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Gift cards are an absolutely enormous industry in the US. In 2015, gift card sales reached a new high watermark of $130 billion, and they’re predicted to reach volumes of $160 billion by 2018 – driven partly by increasing “e-gift card” sales.

One particular area of the gift card market that’s often not discussed is the digital market. App stores like Google Play, The App Store, and other digital marketplaces like Steam have benefitted hugely from gift cards over the last few years. And here’s the catch – these sales aren’t driven by customers buying gift cards for others, but buying them for themselves.

We first saw the beginnings of the digital marketplace revolution with Apple’s iTunes gift cards. These cards were totally ubiquitous in the mid-2000s and were commonly given away for birthdays, holiday presents, graduations, and other celebrations. They were also purchased quite commonly by individuals who planned on using them to purchase music and basic apps for themselves.

But things really began to take off for digital marketplace gift cards when The App Store was introduced alongside the original iPhone. All of a sudden, an iTunes gift card wasn’t just a way to buy your favorite Justin Timberlake song – it was a way to purchase apps, books, movies, and other entertainment material, all from your phone.

Gift Cards To Digital Marketplaces Allowed More People To Use Their Services

Think about what you need when you’re making a regular purchase on a digital marketplace like the Google Play Store or the App Store. That’s right, you need a credit card or a debit card. And until the advent of gift cards to digital marketplaces, anyone who didn’t have a credit card or a debit card was totally locked out of these services.

Younger consumers who had money were often totally unable to fund their own purchases on these digital marketplaces, as many banks require an individual to be at least 18 before allowing them to have a debit card or a credit card.

Those who preferred to make use of cash over debit cards were also totally locked out of digital marketplaces like Google Play and the App Store before gift cards to digital marketplaces came around.

And that’s what’s so interesting about this revolution in gift cards – rather than buying a gift card to give to someone else, consumers began to purchase gift cards for themselves to avoid using credit and debit cards on digital marketplaces like Google Play, the App Store, and Steam.

You’ll see this trend continuing at most retailers. Walk into a WalMart, Target, or other department store or a grocery store, and you’ll see a huge rack of gift cards to various store locations.

Of these gift cards, the most quickly-growing segment is gift cards that allow access to virtual marketplaces, or even gift cards that allow access to subscription-based games like RuneScape, World of Warcraft, and other online games that used to only accept credit cards.

It seems that the founders of these digital marketplaces quickly sensed that, if they didn’t provide some kind of method of purchasing store credit with cash, they would miss out on a lot of sales.

And the humble gift card was the answer to this problem. By allowing consumers access to an easy, quick method by which they could convert their cash into merchant credit, these retailers enjoyed a larger consumer base and benefitted because these gift cards could only be spent on their services.

Why Gift Cards Are So Advantageous For Digital Marketplaces

Digital marketplaces are, by default, digital! That means that physical currency like cash can’t be spent on a digital marketplace – you can’t shove your $20 bill into the CD slot of your computer and expect to be able to purchase something online.

However, the fact that these marketplaces are digital is one of the primary hurdles they have to cross to maximize sales. A 2014 study revealed that up to 29% of Americans don’t have a credit or debit card. That means that unless these digital marketplaces established an easy method by which physical currency could turn into digital currency, they could lose out on a huge market share.

A gift card was the most obvious solution. Activatable at a POS, and able to be loaded with a set value amount that could be paid for however the customer wanted, a gift card was the perfect way to ensure that anyone who wanted to purchase a digital product would have the means to.

In addition, gift cards help digital marketplaces in the same way that they help traditional marketplaces – gift cards are easy to spend, and since a consumer turns their cash into a gift card for one particular service, that service enjoys the profit of the sale before the consumer redeems the card.

Bigger market share. More customers. More payment methods. It’s no wonder that digital marketplace gift cards have experienced such rapid growth.

The Rapid Rise Of Digital Marketplaces In Gaming

The trend certainly began with iTunes gift cards in the mid-2000s, and as time has gone on, just about every digital marketplace has adapted.

Take Xbox LIVE, for example. When Xbox LIVE was first introduced, it was impossible to purchase a subscription without a credit card – details had to be given to the service, and a monthly billing charge was introduced.

However, by 2006 and the release of the Xbox 360, Microsoft had gotten wise – they understood that a large amount of their player base was under the age of 18, and though they may have had the money to buy Xbox live, they didn’t have a credit card with which to purchase their subscription.

So, slowly, Xbox live subscription cards began appearing in retailers like WalMart and Best Buy, opening up an entirely new market segment and a method of selling subscription-based services with physical, gift-card based vouchers.

Microsoft has expanded this method even further with the advent of the Xbox One, which features a fully-functional digital marketplace on which full games and entertainment media are sold. Now, any big-box retailer will feature “Xbox Digital Gift Cards” which are set at a specific monetary value and can be used to purchase Xbox LIVE subscriptions, digital products from the marketplace, and other items available on Microsoft’s Xbox systems.

Perhaps it’s no surprise that Sony – Microsoft’s biggest gaming competitor – followed suit after the release of their PlayStation Plus online gaming service. Sony now also sells gift cards – 3 and 12-month subscriptions to the premium online service, as well as PlayStation®Store cash cards in $20 and $50 denominations.

The biggest competitor these two companies have is Valve, and this PC-gaming focused company has recently introduced physical gift cards of their own for their Steam game marketplace.

Nowadays, almost all electronic stores, gaming stores, and even most big-box retailers like WalMart and Target carry these types of gift cards. Not because they’re given as gifts, but because consumers who are otherwise unable to use them – due to lacking a credit or debit card – purchase them for themselves so that they can enjoy the same benefits that anyone with a credit or debit card could.

Gift Cards For Subscription-Based Games

Given that the audience for video games skews younger, it is perhaps not a surprise that these marketplaces were the first to understand how gift cards could be used to tap into a market that was previously unable to make use of their services.

In fact, this trend reaches much farther than credit to game marketplaces – at almost every major big-box retailer, it’s possible to purchase gift cards for subscription and credit-based games. There are a tremendous amount of game companies using these sorts of gift card credits, including:

  • World of Warcraft
  • Runescape
  • GTA Online
  • IMVU
  • KingsIsle
  • Neopets
  • Roblox
  • Aeria
  • Zynga
  • Plants Vs. Zombies
  • Farmville

And much more. Given the wide audiences that these games target, it became clear to the companies running them that customers who could not purchase their services online needed a way to get their subscription codes or game credits – and so they introduced physical gift cards.

Gift Cards For Subscription-Based Services

Gift cards for digital subscription-based services aren’t just limited to gaming. In recent years, a new, titanic industry has risen – streaming media.

In the past, digital media was primarily purchased outright.  This was the case when the iTunes gift card was introduced over a decade ago. Most people used their iTunes gift cards to purchase music, movies, and other forms of media, which they would then own entirely.

itunes gift cards

However, this is no longer the case. Movies, music, and television have all moved to a primarily subscription-based, online model. Services like Spotify and Apple Music have totally changed how consumers interact with music, and online streaming video platforms like Netflix and Hulu Plus have done the same for movies and television shows.

And, as with any online subscription-based service, these services required credit cards and debit cards to pay – though some, like Netflix, can use services like PayPal. This meant that an alternative would be required to avoid missing out on consumers who would otherwise use their services.

So gift cards for Spotify, Netflix, Hulu Plus, and Apple Music have become commonplace – rather than using an online payment method, users can simply walk into a store, pay cash for a set monthly subscription, and activate their service online, repeating the process whenever they run out of credit.

This same trend repeats itself everywhere you look. When there is a revolution in any digital marketplace, companies scramble to ensure that they can reach the most consumers possible – and for digital marketplaces, this means that a smart gift card implementation is required.

The Future Of Gift Cards To Digital Services

There is always going to be a niche for physical gift cards for digital services. There are always going to be consumers who can’t – or won’t – use a credit or debit card to purchase an online service, so it would be foolish for retailers to leave them out of their consumer base, and miss out on their sales.

However, the world is moving towards digital gift cards – and we wouldn’t be surprised to see gift cards to digital service providers and marketplaces follow that trend.

According to InComm, 89% of people purchase gift cards online, and as time goes on, the trend seems to only be increasing. The primary factor is convenience. Since online and electronic gift cards can be purchased from the comfort of your own home and delivered right to your inbox instantly, it’s easier than ever before to purchase gift cards, whether you’re buying them for a retailer like WalMart or Home Depot, or a service like Netflix or Spotify.

So while physical gift cards are unlikely to go away – especially for digital service providers and marketplaces – the future certainly seems digital, especially with many larger retailers providing dedicated apps and online connectivity that makes storing, buying, and spending gift cards easier than ever before.

Sell Your Unwanted Gift Cards – At EJ Gift Cards!

Whether you’ve got a gift card to a digital marketplace like Apple’s App Store, or a physical retailer or restaurant, EJ Gift Cards accepts hundreds of gift cards – both physical and digital – and our quick, simple, step-by-step process allows you to get payment via PayPal once the details of your card are verified, or after you’ve sent tracking information for a physical gift card.

If you’ve got a gift card to a service, restaurant, or retailer that you don’t particularly care for, take it out of your wallet, head over to EJ Gift Cards, and get a competitive rate paid for it – in cold, hard cash. Our customer service team is always ready to help you if you have any questions or concerns, and our process is as simple as can be.

So get a quote for your card today. You’ve got nothing to lose – and plenty of cash to gain.