutions for the online Video Gamingindustry. While most providers limit their services to a technical link withpayment acquirers, GlobalCollect is a full service partner providingyou with advanced back office services as well as online gamemonetization market metrics, best practices and benchmarks based onyears of experience with international online gaming leaders. Througha single-interface platform we offer access to an unrivalled portfolio ofonline 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.GlobalCollect is PSD licensed and is certified as Level 1 PCI Compliant.Newzoo is an international market research company focused purelyon the games industry. Newzoo provides the best independentconsumer market data across all game platforms and business models.Newzoo also operates the global B2B portal andpublishes the bi-annual Games Industry Black Book. Our combination ofactivities gives us a deep understanding of the global games industryand ensures we are always ahead of traditional market researchcompanies. Newzoo’s clients include GREE, Kabam, Blizzard, PopCap,EA, Gamehouse, Microsoft, SpilGames, GlobalCollect and Wizards ofthe Coast. 2
  • 3. WELCOMEThis report, brought to you by GlobalCollect and Newzoo, reflects onour latest take on the main trends, cross screen monetization andkey facts of the international games market. In addition to our coreWestern countries and the US we have included two EmergingMarkets, Poland and Turkey.Exclusive data from the International Gamers Research by Newzooand GlobalCollect’s transaction data are bundled to share a uniqueinsight into the rapidly evolving games industry and cross-screengaming opportunities. Find out more about cross-screen gaming,number of players, payers and paymentization on the next pages. 3
  • 4. TABLE OF CONTENTS Global overview 2012 5 1.1 STATE OF THE MARKET 5 1.2 CROSS-SCREEN MONETIZATION 7 1.3 money follows time 8 Who plays what? 9 2.1 MMO GAMERS & cross-platform 9 2.2 CASUAL / SOCIAL GAMERS & cross-platform 11 2.3 PC GAMERS & cross-platform 13 payment optimization 14 3.1 towards paymentization 14 3.2 mobile link 15 Insights on the Emerging Markets 16 4.1 OVERVIEW TURKISH GAME MARKET 16 4.2 OVERVIEW POLISH GAME MARKET 17 FREE WEBINAR 18 gaming payments intelligence 19  Copyright ©2012 Newzoo/GlobalCollect 4
  • 5. Global overview 2012State of The MarketWhen we take a close look at the state of the gaming market, we can see it is stillexpanding, in terms of spending, number of players and time spent on gaming.In Western countries spending on games has returned to growth following a downfalldirectly related to the drastic decline in new new boxed sales since 2010. The datashows that the growth for digitally downloaded games, add-on DLC (downloadablecontent), MMO and mobile gaming has pushed the overall spending on games backup.The fact that the number of gamers and time spent has leaped significantly year-onyear promises a healthy growth in spending for the years to come. Emerging Marketsdrive the current global growth, fueled by the continued expansion of internet penetration and buying power in combination with the uptake of Free-to-Play games catering to any budget. The online connectivity and successful monetization of the Free-to-Play games has led to a change of view. Games are now increasingly being seen as services that are continuously being improved and extended. The Free-to-Play business model dominates all screens, except for the ‘TV’ or ‘Entertainment’ screen, but change is on its way, although not as drastic as traditional publishers think. An impressive 80%-90% of the money spent on mobile games is payed in-game. (doubled incomparison to last year). This example shows how a platform, without a ‘paid boxed’model as heritage, can shift towards a Free-to-Play model when the decision is left tothe consumer.Tablets and smartphones are having an enormous impact on the worldwide gamingspace. Not only as game destination with their own monetization potential, but also asscreen extension or to complete the game experience on other screens. Publishersand developers with popular game IP (PC and console) are now faced with a difficultchoice to either extend the existing game experience on all available screens or, offera standalone version based on the IP for mobile, TV and tablet screens.Already 40% of the mobile revenues are generated by games that could beconsidered ‘mid-core’, combining a more immersive gaming experience with a typicalcasual gameplay. The fast-paced technical evolution of tablets performance willdefinitely accelerate this development. 5
  • 6. Global overview 2012 As a result of the vast changes in the global games industry that occurred the lastyears we have seen big losses e.g. ‘TakeTwo’, ‘Nintendo’ and ‘Gamestop’ as well ashuge gains for e.g.’RiotGames, ‘Mojang/MineCraft’ and ‘’ interms of revenue and profit. Online and mobile gaming have rapidly become verycompetitive. The amount of new high quality games is much higher than the healthydouble-digit growth of consumer spending, putting pressure on game revenues.Asia’s total games market continues to grow at an enormous pace. Asian companiesincreasingly seek expansion ‘overseas’ and use their cash to set up offices in theWest or acquire companies that will give them the ability to deliver game experiencestailored especially for Western gamers.Western companies are aggressively targeting Emerging Markets to realize their growthambitions/potential. This has become a strict necessity for any games company, asgrowth in the West is limited and the competition is fierce. In addition to the usualsuspects such as Brazil, Russia and Poland, the focus is clearly shifting towards Turkeyand the Middle East-region.In the graph below, the result of the uptake of Free-to-Play and mobile gamingis demonstrated: a higher share and absolute number of paying gamers, but alower average in spending. The overall result in Western markets is a modest rise intotal consumer spending on games. The outlook is positive as average spending isexpected to rise, especially amongst the many ‘first-time spenders’. Share of total number of players and payers 2011 vs 2012 The Impact of Free-to-Play, Social and Mobile Gaming on Spending Behaviour 64% 66% 64% 55% 52% 51% 48% 44% 45% 44% 44% 39% 63.2 m 86.0 m 16.1 m 21.5 m 24.0 m 24.5 m 10.4 m 12.9 m 3.1 m 3.5 m 1.8 m 2.1 m $21.2 £14.7 €15.1 €20.2 €13.5 €15.5 -6% -6% -18% -21% -21% -26% Share of Payers in 2011 Share of Payers in 2012 Monthly Spent vs 2011 6
  • 7. Cross Screen MonetizationAll types of games are moving towards the cloud and/or browser, relying on in-gamessales for revenues, and are increasingly accessible via multiple screens. Current marketsegmentation is based on definitions and terms that are subject to continuous change,which creates an increasing overlap between the traditional market segments.When it comes to reporting on the past or on a small part of the games business, thesegmentation can still work, but it is not enough to keep track of the bigger picture.This is why taking a screen segmentation approach is complementary to the platformapproach and can give additional insight.Newzoo’s Screen Segmentation Model distinguishes four types of screens: theComputer, Entertainment, Personal and Floating screen. According to this new model,each of these four screen types plays a different role, yet all are firmly present in theconsumer’s life and are therefore continuously used.For example, 31% of Americans now have their TV connected to the web. As appsenter the TV space, the interactive use of this screen will continue to grow, justifying the term Entertainment Screen”. Already 22% of American and 21% of European d gamers uses all four screens l or d k l w lou or to play games. This share a C w Re he net rises to 31% when zooming T ial c So in on the 84 million paying gamers in the US. Europe shows slightly lower shares: 21% of gamers and 27% of paying gamers, still a significant number of consumers. The PC screen attracts the highest share of gamers, 91%, and money spent, 51%. The difference between theshare of gamers and the share of money is the highest with the Personal screen: 59%versus 8%, pointing to growth. This data also indicates that the TV/Entertainment screenhas a big opportunity for growth, but only when the business model catches up with theother screens and the available game genres become more balanced. 7
  • 8. Global Overview 2012 money follows timeResearch on key Western territories indicates that the time spent on games is growingand spending is relatively stable. In the US we see an increase of 1% in spending for2012 in relation to 26% more time spent playing games. Fueled by the uptake of mobileand social gaming, total time spent on games is up impressively which ensures ahealthy outlook when it comes to revenue growth. With relatively flat Western markets,entering Emerging markets, boasting double-digit growth in time as well as moneyspent, has become a necessity for any international game company. 8
  • 9. Who plays what? mmo gamers & cross-platform behaviour The percentage of MMO gamers that actually pay to play MMO games is roughly similar in the US (46%), Western Europe (48%) and Turkey (49%). Only in Poland the percentage is lower (39%). Overall, these are very healthy payer-player ratios, indicating that people are willing to pay. In 2011 an average of three Emerging Markets (Brazil, Mexico and Russia), showed similar results: 46% are paying gamers. Compared to 2011, the payer to player ratio in the US is somewhat lower in 2012, most likely as a result of the growing uptake of the F2P model. Analysis of MMO gamers shows that they play F2P MMOs, P2P MMOs or both. The results show the strength of the F2P model, with over 90% of all MMO gamers playing F2P. In 2011 this percentage was 81% (US) and 85% (Europe), illustrating the continued growth in the uptake of the F2P model. The share of P2P players amongst all MMO gamers ranges between 27% and 31%. Typical for an Emerging Market, Poland has a relatively low share of P2P players with 16%. Surprisingly, Turkey ranges amongst main European countries when it comes to P2P popularity. Payment methods used: Massively Multiplayer Online 5% 4% 6% Credit Card 8% e-Wallet Payment Methods Real-time banking Direct Debit 76% Prepaid 9
  • 10. From a consumers perspective, MMO gamers are very dedicated gamers. This is alsoreflected in their cross-platform or cross-screen game behavior. Illustrated by thegraph below, the majority of paying MMO gamers also spend money on other typesof games. In the US, the overlap is strongest with spending on console games: 81% ofMMO spenders also spend money on console games (18.6 million Americans). Theshare of 65% that also spend money on tablet or smartphone (mobile) is even moreremarkable. EU figures are aggregates of five countries: GER, UK, FR, NL, BE. Players MMO Gamers | 2012 | US Share of paying gamers & Cross-platform spending Payers MMO MMO Players Paying Players PC/Mac Casual & Social Mobile Console 49.7M Download Devices (inc. handheld) 81% 65% 60% 55% 23.03M 46% Spendings on other pays market segments 12.7M 13.9M 14.9M 18.6M Players MMO| EU Share of paying gamers & Cross-platform spending Payers MMO MMO Players Paying Players PC/Mac Casual & Social Mobile Console 35.1M Download Devices (inc. handheld) 75% 63% 63% 47% 17.0M 48% Spendings on other pays market segments 8.0M 10.7M 10.7M 12.8M 10
  • 11. who PLAYS WHAT? Casual / social gamers & cross-platform behaviourThe initial buzz around gaming on social networks has gone, having a direct impacton the share prices of Zynga and Facebook. Online casual game destinations attractan enormous and diverse audience and therefore can play a key role as a marketingchannel for any type of game. The casual game sites have evolved from a purelyadvertisment-driven business to serious consumer monetization destinations, driven bythe uptake of Free-to-Play business models. Social networks connect games and gamers, and are therefore part of almost every games company’s marketing strategy. The total number of social network gamers will continue to grow but the share of paying gamers is in decline as well as the average spending. The situation is different in a number of Emerging Markets, particulary Turkey and Brazil, where the rising internet population use their social networks as their primary access point to the web. Players Casual & Social | EU Share of paying gamers & Cross-platform spending Payers Casual Casual & & Social Social Players Paying 82.1M Players PC/Mac MMO Mobile Console Download Devices (inc. handheld) 67% 57% 51% 39% 20.8M 25% Spendings on other pays market segments 8.2M 10.7M 11.8M 13.9M 11
  • 12. Players Casual & Social | US Share of paying gamers & Cross-platform spending Payers Casual Casual & & Social Social Players Paying 129.8M Players PC/Mac MMO Mobile Console Download Devices (inc. handheld) 67% 61% 47% 47% 29.7M 23% Spendings on other pays market segments 13.9M 13.9M 18.0M 19.9MOnline casual/social and Money distribution and payment methods usedmobile gaming takes 49% Social and Casualof time spent and 27% of Frequencymoney. Free-to-Play business 2% Amountmodels are closing this gap. 4% Credit Card OnlineAlthough the casual market 4% 14% 2% 4%has stabilized, it still is the e-Walletbiggest market in terms of Socialplayer numbers, this is similar and Bank Casualfor the US, UK and Germany. 90% Direct DebitWhen we look at the amount 80%of players that are in fact also Prepaidpayers we see only a smallgroup actually pay for casual& social games: US this 21%,UK 29% and Germany 33%. However when we compare these numbers to the amount ofplayers that pay in the MMO segment we see a completely different picture. In the US 46%of the MMO players, are paying customers, for the UK this is even higher at 52% and with54% Germany is the highest. 12
  • 13. who plays what?PC GAMERS (downloads) & cross-platform behaviourAs games move towards the cloud, game platforms and hardware becomes lessimportant. For that reason we can say that today it is about providing access to gamesthrough one or more screens surrounding a consumer, regardless of the technology.Cloud gaming sounds new but in fact it’s only newin the traditional console and TV gaming space.Cloud gaming has long before been pioneered byPC MMO games that have gradually been movingmore and more power to the cloud. The immersiveMMO experience of triple games are now increasinglybeing brought to consumers via the browser, loweringthe entry barrier. Another example is the new cloud-based gaming services such as Big Fish Unlimited allowing players to participate ingames across tablets, PC’s, TV’s and smart phones.This market consists of very different genres appealing to different target groups. Onthe one hand there are the core PC games priced at $60, while on the other hand $5casual games have flooded the retail market over recent years. Players PC/Mac Download Gamers | EU Share of paying gamers & Cross-platform spending Payers PC/MAC PC/MAC Download Download Players Paying Players Casual & MMO Mobile Console 41.5M Social Devices (inc. handheld) 68% 47% 46% 17.6M 45% 42% Spendings on other pays market segments 8.2M 8.0M 8.3M 12.0M 13
  • 14. payment optimization towards paymentizationIf you consider the wider gaming market revenues generated in the second half of 2011compared to the first half of 2012, F2P monetization model revenues have exceededsubscription payment model revenues for the first time in history. The quickly evolvingonline gaming market demands diverse monetization practices. As this diversityincreases, it is important to separate the broadly used concept of ‘monetization’ fromrevenue generating payment optimization.GlobalCollect has defined the term paymentization as the process of optimizingpayment transaction practices to increase conversion rates and ultimately revenues.These optimization processes are completely separate to business model developmentor game play mechanics, however paymentization should be considered as animportant element in forming a sound monetization strategy.Paymentization practices involve advanced data driven business intelligence andbenchmarking of card processing success rates, global card acquirer optimization,alternative payment method utilization and fraud management. Paymentsdepartments of leading gaming providers have recognized these best practices andrely on GlobalCollect to provide the gaming payments benchmarks to measure theirsuccess against the wider market. Money distribution and payment methods used All platforms* combined Frequency Amount 4% 4% 3% Credit Card 5% 5% 6% e-Wallet 11% 9% All platforms Real-time banking 77% 76% Direct Debit Prepaid * Casual, Download, F2P, F2PSub, MMORPG, Social, 14
  • 15. MOBILE LINK The emergence of free to play, casual and mobile gaming has increased the necessity for robust payment and checkout solutions for mobile and other ‘floating screen’ gamers. GlobalCollect released ‘Mobile Link’ in early 2012, a fully hosted, device optimized payment page for credit card payments and various alternative payment methods. Clients of GlobalCollect can utilize this PCI compliant solution to improve the checkout process and conversion rates for mobile and other floating screen users. The ability to collect payments from gamers in emerging markets can be difficult. Mobile operator billing payments provide an expensive but commercially viable option for gaming companies with low-cost digital delivery. GlobalCollect have integrated BOKU as a payment method to complement our existing payment method portfolio to provide operator billing in 65 countries for gamers. Improved payout timelines, harmonised reporting and remittance and VAT optimization are part of the GlobalCollect integration. 15
  • 16. Insights on TWO Emerging Markets overview turkish games marketThe following findings are based on an analysis of 30 million Turkish active internet usersaged between 16 and 50. The analysis contained over 200 topics across all game businessmodels and platforms: The majority of these consumers, 72% or 21.8 million, play games. Players MMO | TR This share is higher than in Share of paying gamers & Cross-platform spending Payers Western countries. At the same MMO MMO Players Paying time, the share of gamers Players 9.8M PC/Mac Casual & Social Download Mobile Devices Console (inc. handheld) that spend money on games stands at 52%, slightly lower 74% than in Europe or the US. More 66% 64% than one in six dollars spent 54% 4.8M on games in Turkey goes to MMOs. This share of 21% is higher than in any Western or 49% pays Spendings on other Emerging country analyzed. market segments 2.6M 3.1M 3.2M 3.6M The average age of the 9.8 Players million Turkish MMO gamers Casual & Social | TR Share of paying gamers & Cross-platform spending Payers is slightly younger than in the Casual & Social Casual & West, obviously related to Social Players Paying Players PC/Mac MMO Mobile Console the relatively young internet 20.2M Download Devices (inc. handheld) population: 80% is under 35. The share of paying MMO gamers is 49%, comparable to 62% 56% 60% other countries, but average 45% monthly spending is several 5.5M times lower than in the US. 27% Spendings on other 96% of MMO gamers play pays market segments free to play and 27% plays 2.5M 3.1M 3.4M 3.3M subscription based MMO games. 16
  • 17. Overview polish games marketResearch indicates that Polish consumer spending on games will be more than 350million US dollars in 2012. The research in Poland zoomed in on the 18.1 million activeinternet users aged between 10 and 65. The analysis contained over 200 topics acrossall game business models and platforms. PlayersThe majority of these MMO | PLconsumers, 65% or 11.8 Share of paying gamers & Cross-platform spending Payersmillion, play games. Women MMO Players MMO Payingrepresent 44% of all gamers. 5.5M Players PC/Mac Casual & Social Mobile Console Download Devices (inc. handheld)The share of gamers thatspend money on gamesstands at 53%, this is slightly 61% 61% 57%lower than in Europe and 42%the US. 2.1MRoughly 43% of the Polish 38% Spendings on other pays market segmentsgamers plays console 0.90M 1.31M 1.23M 1.31Mgames. This puts it in lastplace in terms of popularity Players Casual & Social | PLwhen compared to the Share of paying gamers & Cross-platform spending Payersonline, mobile and PC Casual & Social Casual & Social Players Payinggaming segments. Still this 10.4M Players PC/Mac MMO Mobile Console Download Devices (inc. handheld)segment grosses a relativelarge share of money spent,25%, when DLC, import andsecond-hand trade is taken 46% 47% 47%into account. 2.9M 29% 28% Spendings on other pays market segments 0.83M 1.31M 1.34M 1.35M 17
  • 18. Webinar: Key facts and insightson cross-screen monetization ofgames in Europe and the Us.Featuring market overview of growth markets Poland and TurkeyPayment Service Provider GlobalCollect teams up with games marketresearch company Newzoo to highlight similarities and differencesbetween Europe and the US - when it comes to - MMO, Casual/Socialand PC games marketUnprecedented results from our latest research and online paymentprocessing will be shared in this exclusive webinar, giving insightsinto opportunities as well as tripwires to do business in these highlycompetitive growth markets.Main topics that will be covered: Cross-screen gaming and the cloud Opportunities and pitfalls of the Free-to-Play business models Differences between Western and Emerging Markets register here 18
  • 19. gaming payments intelligence In July 2012 GlobalCollect processed over 15M gaming transactions globally. Gaming payments data and benchmarks are available to clients based on gaming platform, game type, monetization model and genre. Payment specific data includes global payment method popularity, average transaction values, fraud benchmarks, currency volume, transaction volume figures etc. GlobalCollect provides advice on paymentization practices including multi-acquirer management, automated re-routing capabilities and benchmarking for credit card processing to increase revenues. 19
  • 20. GLOBALCOLLECT VIDEO GAMING TEAM: Nathan Salisbury Matías Fainbrum Global Market Director - Gaming Business Development Manager - Latin America Mobile: +31 (0)6 2506 1803 Mobile: +54 (9)11 4083 3730 Bob Voermans José Nuño Sr. Business Development Manager - EMEA Buisness Development Manager – North America Mobile: +31 (0)6 5060 2050 Mobile: +1 (415) 265 7929 Andrew Monroe Gary Dykstra Key Account Manager – EMEA Key Account Manager – North America Mobile: +31 (0)6 3016 3437 Mobile: +1 (310) 321 2477 Pierre Thiercelin Jay-o Hyon Online Payment Solutions Consultant – EMEA Business Development Manager - Asia Pacific Mobile: +31(0) 6 3016 1928 Mobile: +(65) 9852 3245 GlobalCollect EMEA | Planetenweg 43-59 | 2132 HM Hoofddorp |The Netherlands | tel: +31 (0)23 567 1500 GlobalCollect NorthAm | Three Embarcadero Center | Suite #2900 | San Francisco CA 94111 | United States | tel: +1 (415) 975 0969GlobalCollect LatAm | Av. Alicia Moreau de Justo 846 | 2nd Floor, Office 11 | 1107AAR Buenos Aires | Argentina | tel: +54 (11) 5272 1189 GlobalCollect APAC | 8 Temasek Boulevard | #21-04 Suntec Tower Three | 038988 Singapore | tel: + (65) 6408 8222