Referral marketing is the most effective conversion tool to acquire new
customers, but untrustworthy actors and expensive micro-payments have
blocked its ability to scale. This is nowhere more apparent than in the gaming
The video games industry is $109B and growing at 6% annually.
In recent years, the number of gamers has exploded — today, 2.2B people play
games, making it the single most popular digital entertainment content on any
Inevitably, social platforms like YouTube and Twitch have created strong gaming
communities, and influencers and streamers now command promotional power
and unprecedented reach. The top 10 influencers have an audience of 242m, double
that of the recent Superbowl audience.
Gaming is now a booming professional sport (i.e. “eSports”) with the highest growth
in the industry. International “supergamer” competitions can fill stadiums that rival
those that host traditional premier sporting events. The 2016 International Dota 2
Championship, the richest eSports tournament had a prize of $21m, double that of
The Masters. Professional gamers are fundamentally changing the market dynamics
by bridging the private gaming world and the public sporting arena.
Marketing is critical to drive customer acquisition and usage, but costs are
The gaming industry spends approximately $20B in advertising and marketing 4 and
these costs are increasing fast.
Competition among game developers is intense. Blockbuster game developers now
spend 2-3x the development cost for marketing and advertising through traditional
channels to create “buzz” for their games. 5 At the same time, online customer
acquisition costs are also rising.
A few dominant platforms capture the majority of advertising dollars and broadly,
an average of 30% of developer revenues in distribution fees.
Referral marketing, a way to promote products through word-of-mouth, is
a powerful channel and the most effective conversion tool.
Compared to other marketing channels, referred consumers have the best
conversion to purchase, longer retention, and a higher lifetime value.
Referral through friends is the single most trusted form of advertising, 6 people are
4x more likely to buy when referred by a friend, 7 and the Lifetime Value of new
customers via referrals is 16% higher than those that are not referred. 8 Gamers,
more than in any other entertainment medium, place an even higher trust on
referrals, as the community is especially tight-knit and highly opinionated.
Despite proven effectiveness, referral programs are difficult to track and
These campaigns suffer from fraud (e.g. fake influencer accounts, clickbots),
reporting disparities between developers and platforms, leading to a loss of revenue
for influencers, and many expensive intermediaries.
While industry giants can amplify a brand’s message through sharing, even they lack
a mechanism to track the conversion funnel fully, from initial awareness all the way
to a purchase.
Influencers are powerful agents of referral marketing. But again, no technical
mechanism exists to track and pay an individual conversion for each view, like, share,
or recommendation into a direct sale. The current approach requires developers to
identify influencers manually, cold-contact them one by one, and negotiate unique
deal terms, generally in the form of sponsorships.
The process is time-consuming, costly, nebulous, and lacks measurable goals.
Moreover, it is nearly impossible to reward players with fiat currency because
of cross-border banking complexities and geopolitical restrictions. As a result,
influencers and engaged fans are not compensated accordingly