Casual Connect Europe: "The online games industry can be compared to a television audience"

Casual Connect is the premiere event for the casual games industry with over 3,500 professionals attending each year. This year, industry professionals from all over Europe will gather in Hamburg for a combination of expert debate on the future and the brutal truths the game industry will face in 2012, industry updates and networking.

The seventh Casual Connect Europe, to be held on 7 - 9 of February 2012, will focus on cutting edge topics, including the way new technologies are changing the equation for game developers, game monetization and how game publishers dramatically grow ad-related income through direct deals.

The Paypers has had the chance to talk with Mark Gerban, Senior Manager of Business Development & Payment of gamigo AG and Victor Bacre, Director of Business Development & Payment at Just A Game GmbH, who are among the speakers at this event.

What are your key points for discussion at the upcoming Casual Connect event in Hamburg this month?

We basically want to present to the Gaming industry the unknown perspective of the Payment Managers side of the business. In conferences, payment companies normally present their ideas and products, where they are usually looking to sell something. However, as Payment Managers, we are there to represent the voice of the companies who actually use these products, and give honest feedback on our experiences with them.

We will cover points like “Direct Integrations or Aggregators?”, “When too many payment options are really too many?”, as well as other topics that businesses would want to learn about in the payment industry.

Most importantly, experienced payment professionals from some of the most important online game companies have gathered for this event. This is probably the first time that the people in charge of monetization have come together for an in-depth public discussion. We are excited about the event and very much looking forward to the panel.

From your perspective, what are some of the consumer benefits from an online payment – centered approach versus mobile?

Compared to the past, few people will now disagree that mobile payments are still not as versatile and comfortable as online payment methods. However, in the online games industry, where users purchase many forms of virtual currency, this versatility correlates strongly to the purchasing behavior found in many “common” online payments.

It could be very possible that mobile payments in the gaming industry could establish the footprints to follow for mainstream e-commerce in mobile devices. At the same time, there has been a boom in new technology, and countless mobile payment companies have appeared in the Games Industry as well.

But we are still far to catch up with Korea for example, a prime example for the online game industry, where technologies like NFC or mobile wallets have been in use for years.

When it comes to paying for digital content, either online or via mobile, do consumers attitudes differ (especially if we are talking about various regions and content types)?

It is generally accepted that different regions adhere to different payment methods. At the same time, it truly depends on each audience, their demographic makeup, and the culturally accepted norms.

Curiously enough, for example, Casual Games played by women show a very low amount of chargebacks. Another example could be also per region, where certain countries are more likely to show chargebacks many months later (than average), after the user has been playing the game. Or who can forget the case of a tremendously popular smart phone game, where children kept buying in-game currency, because they thought it was fake money they were paying with.

Users, at the same time, have had bad experiences in the past years with companies that overused or abused the subscription model as a payment option. Support departments in our industry still spend large amounts of time explaining to mobile payment users that a Premium SMS is not a subscription service, but a single purchase. Unfortunately, there are still some “black sheep” in the e-commerce industry that abuse this business model. And since we are associated with this part of the industry, we have the responsibility to create a user experience that is based on trust and satisfaction.

Do the various game platforms attract different audiences?

Absolutely! The online games industry can be compared to a television audience, which is diversified and full of different genres. The general areas of gaming are social, casual and hardcore gamers, each of which has their own specific nature when it comes to payment. This is further complicated by the fact that each genre or game-type has their own specific demographic, and payments need to be fine-tuned to match the needs of the users.

Each game platform, genre and audience has its most preferred payment method. Generally speaking, for games targeted at young children, mobile payments are a preferred payment method; but they can also be very problematic, as parents might believe that the games only want to take advantage of their children. Prepaid cards such as Paysafecard or Ukash are also popular among hardcore gamers and teenagers, while a casual gamer might use a variety of other payment methods such as PayPal, mobile, credit or prepaid cards.

In your opinion, is online gaming one of the sectors particularly susceptible to fraud, as compared to others?

For a good comparison, we should probably compare another industry that is most similar to online games - the gambling market. The online games market is probably not as susceptible as gambling in terms of monetary loss, but it is certainly susceptible to a high amount of digital good theft.

Generally, the bigger an online game or gambling company is, the larger and more specialized its payment and antifraud team should be. The largest gambling companies in the world have developed incredible fraud and risk teams, which are specialized for handling the smallest of details. The online games industry is probably slightly behind in this regard, since not as much physical money is generally at stake. Having similar fraud systems and teams would certainly help, but there might come a point where having a larger team to combat fraud might cost you more than the fraud itself - It is a matter of balance.

Furthermore, this will also be one of the topics of discussion during Casual Connect in Hamburg. We will share some of our experiences, and explain how other companies can minimize their fraud risk. From our discussion, it should also be interesting for payment companies to hear our direct feedback, so they could determine how to further innovate their products, or address the issues that are most important for their customers.

Which are the preferred methods of payment for digital goods?

It really depends on the type of game and user demographic. Without having this information, it will be very difficult to monetize on your audience. If we were talking in general, PayPal and credit card still cover a large audience for many countries, but especially in the United States. In fact, you might be able to cover around 80-90% of the US market with these methods alone. However, in other countries, you might only be able to cover 20-30% of the overall expected volume with PayPal and credit card.

As mentioned, different countries have different niches, so you might have mobile payment as the most popular form of payment in Poland for online games, but the same target group in Russia will have cash machines as the most popular. Since this is a very open-ended question, we hope that people will ask these types of questions at the end of our panel discussion in Hamburg!

In your opinion, which are the challenges and opportunities associated with monetizing online games?

The market is getting increasingly competitive, and a player’s choice is always widening. It is not easy to attract users and keep them dedicated to games with content alone, as the monetization experience plays a key role for the lifetime of a user. Companies spend loads of money to bring a user to the payment page, and it must be easy for the user to pay.

We should not forget that Franchises or IPs do not guarantee success as this stage. A game based on a movie, a TV series or a Cartoon from Big Studios, has as many chances in succeeding as a game from a small studio from Finland (Rovio) or Russia (Wargaming), etc.

The future of online monetization is…

It all comes down to whom can offer the best-rounded package to their players. A purely free business model would be most ideal for a user, but it is hard to justify on the business-side of things. In any case, the company who finds out what comes up after the so-called Freemium or Free-to-Play model will be showing the path to everyone else. But this next model is further along down the horizon, and the FTP model will likely be staying around for quite some time.

Victor Bacre is Director of Business Development & Payment at Just A Game GmbH, a Berlin-based subsidiary of the publically listed company, Bob Mobile AG. Previously, Victor worked at ATLAS Interactive GmbH and Webbilling, where he developed a deep insight and understanding of the online payments industry. He also lived in Barcelona, where he worked at Emagister, part of Grupo Intercom, one of the most successful internet companies in Spain.

Just A Game GmbH is a globally operating online publisher for computer and video games headquartered in Berlin. The company is a subsidiary of Bob Mobile AG with a strategic focus on two business areas - direct end customer sales of browser-based multiplayer and social games and licensing and publishing of classic offline games for next-gen consoles and PC.

Mark Gerban is the Senior Manager of Business Development & Payment of gamigo AG, the online-games subsidiary of Axel Springer AG, one of Europes largest media companies. Mark oversees both the business development and payment operations at gamigo. Prior to working at gamigo, Mark worked at the online payment company BillingPartner GmbH, where he was involved in international business development. He was also a freelance consultant for various businesses in Germany. Mark is currently an American living in Hamburg, Germany, and is also a former World-Class athlete.

gamigo is one of the leading publishers of free-to-play online games, which can be played in the browser or in a game client. gamigo is among the first companies to discover this booming market segment, and published the first entirely localized German-language MMOG in 2001. Since then, the portfolio has continually been expanded and new territories added. Today gamigo offers about 20 games which are published all across Europe and, since 2010, also in North America. gamigo is a wholly-owned subsidiary of Axel Springer AG.