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Ways to Pay for Video Games: A Game Developer's Guide to Monetization

August 29, 2023
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In the past, the only way to buy a video game was to wait patiently for its release date, hop in the car, drive to a physical location, and stand in line to make your purchase. In today’s technologically-advanced world, digital games are widely available to purchase, download, and play at a moment’s notice, all via desktop or mobile applications. Still, a modern concern remains for players. How will they pay for their games? There are approximately 3.09 billion active gamers worldwide. So many people love playing video games, but for game developers, payments have never been a more complex issue. How a player pays for a game can affect their emotional attachment and loyalty to that game. There's a 67.4% payment drop-off rate across the industry, so developers can't afford to ignore players' perceptions of how they handle their payments. Game developers should always monetize with a global audience in mind. That means conducting extensive research and choosing a model that works well for an international audience. Read on to learn more about the pros and cons of the most popular video game payment models and how to exceed your players’ expectations with a seamless gaming experience.

5 Video Game Payment Models

Revenue is vital for game developers because it ensures longevity for their team. They can continue creating new titles for fans with a fresh, exciting experience each time. As a developer, you earn revenue by selecting payment models that work for your users, and those models must also make sense for your game and fit logically within your interface. New technology means many new ways to pay for video games. Below we outline the five most popular payment models to help you find the one that suits your platform.

1. Single payment

The single payment model gives users the benefit of buying video games once without needing to purchase anything else in the future. It is a model that attracts many smaller game developers because it’s virtually effortless.

2. Downloadable Content (DLC)

A downloadable content (DLC) payment model has gamers paying one price for the base game and gives them the option to spend more money to unlock extra features or components any time after the initial purchase. The extras can include new regions to explore in-game, additional levels, special missions, or new cosmetics for characters or gear. This model’s main upside is that it allows you to collect ongoing revenue. It also enables users to customize the gaming experience based on their unique preferences, whether they just want to play the main game, get more of an experience, or enjoy all of its content. Developers using DLC to bolster their revenue should consistently monitor user feedback to ensure the experience satisfies players' expectations and adjust future DLC accordingly.

3. Free to Play (Freemium)

Freemium games allow players to download and play the game, in its entirety, at no cost to them. They must pay real-world money to access items that might enhance or help ease their experiences, such as XP boosts, weapons, powers, cosmetics, or in-game currencies. These games often earn revenue through ad placements. Many users view freemium games as the best of both worlds, being happy to watch a few ads in exchange for the privilege of playing for free. To allow players with budget constraints access to similar extras, developers should consider allowing them to earn in-game currency that they can exchange for virtual goods. These users can still advance in the game but pay the "premium" with time and effort rather than cash.

4. Subscriptions

Subscription models work the same way inside the gaming world as outside of it. Users pay in advance for a set period of time, usually a month, and get to play or access exclusive content for that prepaid time. If players stop paying, they can no longer access the game or the perks. These models offer several advantages to both the developer and the player. They are often reasonably priced, allowing users to play the game with a complete set of features for an affordable monthly cost. For that very reason, some subscription games have millions of users, which results in a hefty amount of recurring revenue for developers. Subscriptions also allow developers and gamers to build a community around the game, making it easier for users to get to know each other and share strategies and ideas. Creating a gaming community helps players build an emotional connection with the game, often keeping them subscribed. Developers can also incentivize and keep subscribers engaged and returning often by releasing new content regularly.

5. Crowdfunding

Crowdfunding is a payment model that asks potential players to donate money toward developing a product that is unavailable to purchase or play. Like a subscription model, crowdfunding has benefits for users and developers alike. Players enjoy knowing they are funding something fun and original, and they may also get the chance to provide feedback in the development process or score exclusive benefits for being a founding member. For developers, not having to raise the capital for game development on their own or surrender their creative control to a publisher makes crowdfunding an enticing option. There are a few caveats. Crowdfunding requires players to trust that the developer will launch a finished game. It also requires the developer's diligence and commitment to communicate and deliver something their users will love. xsolla-ways-to-pay-for-video-games-featured-image-01-870x489.png

6 Ways to Pay for Video Games

Now that we understand the five major gaming payment models, it’s time to discuss another aspect of monetization: the forms of payment you can accept from users. Users should have various options when purchasing via consoles, PCs, mobile, or the web. Here are the six most popular ways to pay for video games.

1. Debit cards

A player swipes the magnetic strip or inserts the chip, or types in their payment details to buy video games online. The funds are transferred straight from their bank account to the merchant's account. The benefit of debit cards is that the player’s money is immediately deposited into your bank account. Generally, banks do not reverse legitimate charges without your consent, and transactions made using a debit card are very secure, since banks invest a lot of money to keep customers and merchants safe from financial harm.

2. Credit cards

A credit card is similar to a debit card in that players use them to make immediate payments. While users borrow money from a bank, the developer still receives it immediately and doesn’t have to worry about whether the user will pay them back. Credit card companies offer impeccable buyer protection, and players can dispute charges with their credit card company any time. Therefore, ensure your payment gateways and technical documentation are solid, and your payment platform integrates pay forms. This way, third-party page detours never break the purchase flow.

3. Bank transfers

Also known as wire transfers, bank transfers involve sending money directly from one bank account to another account at a different bank. Providers like SOFORT, iDEAL, and BLIK often take little time to process once the receiving institution verifies the sender’s information.

4. Digital wallets

Like physical wallets, online wallets hold money for the consumer. There are a lot of well-known names in the digital wallet space, such as PayPal, Amazon Pay, and Google Pay, plus plenty of local digital wallets, such as Alipay and QIWI. Online wallet transfers are often faster than wire transfers, making them tempting for those who want to purchase quickly. An online wallet acts as a middleman between the player and the gaming store or platform in exchange for a service fee. Online wallets can charge service fees to the player and the publisher, so you must decide whether to pass fees on to your players or build them into the game’s pricing structure.

5. Cryptocurrency

Cryptocurrencies (crypto) are digital forms of money. Holders store their crypto in a digital wallet on a hard drive or a cloud-based software platform. Governments don’t generally regulate crypto as they do paper money or coins. Instead, crypto uses encryption technology to verify identities and provide the accounting. Cryptocurrency payments are still relatively new, so rely on savvy partners like Xsolla, which offers cryptocurrency integration with payment processing platforms — such as Crypto.com Pay — that make accepting crypto worry-free.

6. Pay with points

Using points is the most affordable way to buy video games because players don’t need to spend their real money on game purchases. Instead, they use loyalty points from a developer’s partner businesses. For developers and publishers, a points model is easy to set up, and it works to increase conversions and reduce payment drop-offs. For the gamer, loyalty points payments often integrate easily into the game and provide excitement about purchasing. Developers should always ensure their partner agreements are well-documented. Providers like Xsolla can help there, too. Created in partnership with Mastercard, Pay with Points combines Xsolla's payment capabilities and Mastercard's network-level expertise, global scale, and trusted connections to power a secure, accessible, and effortless payment experience. You can also use Xsolla Partner Network to leverage existing partnerships and gain access to 650k+ influencers and 50k+ affiliate networks. xsolla-ways-to-pay-for-video-games-featured-image-02-870x489.png

Streamline Your Payments with Xsolla

The point of designing a video game isn’t to keep it to yourself. It’s to launch, monetize, and scale it so that players worldwide can enjoy what you’ve worked hard to build. Nevertheless, players will always believe that the best website to buy video games from is the one that caters most to their needs. Xsolla Pay Station provides all of the tools and services necessary to give your players exactly what they need and desire so you can grow your community.
  • 700+ payment methods across 200+ locations. Video game buying is a global activity. Xsolla allows you to take payments from players worldwide without the hassle of manual currency conversions. Pay Station respects each gamer’s purchasing habits by automatically surfacing and ranking the most appropriate purchasing options, making payment processes quicker and easier for your user while allowing you, as a developer, to cater to their needs. In addition to more traditional payment methods, Xsolla features Pay with Points, which allows users to pay for games and purchases with loyalty points from participating partners. With an easy setup, you can engage more players and beat the industry-wide 67% payment drop-off rate.
  • Regulatory compliance. Many countries have rules to curb illegal activity and protect private information, protecting consumers from identity theft and other financial harm. However, following these laws can be difficult when your business operates worldwide, as every jurisdiction has different regulatory requirements. Non-compliance can result in hefty fines, penalties, and even business shutdowns. Xsolla’s platform ensures the payment process is secure and compliant with all laws across all jurisdictions so you can maintain peace of mind that your business will always be safe. Also, The built-in Xsolla Anti-fraud helps detect suspicious activity before it becomes a significant problem.
  • UI customization and branding. Playing a game is often more than just an activity — it’s like diving into a new universe. Representing the brand across all aspects of your game is essential in creating harmony for your user. Xsolla allows you to maintain consistency throughout the payment process with interface customization to match the look and feel of your game or company.
  • Adaptive UI. Pay Station integrates with your game for a frictionless experience. Its UI is compatible with mobile and desktop and offers commerce API for bundles and promotions. It makes it easy for your players to take advantage of everything you offer, and more likely that they will.

Make the Right Payment Choices with Xsolla

In the gaming industry, payment models and methods are about more than just monetary transactions. How you monetize your game matters to every aspect of your brand and business. The payment model you choose will determine your development timeline, how often players expect updates, and how connected your gaming community will be. Players are always concerned with finding the best way to buy video games. As a game developer, you should ensure your players have an exceptional buying experience. Being bogged down with payment issues hinders the process and makes it less likely for your game to enjoy the reach it deserves. Some of the biggest names in gaming use Xsolla Pay Station because it streamlines the online gaming payments process for both developers and end users. Contact Xsolla today to learn more about payment solutions and how to create a seamless experience for your team and your players, or register for a Publisher Account and get started right away.
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