The Future of Gaming: Transitioning to D2C with Cutting-Edge Payment Solutions
Discover how the Direct-to-Consumer model is transforming the gaming industry in an exclusive interview with Sebastian Totté, Noda’s Head of Gaming, focusing on minimising reliance on third-party platforms while maximising publisher revenue and customisation opportunities.
How will the direct-to-consumer model trend evolve in gaming this year?
Companies without a web store today are likely planning to launch one this year. Most gaming companies with significant in-app purchase (IAP) revenue will launch their direct-to-consumer (D2C) stores. As the Digital Markets Act (DMA) comes into effect, more publishers are building their D2C channels.
An analogy between brands selling physical goods in physical stores and creating an e-commerce site can be drawn. For gaming companies, physical stores are the platforms, and e-commerce sites are their web stores.
How can gaming companies switch to the direct-to-consumer (D2C) model by leveraging payment services? Give specific payment tools for gaming companies.
By building a consumer-facing store on their website. To facilitate payments, they can either partner with a Payment Service Provider (PSP) or a Merchant of Record (MoR). Both PSP and MoR are third-party companies that enable businesses to accept payments. PSP has the lowest service fee and solely focuses on facilitating the payment process.
MoR, on the other hand, has the highest service fees, but acts as a reseller, selling on behalf of the publisher. This involves tax management, global compliance, and user support. The MoR takes on all the responsibility and liability for the sales and fees are typically a commission for the MoR and an additional fee for the PSP, which the MoR provides within their checkout widget.
If the company can manage MoR processes in-house, then working with a PSP is the ideal solution. However, if it cannot, then MoR is the better option.
“An analogy between brands selling physical goods in physical stores and creating an e-commerce site can be drawn. For gaming companies, physical stores are the platforms, and e-commerce sites are their web stores.”
Sebastian Totté
What are the benefits for gaming companies to switch to D2C?
A lot of money can be saved by switching to D2C. The primary benefit is saving on platform fees, which are 30% for IAP commissions and 27% for the third-party billing fee.
Secondly, the publisher gets to remove the limitations of platforms and to fully own the process from start to finish, including customisation for each player. Meanwhile, the data learned allows for a more personalised experience that can be tied to the game.
Thirdly, with all the money saved by switching to D2C, companies have the opportunity to invest in building new games, leading to further growth.
Could you discuss any success stories of gaming companies that have successfully implemented PSPs are part of their D2C strategy or using innovative payment solutions?
Wargaming is a great example of a company that has capitalised on the lower fees, which come from a combination of lower commissions compared to traditional payment methods, no chargeback fees, and no rolling reserves.
Additionally, Wargaming manages deposits more efficiently by using a consumer-to-business (C2B) bank account and receiving daily settlements. Wargaming’s players benefit from a seamless payment process that connects them directly with banks. This increases conversions because players don’t have to manually enter credit card details.
What key challenges might companies face when transitioning to a D2C model?
One significant challenge is selecting the right PSP or MoR. Many PSPs and MoRs do not disclose their fees transparently, leading to hidden costs such as charge-back fees. This makes it difficult for companies to compare and choose services.
Additionally, companies must build a functional website, link existing content from various platforms, and ensure that the chosen PSP or MoR integrates seamlessly with their operations. Once these systems are in place, ongoing maintenance is crucial.
What role does open banking play in facilitating D2C for gaming companies?
Opening banking has significantly lower pay-in and pay-out fees than traditional payment services because it eliminates payment process intermediaries, such as credit card processors. In addition, the player payment experience is smoother and safer.
How can gaming companies ensure security and fraud prevention when transitioning to D2C?
By using Open Banking payment services, gaming companies can ensure security and prevention when transitioning to D2C. The benefit of open banking is that a direct connection between players and banks is made, therefore significantly improving security.
