Given the complexities of the gaming space, Kamran Hedjri, CEO at PXP Financial, writes for Payment Expert simplifying the jargon used within the space.
The online gaming sector has become big business, but even for merchants the terminology can be mystifying. So, what exactly is the difference between gaming and eSports? Or sports betting and sports gaming?
The growth of online gaming in a relatively short space of time has been staggering. From the 1990s when it took off thanks to the increased availability of the internet, to 2007 when online gaming went mobile, to 2020 when the global gaming market was valued at USD 173.7 billion.
Now considered one of the fastest growing industries on the planet, it’s expected to reach a value of USD 314.4 billion by 2026.
It’s an industry so vast that it’s generated its own set of sub-categories that are easily confused, especially as the line between gambling and gaming becomes increasingly blurred. Here we provide the context needed to differentiate them.
Gaming vs gambling
Gaming is a general catch-all term that can refer to both video games and online games, and is sometimes mistakenly used to refer to the gambling industry, so specific terms have been coined for specific sub-sectors. Using the appropriate term is often just a matter of context. For example, are you playing games in a casino (gambling) or on a PlayStation (video games)? But here’s where things get confusing: there are separate terms for competitive online games, and betting on them.
Although iGaming can refer to online games, it is most often used in relation to online gambling games. Poker Stars is just one example of iGaming. With the global online gambling market expected to grow from $64.13 billion in 2020 to $112.09 billion in 2025, it’s a lucrative sub-sector of gaming, but easily confused with eSports.
eSports and eSports betting
Short for electronic sports, eSports are more video game focused, and the term refers to any online game that is played competitively, just like football or tennis. There are currently around 222.9m esports enthusiasts in the world with an audience that sat at 495m at the end of 2020. This gaming sub-division has such a huge following in fact, that in 2015, the first eSports arena was opened in Santa Ana, California.
What constitutes an eSport isn’t set in stone, but it’s always a video game, and the eSports industry centres around competitive video games. To muddy the waters slightly, as the betting on eSports has become more prominent, yet another term has emerged: eSports betting.
Sports gaming and sports betting: booming industries
The COVID-19 pandemic has jump-started a period of growth for the eSports betting industry. A recent report from Market Insight Reports estimated the market would reach a global value of more than $13 billion by 2025, a significant increase from its estimated value of $800 million in 2019.
This is not to be confused with sports betting, which is gambling that takes place in sports betting establishments, where people make bets on horse races or football teams. This can be done in person or digitally online.
Sports gaming on the other hand simply refers to playing a sports game, like FIFA or Mario Tennis. If this became a competitive online activity however, it would become eSports Gaming, but would not be considered gambling.
While gamers in the US and Europe seem to understand these definitions well and use them fairly universally, corporations have a tendency to pick and choose the terminology they prefer, which can make it difficult to create concrete definitions. For example, if a business considers ‘gambling’ to have negative connotations it may use ‘gaming’ instead.
Payments that don’t stop play
Whether gaming, eSports, or betting, in order to provide the best and most appropriate payment experiences possible, it’s important for merchants to understand which payment methods are used in different types of gaming. This will ensure payment doesn’t interfere with play, and support the immersive player experience.
For the average online gamer, three things are important when choosing a payment method: speed, fees and limits. Everyone wants to send and receive money instantly, and no one wants to lose a large percentage of their cash to fees. It’s also important for online games’ payment method to support flexible limits; after all, most in-game purchases involve small amounts of cash.
Alternative payment methods are an increasingly important part of online gaming transactions, and e-wallets, mobile carrier billing and direct debits were already gaining ground on cards. In many geographies, PayPal leads the way as a payment method for online games, but cryptocurrency and play-to-earn – where the player can receive rewards with real-world value – is likely to increase in popularity.
As the world of gaming continues to grow and evolve, developers must ensure the tech behind taking payments does the same.