eSports is taking over the online entertainment world, but not without a digital payment partner

When I took on the role of head of eSports and gaming at Nuvei, I knew that it was going to be an exciting task. eSports was a booming industry even before the pandemic, and post-2020 it is a global powerhouse. However, many eSports operators, lacking expert guidance, and have not yet updated their payment systems as they’ve scaled. In this article, I’ll explain the opportunities to be gained by forging payment partnerships and offering compliant and seamless payment experiences worldwide.

Competitive video gaming has been around since the 1970s, but it was with the advent of high-speed internet in the 1990s that the industry really took off, spearheaded by the South Korean gaming community. The industry has since grown into a global force, and while the Asia Pacific region still dominates, the rest of the world is catching up – globally, the industry brought in more than USD 950 million in 2020. Business Insider estimates that this will grow to USD 1.5 billion by 2023.

Live competitions are usually huge too – 174,000 attended the Intel Extreme Masters Katowice in 2019 – and while COVID-19 brought these events to a halt, the enforced stay-at-home lifestyle of 2020 actually gave a boost to eSports, partly because traditional sports fans turned to virtual pastimes in lieu of live sporting events. Casual viewership grew from 245 million to 272 million from 2019 to 2020, and frequent viewers grew from 198 to 223 million.

Why do so many people enjoy watching others play video games? For the same reason they enjoy watching athletes play football or basketball. In both ecosystems, the vast majority of the community is made up of fans who tune in to watch professional players who have devoted their lives to mastering their chosen sport. These fans also enjoy these activities themselves as hobbies – personally, I grew up playing football before starting to play FIFA, and my love of chess led to a passion for League of Legends.

For punters, eSports has a number of advantages – for example, odds are much more lucrative because the player pool is relatively new and unknown, as opposed to traditional sport where results are more predictable.

Now, with the rollout of mass vaccines, it is likely we’ll see the big events happening again soon with all their corresponding opportunities for revenue. With the industry fully back online with the additional market share gained throughout 2020, now is the time for eSports operators to make sure they have a payment partner that’s harnessing all the benefits of digital payments for them, because with higher revenue comes corresponding problems for those who are not prepared.

For example, payment delays for winners are damaging to gaming operators’ reputations. Prize pools for some eSports competitions are in the millions of dollars, with 2020’s Call of Duty championship prize pool hitting USD 4.6 million. DOTA 2, an international competition, wasn’t held in 2020 due to the pandemic, but in 2019 its prize pool was USD 34.3 million. While pots of this size are attractive, delays in payouts to winners can ruin a gaming operator’s good name.

It’s also important to note that these pots attract players from all around the world, that is, from jurisdictions with differing regulatory requirements. Large international transfers can draw the attention of regulatory bodies and issuers, leading to delays, payment declines and higher processing fees. Businesses should be looking for payment partners that have the gaming experience to maintain low margins and that provide efficient, compliant payout suites that function in all world markets, from North America to China.

The issue of geographical differences is also relevant when it comes to consumer habits. International players bring with them fans who want to pay to watch their heroes’ streams, purchase merchandise and kit, and even attend live events. However, online payment preferences differ from region to region, and a one-size-fits-all approach will not work.

Operators that wish to scale internationally need to provide payment options that are localized to their target market, because people will abandon their purchases if the checkout experience doesn’t seem safe or recognizable. For example, operators need to be integrated with the alternative payment methods of a given market – like a popular digital wallet for example – as well as provide transparent, understandable currency conversion and seamless subscription payment options. I, for instance, grew up in Paris and reside in London, so I have easy access to payment products with global reach. But does my family in South Asia have the same experience? Would they be able to buy something from the US with their preferred payment method?

Another sure-fire way to lose revenue and reputation is with payment downtime. Sport-based commerce is time-sensitive, as merchants receive rushes of merchandise and streaming revenue during events, so it only takes a few minutes of downtime to lose thousands of dollars’ worth of sales. Operators must look for partners that are geared up to handle volume spikes and that operate with backup data centers for technical issues. For example, Nuvei operates with 99.99 percent uptime, and has backup data centers in case of technical issues.

With the right technology, the pitfalls of eCommerce can be easily avoided. For example, payment declines and chargebacks can be a serious issue with international transactions, but with fraud screening, chargeback protection, and a global network of local acquirers, revenue can be protected and approval rates optimized.

Reliability in payments at scale is also relevant for attracting investors – investment in esports grew from USD 490 million in 2017 to USD 4.5 billion in 2018, according to Deloitte. Esports is no longer a grassroots industry, and attracting investors requires inspiring trust in all aspects of a business.

As esports has scaled, operators have to ensure that their payment system can keep up with their growth, both in terms of revenue and geography. There is a world of opportunity, and the technology exists to harness it – operators just need to make sure they choose the right partners.

If you operate an eSports business and are looking for partners that will help you scale and thrive, please don’t hesitate to contact us for a free consultation.

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