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Sponsored: How Shopify enables game developers to monetize with merch

Sponsored: How Shopify enables game developers to monetize with merch

April 23, 2018 | By Corey Pollock, Product Manager, Shopify

April 23, 2018 | By Corey Pollock, Product Manager, Shopify
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More: VR, Console/PC, Social/Online, Smartphone/Tablet, Indie, Business/Marketing, Sponsored Article

Presented by Shopify

Games captivate, inspire and delight us. They also foster connections to their characters, to their worlds, and to the other players that share the experience. When our favorite games captivate and connect us, we naturally become fans in a way that extends beyond our time in-game and out into our daily lives. 

As a developer you have the opportunity to participate in bringing the world of your games into the daily lives of your fans. One of the most powerful ways to seize this opportunity is in the power of merchandise. Through merchandise your fans are given a natural way to identify and evangelize your games and you are given a new way to support your studio and become a better entrepreneur.

At Shopify we are committed to enabling entrepreneurship everywhere. For Shopify’s gaming team this means enabling developers and studios of all sizes to leverage the power of merchandise. Our platform provides access to merchandise production that asks little of you up front, but can rapidly scale. From there, we provide a powerful suite of tools to get your merchandise in front of fans where it matters most: right inside of your game.

Bringing Digital Worlds to Life Through Commerce

Shopify’s roots are in allowing anyone to get started selling online. Having an online store that is all your own is still the core of our cloud-based platform. However, over the past 12 years, we’ve grown to become the world’s largest multi-channel commerce platform.

What is “multi-channel commerce”? It’s making your products available for purchase in all the places audiences go to find those products. For some business that means social networks like Facebook, Pinterest, or Instagram. For others it’s marketplaces like eBay. For others still, it’s in-person at maker faires, pop-up shops and retail locations. For some it may be all of the above.

Our powerful and affordable tools allow entrepreneurs to sell across multiple channels from a single platform. Shopify is your products, orders, customers, analytics and marketing in a single command centre across all your channels.

For game developers, the most direct channel to the audience is clear: within the game itself.

How In-Game Merchandise Can Boost Your Revenue

Looking at current mobile gaming monetization, we see five different contributions to revenue. The first three are directly tied to the game experience: up-front game purchase, in-app purchases, and advertising. There are also two major streams of revenue that happen outside of the games: merchandise and licensed media such as TV, books, and comics.

On mobile, the direct path represents a $50 billion industry. Breaking that $50B down yields some interesting results. First, a mere 4% of revenue comes from players engaging in the traditional model of paying up front for a game. Over 95% of mobile game revenue comes ads (53%) and in-app purchases (43%) (source). When we take one step further into the numbers, we see that all of that in-app purchase revenue comes from a remarkably small population of the player base, only 5% of players make in-app purchases.

"The power to reach more players is in merchandise. It is one of the fastest growing segments in gaming, already valued at $500 million."

In other words, for free to play games 95 percent of players are making zero purchases. And they probably don’t want to see ads either. 

We could ask whether it is sustainable for only 5 percent of game players to support a $50 billion industry. However, there is a better question: what new opportunities exist to provide the 95 percent who aren’t spending any money something they find valuable? And how do we make it easy for them to buy?

The power to reach more players is in merchandise. It is one of the fastest growing segments in gaming, already valued at $500 million. Looking at global trends for merchandise shows a global audience hungry for tangible items related to their favorite entertainment.  The Licensing Industry Merchandisers Association estimated the global market for licensed merch based on entertainment/characters was $118 billion world-wide in 2016.

Physical purchases on mobile are also free of 30% revenue split that digital purchases incur. Nearly 100%of the revenue for physical merch sales go to you.  Platform holders like Apple and Google don’t take their standard 30 percent cut. Nor does Shopify; our revenue is based on the monthly subscription fee to use the platform. While sellers have to pay for the cost to manufacture the merchandise, they’re also in total control of margins.

For developers, after working hard to develop a great experience for fans, new revenue from merchandise can help them continue doing what they love. For fans, merchandise provides a way for players to evangelize their favorite games, and in turn, drive more people to your game. And the most exciting part is that giving fans a way to celebrate their favorite games in real life is an easy process for developers. 

Creating Your Merchandise

The idea of making merchandise and selling it through a game may sound daunting to some, but it’s not. Shopify’s approach to physical in-app purchases completely democratizes game merchandise. It is created on demand and drop-shipped from the point of manufacture to your players. 

This drop-shipping process removes traditional barriers to merchandising. Gone is the huge up-front investment to buy and store inventory. The creation of each merch item is tied to a purchase and is fully automated. With items going direct from manufacturer to consumer there is no tedious shipping processes and endless hours spent managing orders. Game developers go from start to scale very quickly, all while investing their time where it should go: creating games. 

Through powerful apps that embed into the Shopify interface, companies like Printful allow anyone to start creating a line of drop-shipped merch in minutes.  A rich variety of products can be created for an on-demand merch line and can later be augmented with items requiring the traditional design and manufacture process like plushies or collectable figures. Even with traditional inventory, warehousing and fulfillment services in the Shopify eco-system can remove the order management and shipping process from your workload, often in the same locations as on-demand merch.

Getting Merchandise into the Game

The most important part of the merchandising process is making it easy and natural for game players to buy.  This new form of direct, in-game revenue doesn’t require redesigning the gameplay or overall experience in service of this new monetization strategy. Whether it’s a collectible figure, apparel, or uniquely creative way to bring the game’s world to life there are organic opportunities to present these options to players with Shopify’s Buy SDKs. From the simple experience of providing a merch store off the title screen to rewarding exclusive merchandise for completing in game challenges, developers are in control of presenting purchasing opportunities that make sense for their fans and their game design.

The Shopify Buy SDK for Unity enables developers to power immersive commerce experiences inside their titles. The SDK is well-documented and lightweight.  A simple integration can take less than an hour. It’s also totally customizable, ensuring the buy experience in every game feels like the game. Game developers have full control over the UI and where and when the purchasing opportunity appears.

The SDK also uses native checkout technologies to make checkout seamless. Shopify uses technologies such as Apple Pay and Android Pay to present a quick and trusted experience for purchasers without leaving the game. That makes it easy for gamers to say yes to making that purchase. This combination of on-demand merch and the Shopify Buy SDK for Unity means there’s a low barrier to entry and an ability to scale with ease.

The Shopify Buy SDK for Unity contains three layers of content, allowing game developers to start integrating products on their stores at the technical level that makes sense for them. 

The core of the SDK makes it easy to access Shopify’s Storefront API. Easy to use classes allow for operations such as querying the available products on a store, creating and managing a user’s cart and completing the checkout.  

Built on top of this foundation is the UI Toolkit. This toolkit provides patterns to guide and simplify implementation of common user flows. We provide patterns for two specific user flows. The first, is a single-product experience that presents a single purchase option and express, cart-free checkout. The second is a multi-product experience that mirrors a tradition online store handling multiple products and variants, such as shirt sizes, as well as a shopping cart for the user.

The single and multi-product storefront patterns included in the UI toolkit for the Shopify Buy SDK aren’t mutually exclusive. A title can have a number of single-product presentations, say for different achievements or milestones, as well as a main multi-product storefront.

Finally, the SDK includes an end-to-end example implementation. The example includes everything from the fetching of products from a live Shopify store to handling final payment and everything in-between.

For some developers, dropping in the reference implementation and theming the UI to better fit their game will be a quick route to adding in-game merchandise.  For games that want to present a customized visual design for their store, but follow traditional purchasing flows, the classes of the UI toolkit will be ideal. And finally, for developers that want to be involved at the lowest level, the SDK allows easy and direct access to our storefront API.

All three levels of content are contained in our single Unity asset bundle and source code is available for all of it.

Beyond Unity: Other Avenues to Monetize with Merch

Shopify started with the mobile gaming market, taking advantage of its huge size and simple ecosystem. However, Shopify Gaming’s goal is to make every game easily shoppable.

Shopify has additional Buy SDKs for those not using Unity. Already available are platform level Buy SDKs for iOS (Swift), Android (Java), and the Web (Javascript). All contain native checkout experiences. Coming soon is a C++ SDK aimed at game makers using Unreal or writing their own engines.

Game Developers Doing It Right

One success story is that of Eli Cymet, the lead producer behind Alto’s Adventure. Shopify had the wonderful experience of working with Eli and the Snowman team to add a store into Alto’s Adventure. 

For Eli and his team, it was extremely important for the buy experience to be an extension of the game and its world. It needed to feel incredibly organic and non-invasive for the player. And it worked. Shopify helped Alto’s Adventure crack the code on that 95 percent of players, tackling the free-to-play challenges that many mobile developers face. 

Just two months after the in-game store launched, Alto’s Adventure doubled its merch revenue from the previous year. More than 60 percent of net new sales came through the game, and the average cart size was $38. These are amazing results when you consider that Alto’s Adventure is a three-year-old game, selling for around $5.

The Future of In-Game Commerce

Shopify exists to help creators and makers start with everything they need to launch their brand. Then, we help them scale and grow that business. We want to make it easy for anyone to turn any platform into a digital storefront. We want to make it easy for anyone to be an entrepreneur. 

If the history of commerce has taught us anything, it’s that the closer the point of purchase is to the point of engagement, the more likely people are to buy. Physical products let players bring a piece of their favorite game back with them into the real world. Those products act as a bridge, a badge of honor, and a fond reminder of hours of playtime. 

Games engage our attention like nothing else, so shortening the path to purchase is critical. At Shopify, we’re really excited about the possibilities that this will unlock for every game developer and every game. If you’re interested in learning more about selling in-game merch, check out more here.

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