We caught up with Xsolla's Chris Hewish at a hectic Gamescom 2023 for all the latest news from the company, their take on where the world of webshop innovation and app payments are heading and his hopes for even better business in the future.
PocketGamer.biz: So how do you find Devcom and Gamescom? What are your aims for being here at the show?
Chris Hewish: Well, being here really caps off our latest releases that we've been talking about. Approximately every quarter, we do a release week where we announce new products, new features, new partnerships, anything that might be of interest to our partners. And then usually that is around the time of some sort of major event as well. So we like to go into the event and evangelize the new stuff as well as our current slate of products and solutions.
We're a sponsor of Devcom and we have a number of tracks where we do panels or presentations. And then we go into Gamescom where we do a lot of the business development meetings one on one.
How's the last six months been for Xsolla? What’s exciting and what's been a success for you?
So the last six months have been good. Really good. We've been ahead of the curve on bringing new partners and projects on board. We've continued to see a lot of strength with our webshop business. That was something that we launched about a year and a half ago now, and that is a solution that allows mobile game companies to spin up a presence online and do a lot of their commerce with their players through these webshops.
The thing we're really seeing happen now is that the webshops are starting to evolve into community hubs. That's really something that you've seen on the PC side of gaming for a while, but mobile gaming really hasn't had that, right? So it's pretty exciting to see that development and expect to see more of that in the coming six to 12 months.
We've been ahead of the curve on bringing new partners and projects on board.Chris Hewish
Elsewhere we’ve got our new parental controls, where we partnered up Privo. And that was in response to the past six to 12 months of government and societal interest in parental controls around kids and gaming. Obviously, we've had game ratings and age checks for quite a while but it’s something that hadn't been particularly top of mind for a lot of companies.
It’s a real, full suite, not just, hey, we put a age gate option in our pay station or launcher. We really put a full stack of privacy controls for parents and guardians in there. There's a changing landscape as regards the use of in-app purchases and the familiar gatekeepers are diminishing in their dominance and their relevance.
How do you see things progressing on that front? The volume of avenues that people are going to have and the means to which they're going to be able to make payments. Where do you think we might be in six months time?
Look, it's always changing, right? Let me take a step back. Having been in the industry for so long, remembering way back to the game ratings and how that all came about. I think any time that an industry can get ahead of regulators and introduce tools that allow them to self-regulate, that's a good thing.
It's healthy for the industry, and it can help us avoid getting to a point where, if people keep their heads in the sand, then eventually regulators will take action to mandate certain things even more strictly than might be good for business.
And cryptocurrency and Web3 just make payments and privacy even more complicated…
And crypto? I mean, gosh, that opens up a whole new vector of how people can pay and how do you even verify at that point if they're a minor or not? So getting ahead of it, I think, is important and it's healthy for the industry.
How does your deal with Crypto.com work for you guys? What does the connection bring?
Really there's a couple of things. We've been looking at crypto for for years now, but we've been very cautious in our approach to integrating different crypto currencies into our payments API because even though we are not a payment processor, we're a merchant of record. We still work very closely with banks, major credit card companies, and we never wanted to do anything that would inadvertently run afoul of those companies. So we've been looking at this for quite a while. We integrated Bitcoin were pretty slow and cautious and that led us to thinking, okay, we know this is legitimate now, we've seen enough going on we're hearing enough from our partners. The Web3 landscape is kind of through that initial craziness, and we're getting to the point of where we may start to see legitimate products or games releasing that take advantage of the technology.
It gives us access to 80 million crypto users and really helped open the door for us to be able to work with Web3 creator communities.Chris Hewish
So now really is the time where we need to figure out how we can engage with that space in a way that protects us, protects the customers, and offers the greatest range of options for all of our players and partners. So that led us to looking for a partnership, and Crypto .com kind of quickly came up as a company that are doing this right. They're doing everything above board, they're not cutting corners and we know we can safely engage with them, not only for ourselves, but also for our partners and our players.
And it gives us access to 80 million crypto users, expanded all of the payment methods that we were making available, and just really helped open the door for us to be able to work with Web3 creator communities.
What's your take on the pressure on App Stores to make changes? I was thinking back at when the Apple App Store started and they introduced the 30% cut. What was your take back then? When you first saw 30%, did you think that was outrageous at the time?
You know, having been in the industry for so long and understanding margins and the cost of doing everything, and honestly looking at it… When I heard 30%, it just made no sense, right? Because the margin, you know, at the time, unless you had a big breakaway hit, you were dealing with 8 to 12% margins in a lot of cases for companies. And I just thought ‘how are you going to reconcile 30%?’
Obviously, it makes sense when you look at free to play and doing things at a massive scale but honestly, that success kind of hid how just big that 30% ‘tax’ was, that 30%. Sure, it made sense maybe early on when the infrastructure was new, when the App Store was small, the size of market was unknown, and they were introducing a whole new ecosystem.
Obviously, there's a lot of cost and often when something new launches, there's a higher price point initially. So in the early days, I was shocked, but I understood. And then as time has progressed, it's like, OK, it's obvious that this is out of whack with the realities of the market.
Tell us about your work with AppsFlyer too. What does that connection bring?
That's a really cool one. I mentioned our web shops and how that's been a really successful growing business. But how the heck do we drive traffic? How do we know what data is happening there? How do we understand, get a full picture of what's going on?
We provide some of that data already, but obviously we wanted to be much more robust. So we looked at AppFlyer as a partner that could bring in their technology, integrate it into our web shops, and provide all of the insights and the data so that our partners could make smarter decisions.
It allows our partners to look at monetization and revenue retention so they can get a good idea of what their ARPU and lifetime value is. They can help to increase the number of paying users - all of the stuff you would look for. So if a customer comes to the web shop, there's user authorization, which we do at checkout, and that ID can be tracked across all of the events with AppFlyer so that they can start to really track and show the partner just what is happening with that player. And then it displays everything with the AppFlyer dashboards for both mobile and web.
So they can also not just understand the revenue from those users and the retention, but they can also start to track how campaigns are performing. Partners are starting to run limited time events, special marketing campaigns, all of the things that you would think of within the app. They're now in the in the web shop as well and AppFlyer helps them to get a full view of what's happening everywhere that you're engaging with your player.
The discovery of things that the player might be of interest to the player to purchase and surfacing that front and center instead of having the player having to search for it. That’s really exciting, I think.Chris Hewish
Has the world of AI had any kind of bearing in the app finance side of stuff as yet? Is there a big AI in payments or security thing that's going to going to drop any minute?
So we've been using AI to some extent - not the generative AI piece - but AI has been around on the back end for fraud security and all of that, right? I think we're going to see some interesting things with AI and maybe it'll be controversial or maybe it won't.
Something we've already seen in the past with ecommerce traditionally, is behavioral pricing starting to build an understanding of the customer and using AI to customize not only pricing but what happens when we start to connect that and customize actual content or offerings too?
This is not something we have at the moment, I'm just future trending here, but I think that's really exciting to me. How can you use AI to increase the value for a player through not only pricing and timing and offers and all of that, but actual content too? How can you start to use generative AI that can understand a player and actually create some new content or properly source from a larger repository of content for them to discover?
So discovery of things that the player might be of interest to the player to purchase and surfacing that front and center instead of having the player having to search for it. That’s really exciting, I think.
Are you a fan of AI? Do you think it's going to be a force for good in the games and the monetization of games?
I think in the end, it's a tool, right? Personally, I view AI as a productivity tool. Will it be disruptive? Yes. Will it evolve business models, potentially go down some dead ends? Take loot boxes, for instance? Is it possible that AI, if it's being used in commerce, could come up with some really icky monetization methods that people push back on? That's possible.
We all know people and there are going to be some people that are going to want to maximize that, right? But I think when you look at the industry as a whole, at the end of the day, there may be some bumps, there may be some things that happen that people don't like, but overall, I view it as a net benefit.
As a tool to help understand data better, to understand the players better, it can provide greater value. All of the advances and tools get to a point where if you're driving purely for retention and engagement, it becomes too much, right? But that's kind of a macro conversation around entertainment at large.
We want to provide them with the ability to transact with their community, so that they can realize their dreams.Chris Hewish
I'm all for a lot of smaller companies producing better games. That seems like an easy win. Are those the sort of companies that you'd be looking to help out?
Absolutely. We help companies of all sizes, and we have long been proponents of. This used to be sort of one of our logos: “Democratizing the business of games”. It would be very easy for us to focus only on the big companies but we very intentionally look at the entire industry and we want to help everybody. And we believe that the power of going direct to consumer can help companies of all sizes.
And to your point, as the production barriers lower to creating great content, it's more important than ever that those creators are able to go direct to their audience and that discovery is made a lot easier.
Anybody can take the time to start to build up a community and engage with that community and we want to provide them with the ability to transact with their community, so that they can realize their dreams. I know that sounds very kind of corny, but it is true. I mean, I love the industry and indie gaming and small developers are a huge part of it.