In recent years, the rise of the online casino and independent online gambling games has been propelled to new (and sometimes positively unexpected) heights. Consistent research shows that 96% to 98% of gamblers fall into the recreational gambler or social gambler category—people who are considered healthy gamblers. The industry’s market size is expected to reach up to USD 127.3 billion by 2027.
It would be hard to discuss the psychology of gambling without getting into some of the ideas about how the brain’s reward system works. If you didn’t get some kind of psychological kick out of gambling, you wouldn’t do it. Neither would anyone else. Your brain is hardwired to enjoy activities when you don’t know what’s going to happen, especially if one of the possible outcomes involves a reward of some kind. Dopamine is released when you have money in action at the roulette table, or anywhere else in the casino.
Newer payment solutions, including mobile wallets and in-app payments, are transforming the gaming industry. A recent report by Juniper Research forecasts that digital game monetization will grow to a $106 billion industry by 2021. While this is exciting news, game developers struggle with how to monetize their product while also catering to the tastes of the millennial audience. For many millennials, there’s a clear aversion to cashless payments that involve handing over sensitive personal data or using credit cards. In fact, even though millennials are typically seen as tech-savvy and forward-thinking, they’re less likely than older generations to trust online payment solutions. Regardless of this growing sense of skepticism from the younger generations, these same young adults spend over $20 billion annually on video games!
What is the psychology behind millennials and online payments?
Millennials were raised in the digital age, so it’s not surprising that they’re comfortable transacting online. However, many millennials were also raised in an era of financial instability where the 2008 financial crisis led to a global recession causing widespread job loss, home foreclosures, and general economic mayhem. Given that many millennials came of age during this tumultuous period, it’s unsurprising that they’re more cautious about the financial systems currently in place. This is also why cryptocurrencies are becoming more popular amongst younger generations as they offer them borderless freedom and spending that traditional currencies do not.
Why are games so hard to monetize?
Games are a huge market, but they’re also a competitive one. With the rise of gaming as a social and competitive activity, it’s become more important than ever to monetize both content and in-game purchases. With this in mind, it’s not surprising that game developers have faced difficulties in monetizing their products. One of the biggest obstacles has been payment friction, or issues with the payment process. Due to the competitive nature of the gaming industry, developers are under pressure to keep monetization low and unobtrusive, which is easier said than done. Credit card payments are often seen as a barrier that prevents users from purchasing in-game items, while digital payment methods can easily be hacked or compromised. These factors can cause friction for both the developer and the user.
Which payment methods do millennials prefer?
Millennials are much less likely to use credit cards. This may be due to a general distrust of financial systems, or it could be because many millennials choose not to have a credit card, which are typically seen as a sign of financial stability. Despite this, millennials have shown a clear preference for in-app payments over online payment methods. This may be because in-app payments are often quick and easy, with payment information saved to the user’s smartphone. Alternatively, it could be because millennials are more likely to use a digital wallet app than other generations.
Benefits of using cashless payments for gaming
It’s important for developers to remember the unique psychology of the millennial audience, especially when it comes to monetization. Fortunately, newer payment solutions, including mobile wallets and in-app payments, are transforming the gaming industry. These payment solutions use a combination of methods to keep users’ sensitive data protected while also facilitating quick and easy payment. For example, mobile wallets allow users to store payment information in a secured digital vault, making it quick and easy to pay for items or make in-app purchases. In-app purchases are particularly helpful for games, as they allow users to purchase a variety of items without leaving the game.
Video game-specific payer psychology
Given the unique millennial psychology when it comes to payment choices, it makes sense to include video game-specific payment options. These can include gifting between players, subscription payments, and merchandise purchases. Virtual gifting services like eGifter have been growing rapidly in recent years, particularly among gaming communities. Subscription payments, often used for online services or gaming content, are another helpful way to monetize a game. While these payments are typically recurring, they’re often seen as a positive thing. When a user subscribes, it’s usually because they value the product so much that they’re willing to pay every month. Finally, merchandise purchases are another helpful way to monetize a game. When merchandise is available for purchase, it gives users a way to support the game and show their love for the game and the community.
Final words: Bottom line
When it comes to monetization in the gaming industry, there are many factors to consider. As you’ve read above, millennials are a unique group with a distinct psychology when it comes to payment choices. Given these factors, it’s important for developers to think carefully about monetization methods, particularly in-app purchases and payment options. Having a variety of payment options that offer fast and seamless checkouts are crucial for gaming companies.
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