Understanding The Challenges of Self Distribution With Nexway

2021.4.6 Interviews by COCOS

We know most games will wind up on the Google Play Store or Apple App Store. But some of you are probably trying to sell the game outside the ecosystem and, for some, making HTML5 games on your own website. The great part about selling the games on your own is you keep a lot more of the sales and have more flexibility in how you have gamers spend in your game. The bad part is trying to find companies that can help you with your e-commerce, distribution, and other items.

We know a few companies are working on helping these companies, and we were able to talk to one and pick their brains about it. Nexway is a company that gives publishers and developers a way to distribute their games, monetize them, and scale them for not only online games but for games you can purchase at stores and e-stores.

We sat down with the company’s CEO, Victor Iezuitov, and his team to talk about what they do and what developers need to prepare for when bringing their games to new markets, and the challenges to prepare for.

About Victor Iezuitov: With extensive international finance and management experience, Victor has worked as a board member, CFO, CEO, and Senior Analyst in investment funds and private banking companies.

Cocos: Great to talk to you! We know you work with a lot of tech companies at Nexway. But what are some of the people that you are working with within the game industry?

Victor Iezuitov: We have been a global video game and software distribution company for many game companies. We’ve worked with Ubisoft, Bethesda, Versus Evil, Plug In Digital, Techland, and many other companies to provide subscription models, manage local payment methods, prevent fraud, engage partners and resellers, deliver key customer insights, and beyond.

C: Why would developers come to you to start selling their games outside places like Google, Apple, Steam, or other major stores?

VI: Many come to us for many different reasons. Some do it because they want a higher profit margin. Some want to keep full ownership of their gamer’s experience, allowing for better marketing and ways to connect to their user base.

But a lot come for ways to improve and secure their billing, payment, and subscription options. It’s hard to do on your own and find other merchants that will provide better revenue than they’d get elsewhere.

Any merchant also has legal obligations when selling its products and services, and it becomes even more complex when you decide to develop a business that goes across borders. Scaling a business globally without risk isn’t that simple!

C: Yes, with so many different issues with taxes, money transfer, and other legal requirements, it’s a huge task that any smaller studio could really suffer long hours trying to navigate.

VI: Of course. As a company selling games online, you are legally obligated to tackle different administrative tasks on your own and deal with the hassle of all of these compliance measures at the local, regional and global levels on your own. We’ve been helping remove that headache for game publishers and developers that want to scale their business.

We provide an all-in-one solution that keeps your business compliant with all local and global regulations. Our Nexway Monetize solution helps you manage your entire payment journey. We allow you to accept payments, manage fraud prevention, currency conversion, taxation and security management, local tax and VAT management, chargeback detection and negotiation, and customer data protection compliance, managing pay-outs to your suppliers worldwide.

C: How many countries do you offer services for?

VI: It’s hard to catch every country and payment method, but we help publishers and developers process payments in local currencies with the most adapted payment methods in more than 140 countries.

We simplify commerce with powerful payments technology, offering 47+ payment methods, 20+ languages, and 40+ billing currencies and providing 24/7 customer care!

C: You said that you help in taking care of fraud prevention. This has been an issue people in our company have had when working in the industry at other companies. It seems to be an issue no one talks about but is very relevant when paying the bills.

VI: Fraud is nasty for game developers as having dozens of keys resold for a low price on the grey market could damage the game’s image and its creator. Many third-party people will purchase many keys in a region where it’s sold for less and sell at a higher price in more expensive regions, profiting from the sales while staying under the listed price in that region.

The creator needs to evaluate if it is worth the risk to apply very low price points in some regions. At the same time, their game will probably not reach a significant audience due to gameplay, story background, cultural theme, etc.

Nexway has had years of experience in the video game industry and online distribution, so we can manage these issues on the developer’s behalf, taking into account potential issues when prices are set.

C: Do you have any examples of that happening?

VI: Keys being sold at a lower price can hurt a developer’s sales at a higher price in another region. One example among hundreds, a game with an RRP/MSRP of €49.99, is resold for about €20 (At launch!). This most certainly is because of lower prices available outside of Western Countries that also come without geo-locks on game keys. We can see this from a site like this (a game prices comparison website ): https://www.allkeyshop.com/blog/buy-monster-energy-supercross-the-official-videogame-4-cd-key-compare-prices/

C: What about chargebacks? This is a major challenge for some companies making games for the web.

VI: The chargeback issue is getting worse, hitting gamers, developers, as well as well-established companies. The gaming industry’s online nature and growth have made it easier than ever before for people to trigger the chargeback process.

Some of the most common chargeback requests those in the gaming industry face are:

●       Lost or stolen cards: Online payments make purchasing easier than ever, but unless the system is up to date and suitable fraud protection checks are in place, people can issue a chargeback request for lost or stolen credit cards (rightly or wrongly)

●       No real return policies: Because developers and online gaming operators are not dealing with a physical product, they are often lax on their own return policies and can neglect customer service issues, resulting in a chargeback request.

●       Returns and Cancelled Transactions: These are, more often than not, the most legitimate chargebacks, either stemming from a customer being unhappy with a product purchased or having a second thought after initiating a purchase.

●       Affiliate Fraud: This happens when savvy affiliate marketers allow many fraudulent transactions to occur on their sites to boost their own commissions. Typically, they will cash out on those commissions before a retailer ever catches on.

●       Authorization and Processing Issues: These are errors that happen on your payment processor’s side of things—primarily when the processor can not authorize a transaction — and can be avoided with the right systems and solutions in place to minimize error.

Not every chargeback request is a fraudulent one. Of course, they are necessary, especially in a digital world where fraudulent activity is becoming more and more common.

There are ways to fight chargeback culture, hold onto your profits and keep customers happy at the same time. Several solutions can help minimize the risk of fraud and chargebacks. This includes implementing fraud detection monitoring, address verification services, credit card verification code validation, and producing terms and conditions that are easy to digest and understand.

Taking away the faceless nature of your online activities can also reduce chargeback requests. Creating an online customer service policy through avenues such as social media channels can again go a long way to improving customer satisfaction and reducing chargeback rates.

Nexway already has all of these solutions to help game publishers and developers adapt to an evolving consumer chargeback philosophy and run a more prosperous, efficient, and profitable e-commerce business.

C: Moving on from the challenges of getting payments, if you decide upon building a B2C marketplace for your games, what advice would you give to those just starting other than using your company for many of the backend items?

VI: For payment managers in the gaming companies, to monetize the games, the first thing to do is to optimize the B2C store so that you are:

  • Building a better user experience in the checkout flow.
  • Ensuring the local payment methods are complete.
  • Getting the best offer for payment implementations with service providers.
  • Making sure the best taxation practice.
  • Making sure a better payment processing and conversion rate in International markets
  • Managing relationships with global payment service providers to gain better support
  • Being PCI DSS compliant
  • Getting local market compliance and security: PSD2, SCA, 3D Secure, SSL certificates
  • Optimizing payment acceptance rate
  • Setting up fraud management systems internally or purchasing reliable anti-fraud external solutions. Usually, an external fraud prevention solution with AI & ML technology is costly, and the price of different players in the market is not transparent. It is also complicated to know which has the best fraud solution since the market is very fractionated. The price to try them out is high because most of them would require set-up fees beforehand.
  • Building a localized customer care team in different time zones for better coverage. It usually comes with a high cost of having an internal localized customer care team since the personnel cost is higher in Europe and the US than in some Asian countries.

C: This might be too much for smaller companies. Maybe having a reseller might be better. What are some of the things you need to know when you start working with other resellers that will be your B2B friend, and why should I find a reseller for my games?

VI: Setting up a B2B program is a smart strategy to grow your games business worldwide. You simply and quickly expand into new channels to reach new audiences.

 It is challenging to expand the B2B resellers into every single foreign market, and it is also time-consuming to reach every single reseller on your own. Whether you sell games or one-time licenses, or renewable subscriptions online, providing your resellers with a personalized one-stop-shop will help boost online sales and expand your distribution network effortlessly.

You can see your resellers as an extension of your salesforce and a constant revenue stream. But deciding to deploy a reseller program of your own shouldn’t be taken lightly. It would be best if you had the right tools and strategy in place to make this seamless for everyone involved.

Considering the rapid growth of the gaming business in Asia and the complexity of entering this market, Nexway launched its B2B reseller portal project for APAC. The portal enables game publishers and developers to sell digital video games in bulk in Hong Kong and the Asian market under a single Nexway branded store. Publishers keep control and can allow or deny their products’ listing and availability on the B2B games reseller portal. Game publishers or developers can also allocate percentages of permanent discounts to one or more resellers at the same time.

C: What should game developers’ realistic expectations be when working B2B with other retailers, and where should they focus on to make sure it’s a good and long-lasting relationship with these retailers?

VI: The game developers, working B2B with other retailers, can expect a result from 10% to 30% of their market share.

To ensure they are a harmonious and long-lasting relationship with other retailers, game developers should focus on localizing the game whenever possible and deploy promotion plans linked to major key events happening per country and/or partners. They also have to ensure all geo-locking is in place if they want to address a cheaper market with local prices.

C: Thank you for your time, and thanks for the great insight on the work you are doing.

VI: My pleasure. Feel free to have your readers contact us at our website www.nexway.com if they have any more questions. Or contact Grace Chen, our Senior Sales Manager at gchen@nexway.com

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