Micro-payments to the Rescue
Designing Billing for Online Games

Nils-Holger Henning
Casual Connect Magazine, Winter 2008

As mentioned in Paul Heydon’s article in the Summer 2007 issue of the Casual Connect Magazine, Bigpoint GmbH has had success in the use and development of micro-payment methods—which at this point have been integrated into 26 long-running, browser-based online games. As a follow-up to Paul’s article, we have been asked to provide more detail that might give others in the industry ideas for implementing micro-payments into their own offerings. At the same time, we’ll share some things that we have found important in designing billing systems, and we’ll demonstrate the potential of micro-payments outside of the stereotypical Asian and Russian markets.

Billing Systems

While most online businesses favor traditional methods of payment (by debit or credit card), these methods reach their limit of effectiveness any time the transaction costs exceed the value of the goods sold. For purchases with minimal merchandise value—as in the sale of virtual goods—innovative alternative methods of payment, such as micro-payments, need to be developed. To maintain customer experience these transactions must be quick, direct, and as easy-to-use as cash or credit cards.

The requirements we have found vitally important for a well functioning micro-payment system include:

• A high degree of security
• Ease-of-use
• Uncomplicated hardware and software requirements
• Anonymity
• Protection in the event of damage or loss
• Quick receipt of goods
• Minimal disruptions in service
• Protection from misuse
• Attractive transaction costs
• Reasonable costs for implementing the service

One important note is that often the biggest hurdle to gaining a customer is getting them to pay at all, so just because small amounts of money are initially involved in the transaction, any payment system must support the customer’s disposition to buy by eliminating or minimizing any potential hurdles a first-time customer might face. Positive purchase experiences are vital to encourage consumers to continue using micro-transactions.

Bigpoint Case Study

Bigpoint’s approach allows players to play 26 online games in 10 languages for free with the option of purchasing virtual goods or premium game features for very little money. Bigpoint has over 11 million registered users purchasing virtual equipment and consumer goods via micro-payments, with hundreds of thousands of micro-transactions carried out each month.

Bigpoint generates its primary revenues through the sale of virtual goods inside of long-running online games, with the obvious advantage that new or promotional virtual items can be made available to customers directly and quickly with minimal noteworthy production costs. This keeps the service new and interesting for players without the need to design a new level or offer a new game. Since the games and shopping system are all browser-based, the selection of goods can be updated quickly, adjusted on the fly to align with the wishes of the users. In this straightforward way, the game experience can be customized for each customer.

This approach has many advantages, not the least of which is the simple integration of brands and promotions. For example, with minimal cost to the development team, the pirate adventure game Seafight might offer for purchase a special edition ship to coincide with the release of the movie Pirates of the Caribbean. Because of the virtual nature of such a promotion, the brand receives high-quality, immersive exposure without the high production costs (and poor ROI) which might otherwise keep the promotion from ever proceeding beyond the concept phase.

From a consumer’s perspective, the experience is one-system-fits-all, as all of these virtual items can be acquired for just a little bit of money—in increments to fit any bank account. Since players have the option of spending more or less money depending on their individual budgets (as opposed to a more conventional single-purchase-price model), the system tends to maximize the value of each customer, to great effect: currently the average user at Bigpoint invests more than the average user at World of Warcraft.With the many payment options available to consumers, account funding must support a wide range of options. Telephone banking makes it easy for the Mafia 1930 boss, Seafight pirate or an up and coming Top Model to make a purchase: One call is enough to bring the account back into the black, with the charge appearing later on the player’s telephone bill. Bigpoint is now expanding the billing system to include an EasyClick account which retains profile information on each buyer to simplify future transactions.

Other micro-transactions can be made by linking to popular methods of payment such as PayPal, T-Pay, Webcent and others—well-known payment methods which have already earned the trust of consumers. As for international transactions, innovative payment integration systems already have been developed to make it easier for foreign players to make payments directly, quickly, and easily.

Multiplayer Liquidity

Multiplayer liquidity—the number of people available to participate in the community via chat and online play—plays a vital role in the success of any community game, and it plays an essential role in the proliferation of online virtual currency as well. The more people who use a particular virtual currency, the more vibrant the virtual economy and the community within which it operates. It’s one of the reasons why micro-transactions are becoming an increasingly important component of many portals’ growth strategies.

Integration of this white-label, turnkey system has been so successful that big TV stations (for example, Pro7, RTL, MTV), Internet portals (Web.de, Yahoo, AOL) and print media (Bild, Focus, TV Movie) have all integrated Bigpoint games into their web portals. This Triple-Win-Principle (content, community, and monetization) functions so well internationally that the game portal has already been translated into 10 languages, and international media partnerships are already in existence in Russia with Rambler and in the United States with WildTangent).

Nils-Holger Henning is Director, Business Development at Bigpoint GmbH. Nils can be reached at nils-holger.henning@casualconnect.org