How to Capitalize on Cloud Gaming
Computer gaming has followed the transformation of gaming devices in lockstep for the past 15 years. Starting with fan-based and retail distribution of games like Doom, gamers found a new use for their computers. Eventually, the ability to download a game without ever going to a retail outlet widened the demographic of gamers and changed the way games were marketed. More recently, the proliferation of playing games with or against your friends has been all the rage, (from Counter-Strike to MMOG like World of Warcraft) as internet connections have improved to high-speed levels.
Just like backup, collaborative, and email software applications, games are undergoing a metamorphosis from a download focused product to a cloud focused product. In order to benefit from the emergence of cloud gaming, companies must consider the new opportunities and challenges that arise from it.
Types of Products
If you’ve been living in a cave, you’ve likely never heard of Farmville or received a friend’s request to help keep their farm alive. Although my colleague Thane uses those requests to identify people he should unfriend in Facebook, some percentage of the people actually spend real money helping their friends with a virtual farm. I don’t know why, but they do.
Regardless, there are now more products that cloud gaming companies can sell, which will have an impact on the e-commerce requirements needed to facilitate these transactions. To begin here is a list of types of products that a company can sell, with examples of each:
- Access anytime – Minecraft
- MMPG – World of Warcraft
- In game products - Farmville
- Virtual gifts - Camfrog
There are numerous models for billing gamers. Companies may decide to limit some of these models in their own financial interests, but it all depends on the types of products offered.
- Subscription: regular billing amounts for periods of time
- Usage: billing based upon how much the user plays
- Microtransactions: charge a small amount for an item or event
- One-time: charge a fee to access the game, more typical of the downloaded games market
- Pre-paid cards: retail selling with fixed amounts (Popularized by Zynga)
- Accounts: pay money in advance and deduct as an event occurs
- Real-time adjustments: single click purchases in-game
Many of these options were not available until companies started moving to an online network of gaming, but the coming explosion of cloud gaming will likely create even more novel billing concepts in order to make money off of the paradigm shift. Lookout for changes!
Cloud gaming effectively ends any chance that a company has of ignoring an international market for their products. Due to the nature of the product, cloud gaming companies must think locally when selling globally. A company’s marketing message becomes just as important as their e-commerce infrastructure, which is not trivial:
- Payment Methods: Don’t assume that credit cards are the only option needed. Especially when thinking about gamers, consider that many of them are in a younger demographic and prefer methods like PayPal, WebMoney, and Konbini. Don’t leave money on the table when your customers want to give it to you.
- Currencies: With the weakening of the US Dollar, pricing your products in dollar for Euro amounts will result in increased revenues and give the appearance of a local company, which improves trust and conversion rates. Be careful in how you display international prices because the wrong format may confuse customers and you may lose revenue.
- Languages: When considering making a payment, non-native English speakers are most comfortable in their own language. Reducing mistakes in the order process alleviates frustration and increases conversion rates.
Making the move to cloud gaming introduces a new level of seriousness in the level of fraudulent attempts. If you aren’t vigilant in the fight against fraud some hacker may infiltrate your users' private information. You may may be facing chargeback fees and a PR disaster from the stolen cardholder’s public complaints via Twitter. Your cloud gaming business is too important to risk without an expert anti-fraud team backing you up.
This is an exciting time in the gaming industry. As you plan your cloud gaming adventures, remember that it’s a brave new world topped with a healthy spice of risk… What trends are you seeing in the cloud gaming space? Who’s selling in an innovative way within cloud gaming? I’ll be attending the Cloud Gaming USA conference in San Jose on September 7 and 8. Feel free to tweet at me if you’d like to schedule some time to talk or challenge me to your favorite cloud game.
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Justin Rondeau says:
Social gaming is getting huge! Check out this article, it is estimated that 27% of online Americans will take part in social gaming.