Micropayments Promise New Game Revenue Models

Electronic Gaming Business, July 30, 2003

The Revenge of the Arcade?

While many (and we mean many) micropayment ideas came and went throughout the '90s, this new generations argues that post-bubble circumstances and their own technologies have changed enough to make it work now. Users and publishers recognize the need to charge for content and everyone is more comfortable with electronic transfers of all kinds.

One thing that hasn't changed about the micropayment model is the challenge of getting consumers to buy in. Because no single micropayment solution has achieved ubiquity on the Web, it has been difficult for the model to make sense for consumers in the same way PayPal became a standard for making person-to-person payments.

According to the Online Publishers Association's latest study on feebased content, content purchases for under $5 grew 707% in 2002. Nevertheless, this stream still represents only 1% of total content sales or $9.6 million, and the lion's share of that goes to news articles. Less than 5% of fee-based game content sells for under $5.

Even with 700 content providers on board, Roberts admits that consumer behavior remains more tentative than he anticipated. "There is a tendency for the initial time to load [just] the amount of the initial purchase. We envisioned more the model of loading $10 or $20 and spending it over time."

Much like consumers themselves, the major content providers, including game companies, seem to be waiting and seeing which solution ultimately makes the cut.

The New Micropayment Breed

Paystone

Location/Size: Vancouver, BC and San Jose, CA/30 FTEs

Status: Launched in May

Clients: 700 (including American Empire Records, Freedomtogroove.com)

Peppercoin

Location/Size: Waltham, MA/12 FTEs

Status: Commercial Beta (formal launch in September)

Clients: Six beta customers (including Big Frank Records, Celebrity Rants)

BitPass

Location/Size: Palo Alto, CA/5 FTEs

Status: Beta launched June 30

Clients: Seven (including ScottMcCloud.com)

Contacts, Rob Carney, 781/891-8330 x11, rob@peppercoin.com; Dan Fergusen, 214/823-0500 x105, dfergusen@blockdot.com; Matt Graves and Kurt Huang, 650/354-1844, matt@bitpass.com; Brian Roberts, 604/488-2575, broberts@paystone.com

[Copyright 2003 PBI Media, LLC. All rights reserved.]