We have found the microtransaction business model to be viable in every Asian market we have entered. Many times, what restricts growth is not the model itself, but the status of the underlying Internet and payment gateway infrastructures in that particular country.
For example, in South Korea - the home of online gaming and microtransactions - household broadband penetration is one of the highest in the world and there is a very robust Internet café scene. Also in South Korea, numerous economically feasible payment gateways exist, such as payments via mobile phone, aggregated prepaid card networks, etc. In the US, broadband penetration rates only recently hit critical mass and many payment systems are still in a nascent stage and do not make economical sense for companies to utilize.
Why is this kind of financial model beneficial for your company, and what advantages does it have over a more traditional retail, or even subscriber based, model?
All of Nexon’s games are free-to-play/microtransaction-based. Much of Nexon’s success has been attributed to our development and adoption of this business model. This combined with the richness of our IP’s gameplay allows us to keep our games more accessible and reach a broader audience - Nexon prides itself on providing high quality gaming experiences online with no up-front financial burden. This allows everyone from the experienced gamer to the uninitiated to jump right into our games, for a few minutes or for hours on end.
People that are playing other online games can try our games without any commitment, [which allows the company to] grow the market In Asia, games like maple stroy mesos and KartRider have allowed Nexon to break out of the core gamer market. In Korea, Kart and maple stroy mesos have both independently been played by roughly a third of the population. Because our products are free-to-play, it allows current players to easily bring their friends into their online gaming environment.
Our games also allow for great advertising and co-promotional opportunities. In Korea, we have done deals with Coca-Cola, Mini Cooper, etc. Because our business model allows us to target a much broader market - the interactive mass market - we are the best option for product companies to reach their consumers. Also, our monthly patches allow us to create and insert new content frequently, and we look forward to product placement opportunities.