Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Fintech and the Gaming Industry
Finextra | Vivek Dubey | April 2021
FinTech has a Midas touch and since the 2020 crisis, it has redefined the Gaming Industry. We have arrived in the era of FinTech driven Gaming Industry. Let us try to look at few numbers, in one estimation, 2020 the global gaming market had an approximate net value of 167.9 Billion USD. This value is expected to grow to 287.1 Billion USD within the next five years, owing to an increase in popularity, accessibility, and development of games. The outbreak of COVID-19 has been a force in driving the consumers of all entertainment industries like movies, theaters, music shows, etc towards online gaming. A survey in March 2020 showed that Americans reported a 45% increased time playing online games during quarantine than in the preceding weeks. That was the time when the governments were deciding on lockdown around the world.
The gaming field provides various avenues for profit, not bounded to game businesses alone. Popular E-sports titles have large events for players and fans alike, akin to physical sports. Another study mentioned that in 2019 the estimated prize pool of game developer Valve’s DOTA 2 The International tournament surpassed 30 million USD, which, along with the venue arrangements and management, was funded by the DOTA 2 player base. Events like these not only promote video games and attract new fans but also create new opportunities for potential investors in the gaming industry.
See: Ep27-Mar 1: Blockchain Gaming and Esports with Shidan Gouran
With gaming growing as a profession, and people started understanding the dynamics of the gaming industry, it has attracted attention as a form of stream-able entertainment. Amazon’s online streaming platform Twitch has been at the forefront of this new development, with over 17 billion hours of content watched in total in 2020. Through the platform itself, viewers can donate to their favorite players which, along with within-site advertisements, have become a source of previously untapped revenue.
Another area where the gaming industry has had a huge financial impact is the development of new computer hardware. Graphics cards, consoles, prebuilt gaming computers, and phones have all seen rapid developments in recent years to support even more rapidly developing games. It is expected that in 2026 the global gaming hardware market size will have reached 180 million USD, up from 146.7 million USD in 2020. The COVID-19 pandemic, coupled with a surge in the cryptocurrency mining sector, has created a supply-demand gap that has driven prices of computer parts much higher than before.
With gaming having captured such a large segment of the population, one can’t help but wonder where finances fit into the equation. How do such a massive volume of transactions and rewards transfer between customers, developers, and manufacturers so seamlessly? The answer lies in FinTech, which has developed significantly in recent years. As the name implies, FinTech is the incorporation of modern technology in the finance sector, intending to develop a more streamlined system for instant transactions. It is the stepping stone between traditional bank transfers and instant P2P trades, and as a whole has seen a market volume of over 1.39 trillion USD in 2020. The biggest FinTech platform today is PayPal, which has been incorporated as a payment service on many gaming websites. Google Pay has been another major player in the sphere, especially in transactions related to mobile games.
See: What Attracts Investors to Blockchain Gaming?
Finance is an integral part of any online gaming platform. With the advent of online gaming and easier access to downloadable content, there has been a paradigm shift in the gaming industry from selling single, hard copies in retail stores to entirely computer-based soft copies. The advantages of this system are many; it gives a wider variety for consumers to choose from, a place in the limelight for smaller developers, and the ability to improve user experience and in-game features through online updates. A major problem, however, arises when it comes to payments. Traditional bank transfers are tedious and time-consuming, offering no real benefit compared to buying store-bought products. Fintech offers ideal solutions to this problem, through financial services embedded in-game platforms themselves.
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