September 2023

It Started with Games and in Games it Booms!

The New Era of How We Play

Games are as old as humanity – it is how we learn, how we practice and how we have fun. Gaming has always been here, but today it is undergoing one more major boom as the recent lockdowns attracted new people to it. There are millions of players and thousands of game companies out there, claiming an increasingly larger stake of the global e-commerce market. 

Planet-wide Online Entertainment

Online gaming made its first baby steps back in the 1970s. It was confined to internal computer networks at various colleges, but then came the Internet. Yes, technical limitations in computer hardware and Internet speeds at first limited the scope and spread of online games in the 80s but the 90s brought an increase in both the speed and availability of Internet connections worldwide, ushering the new age of gaming online that we know today. 

The price of gaming hardware and of the Internet coupled with the costs of maintaining game servers plummeted so much that both the Internet and online games became affordable to millions. Who promptly discovered the joy of World of Warcraft, a massive multiplayer online game (MMO) that reigned supreme among online games, even while dozens of other games on the market vied for both second place and a chance to supplant it as the king. 

In the past two decades, online gaming has grown into a multibillion dollar market, with a projected revenue of 26 billion USD in 2023, and an annual growth rate of 5.64% between 2023 and 2027. Projections regarding online gaming industry growth put the number of online gamers at over 1.2 billion by 2027, and the projected market volume for 2027 is currently at over 32 billion USD.

For Europe alone, the projected revenue for 2023 is an impressive 4.91 billion USD, with an expected 6.14 billion by 2027, and over 100 million users by that same year.

Online games today offer both a variety of experiences and a variety of titles

  • Massive Online Battle Arena: League of Legends, Dota 2, Honor of Kings
  • Roleplaying Games: World of Warcraft, Runescape, Guild Wars 2
  • Hero Shooter: Valorant, Apex Legends, Overwatch
  • Battle Royale: Fortnite, PUBG: Battlegrounds, Call of Duty: Warzone

Play and Watch, Watch and Play

Online gaming spread out and brought a surprise. Turns out, people not only enjoy playing games but also watching other people play them. While it may sound strange at first, this is perfectly understandable. After all, people may enjoy playing football or basketball, but they certainly enjoy watching others do it as well. 

This led to the growth of eSports, where teams or single players compete in game matches before live audiences that cheer them on, backed by sponsors that make lucrative deals – often in millions of USD – with players in exchange for promotion.

eSports statistics: in 2019, viewership for eSports in general was around 400 million worldwide, with revenues from around 957 million USD, and these are expected to exceed 1.6 billion by 2024.

eSports sponsorship and advertising brought in around 640 million USD in 2021, accordingly to Statista.

Today, Twitch averages over a million live viewers per day – which can go up to four million! – and on average over 50 000 channels streaming at any moment. On a monthly basis, Twitch provides a platform for over seven million gaming content makers, with the top ones accruing tens of millions of followers who will tune in for each new live stream.

It’s hard to overstate how big Twitch actually is in the online gaming sphere; in 2022, its market share was a staggering 73% of mobile usage among all live streaming platforms – second place was taken by Bigo Live with only 9%.

Very soon Twitch the channel surpassed the other Justin.tv channels in popularity, drawing over 45 million unique users by late 2013. In 2014 the entire Justin.tv, now renamed Twitch, was bought by Amazon. By 2015, it boasted over 100 million viewers per month.

Lessons to be Learned

The gaming industry in general and its online segment in particular have some useful lessons for the e-commerce market as a whole.

The attention of the customer is key to success and how to get it and keep it in a veritable ocean of content aimed at customers who like novelty above all else is surely something the gaming industry can teach. 

Games go all in with good design and immersive experiences, gaming companies maintain a consistent output of quality products, gaming platforms ensure easy accessibility and benefits for their users, and gaming live streamers keep and generate interest with honed playing skills and honest interaction with their followers and fans.

The New Tech Round the Corner is Already Here

We live in a world of new tech and the gaming industry has always been at the forefront of both the development and the application of it.

Virtual reality (VR) is one of the bigger things to make the jump from science fiction to reality. Put on a headset, connect it to your computer and there you go: an entire virtual world you can move around in and interact with. Immersive, indeed! The price point is still steep enough to keep VR gaming “niche”, but developments in technology are expected to soon break that barrier, making VR gaming exceptionally affordable. 

Augmented reality (AR) technology allows for virtual elements to be overlaid on the real world. Gamers look through special glasses or their mobile device’s cameras in order to see and hear things the game has added to their immediate vicinity. The massively popular Pokemon GO game, with thousands of people going for walks around their neighborhood to hunt Pokemon and engage in battles with other players, is the best-known example of this in gaming.

Artificial intelligence (AI) has for quite some time been of interest to the global industry and market. Recent developments regarding AI used for creating images or text generation has pushed the area to the forefront. In gaming, an AI component of a game could react to more things a player might try to do than an army of programmers could think of and program into the game beforehand. 

Smooth and engaging are some of the words most often used with regard to a gamer’s user experience, and this can be easily applied to any other e-commerce.

Experience, Experience, Experience

User experience makes or breaks a game. If a player doesn’t enjoy not just the content of your game but also how he interacts with the game itself, they’ll go look for something else, something better.

Smooth and engaging are some of the words most often used with regard to a gamer’s user experience, and this can be easily applied to any other e-commerce. No matter which goods, products, or services you sell online, customers will appreciate it if they can easily discover what’s on offer, what’s in stock, what the delivery options and payment plans are, and if the shopping experience is fast and frictionless, with a minimum number of clicks necessary to get the item from their shopping basket to their front door.

Reviewing and Monitoring KPIs

ARPU is the Average revenue per user (ARPU) is a KPI that is the cornerstone of any projections regarding future growth and planning for a game. The math is simple, but the significance cannot be overstated: divide total revenue, which includes everything from one time download fees to monthly subscriptions to in-game purchases by players, by a game’s total user base, and both you and your investors will immediately know how much value your users put in the game.

The Lifetime value (LTV), i.e. the total monetary value of a single gamer over the time span of playing your game, informing you how much you should spend on your efforts to acquire a single new customer while still staying profitable.
Retention rate monitoring is also paramount – comparing total number of customers in two consecutive time periods for a general impression or getting more specific by separating customers into cohorts.

Losing customers is also an inevitability, but so is tracking this indicator. In the gaming industry, it is the Churn rate that tracks how many players are no longer playing your game.
And, of course, the Conversion rate: the ability to turn free users into paying users.

Now, read all that again, with customers and clients in places of gamers and users, and you have all the insight you need into designing an online sales experience that is as smooth and engaging as can be.

Make it Fun 

Gamification as a concept is not new, but its widespread use certainly is. Integrating concepts and elements from games into another activity makes that activity more appealing and increases the quality of the activity’s results. 

Gamification can influence behaviour and this has made it interesting for e-commerce. Think eBay and its competitive bidding system, with stars given to successful bidders, making them feel like they were, in gaming parlance “leveling up”. A simple thing to implement which made customers feel that they’ve not only purchased something but also “won”, essentially providing the same rush you get from beating an opponent in a game. Duolingo offers language learning through daily tasks that earn you points that can be exchanged for retries on a failed test or just a swanky new outfit for the green Duo bird itself.

“Special” and “rare” objects are very desirable in games and the online retailer Woot managed to translate that into their business model. Offering only a single product per day, for a limited time, in limited quantities and at a special price, the retailer offered the next product for sale only once the previous’ supply has been exhausted or time had run out. Since customers have no way of knowing beforehand what will be on offer, this creates an air of suspense and mystery, motivating customers to make purchases because the next one might be something very desirable. 

M&M’s might be the king of shopping through gamification with their website that allows customers to design everything from the color to the packaging of a batch of M&M’s – the ultimate personalisation. 

The above-mentioned examples are only a few, but they demonstrate that the online gaming industry is a thriving, growing market with many opportunities for advancement and innovation in the e-commerce market. 

Integrating concepts and elements from games into another activity makes that activity more appealing and increases the quality of the activity’s results. 

Interview with:

Alexandru Manta

Product Manager – Easy at Nexi Finland

1. How has the pandemic affected your gaming habits? Have you discovered any new games? Have you been playing more or fewer multiplayer online games than before?

I’ve always been a social nerd and spent most of my evenings playing games. I ran a World of Warcraft guild for 13 years, so when the pandemic hit, it was great to see all of my friends and guild members online more often. We could do more content together and even started branching out into different games. I even picked up Dungeons and Dragons 5th Edition, which has been an amazing world to play in!

Nowadays, I spend less time playing online games that require a lot of min-maxing or games that utilize FOMO (fear of missing out) for their events.

3. Do you go back to old games or prefer playing new ones?

I have a few games that have been part of my “core memory” which I tend to revisit every year or every few years, like Freelancer, Xcom, and Souls games. Recently, I’ve picked up the Metro series and Elden Ring and am looking forward to Starfield! If you see me skipping work for two weeks when Starfield comes out, it’s not a coincidence ^^

Having spent 10 years in the game industry, I was often getting pulled out of the world by analysing game design and concepts – so nowadays, I tend to socialize with my friends in games that put more emphasis on skill than grind. I’m always down for some CS:GO or League of Legends!

2. How do you discover new games, and what platform do you use to buy games?

Mostly through friend recommendations, YouTubers that I follow, and Twitch. As a mainly PC gamer, I tend to buy everything on Steam, but with over 400 games in my inventory, it can be challenging to find something unique that draws me in.

4. Do you watch let’s play videos to move forward when you get stuck?

For single-player games, I tend to play them on the hardest difficulty without guides, and I love to get immersed and explore a well-designed world. It’s part of the fun to get stuck somewhere, and I get a lot of satisfaction when I figure something out on my own.

Interview with:

Iva Babić

Graphic Designer at Nexi Croatia

1. How did the pandemic impact your gaming habits? Did you discover new games? Did you play more or less multiplayer online games than before?

The pandemic obviously had me staying home much more than usual, and I was already a pretty big gamer so you can imagine that I ended up doubling down on gaming! I played mostly the same games I’ve been playing for years, but some new additions made their way into my gaming library, like The Legend of Zelda: Breath of the Wild, Hades and Animal Crossing: New Horizons. I prefer playing single-player, open world games aside from the times I join my friends for a game of League of Legends or Overwatch and that didn’t really change over the course of the pandemic.

2. What platform do you use you buy games?

Depends on what I’m playing on – I mostly play on a PC so most of my games come from Steam’s ever-expanding library, and it’s super convenient too because it stores all your save data on the cloud.

4. How do you find out about new games?

Usually Twitter or Youtube, although just scrolling through the Steam store also helped me discover some brilliant games – most of them were blind buys! These days, the Tiktok algorithm has also figured out the genre of games I enjoy so I get some great suggestions on there too.

3. How much do you go back to old games as opposed to playing new ones? games?

I think I have a tendency to go back to old ones a fair bit – for example, the aforementioned and infamous League of Legends is a game I’ve been playing for over a decade now, mostly due to nostalgia since I got close with a lot of my friends thanks to it. I always go back to it, even if I play it a little less nowadays. However, I’m trying to expand my horizons and play new games when I can. Same with Skyrim – it’s a decade old at this point and some of the game mechanics are kinda outdated but I still love it, and I wish I could play it for the first time again!

5. If you get stuck, do you watch let’s play videos to move forward?

I generally try to figure stuff out by myself and I could spend hours trying to crack a puzzle, but much as I want to be an epic gamer and say I’ve never looked for help, that would just be a lie. To be fair, some Zelda puzzles are really hard!

Interview with:

Nicolas Butler

Product Manager at Nexi Denmark

1. How did the pandemic impact your gaming habits? Did you discover new games? Did you play more or less multiplayer online games than before?

I don’t think I went with new games. But I definitely had more hours during a week. It was not possible to see your friends for a period. Therefore, online gaming was/(online games were) a good solution.

2. What platform do you use to buy games?

Steam or Battlenet

3. How much do you go back to old games as opposed to playing new ones?

I’m not into old, old games.

4. How do you find out about new games?

Friends, Twitch, Youtube

5. If you get stuck, do you watch let’s play videos to move forward?

I don’t get stuck. I’m a rockstar