Revenue from digital games will reach $100 billion this year and will surpass $132 billion by 2021, according to a new report from U.K.-based consultancy Juniper Research. Free-to-play games with in-game purchases, add-ons and the ability to upgrade to ad-free versions is the dominant monetization model. While the report found that PC games and console games continue to grow, increasing mobile adoption will continue to be the primary driver of revenue growth for game developers.
As is the case with other digital commerce verticals, the more transactions grow, the more inviting they are as a target of fraud. The vulnerability of games and gamers was highlighted two weeks ago when news broke regarding several gaming forums that had been hacked. The hack not only opened Microsoft and Sony to account takeovers using login information stolen in the data breach, it also underscored the existence of communities of gamers who fraudulently sell and trade login information for access to free games and trade tips on other ways to defraud gaming companies.
The cost to these companies as they attempt to curtail fraud can be considerable—more even than for traditional retailers. One recent study reported that merchants selling only digital goods spend far more fighting fraud and chargebacks than retailers of physical goods—up to 20 percent of their operating budgets compared to 14 percent for physical goods merchants.