Analysis: Why the games industry should embrace Bitcoin

Analysis: Why the games industry should embrace Bitcoin

Bitpay's European marketing manager Wouter Vonk recently worked with Jagex to help them integrate bitcoin into Runescape. Here, he discusses the payment method's future in games

With numerous players in the gaming industry, such as Xbox Live, Zynga, BigFish, Jagex and Twitch, all attracted to bitcoin's ability to make in-game purchases more efficient and secure, it's not surprising that adoption of the cryptocurrency is gathering pace.

The industry is already experiencing massive change, partly due to the rise of mobile and tablet gaming, but also as a result of games changing from being products to services that constantly evolve after launch.Gamers can provide studios with instant feedback and help to shape their favourite titles post-release.

Pricing models have also changed. High Street retailers can still expect to have sold-out pre-orders for titles such as Call of Duty and FIFA, but these are the outliers. The average price of a game in the iTunes App Store is actually just $0.68, and 90 per cent of apps are made available for free. Even the biggest games studios are now creating freemium games heavily weighted towards in-app purchases, in an attempt to reclaim shrinking margins.

Swrve's 2014 Monetization Report found that 67 per cent of in-game purchases were for amounts between $1 (65p) and $5 (3.24), and that the average transaction value was just $5.94 (3.85). These small payment amounts often see developers paying 15 per cent or more in fees.

Bitcoin can enable games companies to accept in-app transactions with no transaction fees. Payments are also completely borderless, meaning that they can be sent from anywhere in the world, to anywhere in the world, without incurring bank charges or conversion costs.

Transactions become easier for the gamer, too. Jagex, whose portfolio of online games uses a freemium model for content and cosmetic items, has started using bitcoin. Historically a user would use a credit card or gift card, but with bitcoin payments it could be just as easy as getting a payment address and sending away.

FRAUD PROTECTION

The recent spike in news of mass credit card leaks is just one more reason why there is increasing demand from consumers for alternative payment methods. But fraudulent purchases and credit card chargebacks are a massive headache for games companies as well and, as bitcoin transactions are non-reversible, games companies may see the virtual currency as a way of protecting their revenues.

Bitcoin can also help parents manage their children's in-game spending; with parents starting to dispense allowances in bitcoins, having a bitcoin in-game purchasing model should do away with children running up big credit card bills.

Bitcoin payments could offer parents a way to give children an online wallet with a small amount of funds to spend on games and in-game purchases, teaching them how to be responsible digital citizens.

As long as it continues to make sense for the games industry to adopt bitcoin as its new currency, it is likely that we will see more developers integrating bitcoin into their games.

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