ESports Industry: Differentiation Through Content Creator Payments

The video game industry has grown by leaps and bounds over the past decade and as a result of the pandemic, has rocketed past both the movie and North America sports industries combined. According to a recent Marketwatch report, global videogame revenue was expected to hit nearly $180 billion in 2020, as compared to $100 billion for the motion picture industry and $75 billion for sports.1 Contributing to that growth, revenue from the worldwide PC gaming market was estimated to reach nearly $37 billion in 2020, while mobile gaming was expected to generate more than $77 billion.2


Mark Wuscher,
Director, Citi Treasury & Trade Solutions

A subset of the video game industry is “esports,” which is characterized as video gaming events where professional and amateur players compete against one another. In 2021, the global esports market was valued in excess of $1 billion, representing an increase of nearly 50 percent over the previous year.3 This high rate of growth is expected to continue into the foreseeable future.

While a wider-than-usual audience may have turned to video games and esports events for entertainment during the pandemic, experts anticipate the habit will likely stick for many, which should lead to strong growth this year as well.

For small- to medium-sized developers in the PC gaming segment of the industry in particular, the challenges of collecting payments from customers, managing liquidity, and issuing payments to remote employees and content creators must be overcome in order to continue to meet growth objectives.

The importance of an optimized collection strategy

One of the biggest challenges many companies in the PC game marketplace face is selling software directly to consumers. For games in the free-to-play space, this might involve collecting large volumes of microtransactions from players who are purchasing skins, weapons, vehicles, buildings, etc. Developers looking to cash in on the burgeoning direct-to-consumer market are under increasing pressure to put in place an infrastructure that facilitates global collections. In many markets, credit card collections will suffice, but in a growing number of international regions, such as Asia and Latin America, alternative payment collection methods will be required, particularly in those places with lower card adoption rates.

PC game developers will need to optimize their collection strategies in order to meet changing consumer payment preferences. Banks, such as Citi, are helping to address this need with innovative solutions, such as Spring by CitiSM. Spring by Citi is a new consumer-to-business (C2B) solution that enables businesses to securely accept a wide variety of digital consumer payments, including cards, e-wallets and bank transfers such as Request-to-Pay, through a convenient online payment gateway. This solution helps to deliver payment ubiquity through a localized payment experience, which is key to supporting developers’ growth objectives.

Managing liquidity effectively

Once a game has been launched, developers may face an additional challenge – how do I effectively manage the sudden influx of cash? Treasury professionals are constantly under the gun to consolidate liquidity and make critically important decisions around how best to invest funds. Often, this involves deciding whether or not to repatriate revenue back to the company’s headquarters. And as is often the case with smaller developers, the finance team may very well consist of a single individual tasked with managing liquidity across multiple regions. These professionals have the challenge of ensuring liquidity is readily available for strategic acquisitions, paying down debt, and paying back investors.

For such organizations, being able to turn to a trusted banking partner to help guide these important decisions can be invaluable. Banks have a wealth of knowledge around the treasury and finance functions, and can be an invaluable resource, providing insights and support to help developers grow and meet the changing demands of the marketplace.

As the video game marketplace continues to rapidly expand globally, savvy developers will tap into bank expertise and innovative solutions to put effective strategies in place to collect payments from customers, manage liquidity, and issue payments to remote employees and content creators. In this way, treasury and finance teams will play a vital role in helping to ensure the success of the business.