Author Archives: tayoungryui

Virtual Economy at GDC2009

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Game Developers Conference 2009 took place at Moscone Center in San Francisco USA in March 23. One of important keywords from this year’s Game Developer Conference is digital distribution of video games. So, many sessions dealt with issues related to digital distribution like virtual economy models, new revenue models for casual games distributed via console networks including PSN, XBLA. In addition, virtual goods trades and how to make more money through various new distribution methods were focused by a number of sessions.


At his keynote lecture, Iwata Satoru, the CEO of Nintendo announced that Nintendo’s new handheld platform, Nintendo DSi will implement a digital distribution service. Especially, he announced that the new sequel of one of Nintendo’s biggest franchises, The Legend of Zelda will be only available through the digital distribution. The fact that they adopt a digital distribution model for their most profitable handheld platform means they will change their main distribution method from package selling to digital distribution. This change implies that there will be more possibilities of virtual goods trades and microtransaction models for mobile game platforms. Actually, Sony PSP, Apple Iphone have implemented digital distribution methods as well as Nintendo DSi.


Among various summits at GDC 2009, Worlds In Motion Summit deals with virtual worlds in video games and methodologies to integrate socialization into video games. At this year’s Worlds In Motion Summit, a wide range of issues about virtual worlds and virtual economy were discussed. At the first session, Sulka Haro, the creator of Habbo Hotel talked about success factors of Habbo Hotel. He explained how Habbo Hotel’s game mechanics which has no rules creates social game plays and dynamic interactions between users. At the second session, Don Choi, the CEO of OGPlanet gave a lecture about the free-to-play business model of OGPlanet, describing how and why it has been successful. Also, he talked about maintaining balance for games having microtransaction system and in-game shops. In addition, Erik Bethke from GoPets and Andrew Schneider from Live Gamer discussed about optimal design methods for real money trading. They emphasized that a game design that encourages users to socialize each other and make virtual communities will enhance the revenue from real money trading. Also, they mentioned the importance of balance between primary item markets and secondary markets. Sibley Verbeck, the CEO of Electric Sheep talked about real money trading as well at his session. He focused on user-generated contents in online games for kids.


Some sessions at Business and Management Track dealt with virtual economy issues as well. Case studies about social games by Kristian Segerstrale, the CEO of Playfish were very instructive. He gave a lecture about five key lessons learned from developing social networking games and explained why those lessons matters for the future of overall game industry as well as social networking services based on his game projects. His five lessons were as follows. 1. The era of franchises may be over. 2. All games will become services. 3. Marketing by numbers will become important. 4. Game designs will change into multiplayer-driven. 5. Game developers have to listen to their users.

A round table session called Free to Play, Pay for Stuff: Virtual Goods Explored coordinated by Daniel James from Three Rings and Matt Mihaly from Sparkplay Media was useful as well. During the session, many game developers discussed various issues about microtransactions and virtual goods trading like secondary market issues and multiple-currency issues.

Korean online game portals report record-breaking sales in 2008

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At the beginning of February, South Korean news reports said, nevertheless the global recession, Korean online game portals announced that their yearly sales were highest ever in the South Korean game market in 2008. While all most all big game publishers in the global game industry including EA, Activision-Blizzard, THQ, SCE, MS are facing a huge amount of loss and planning large-scale layoffs, South Korean online game portals including Neowiz Games, CJ Internet, Hangame are celebrating their incredibly successful sales records.
Neowiz Games which runs an online game portal site called PMang reported their sales during the 4th quarter in last year neared 50 million dollars with a profit of 8.6 million dollars. Compared to the sales in the 4th quarter in 2007, it increased by 58 percent. The profit increased by 100 %. It is their biggest profit and sales ever. All of their games in their online game portal PMang are free-to-play online games including Special force, FIFA Online and NBA Street Online Special Force is the first FPS game adopting a micro-transaction model. FIFA Online and NBA Street Online are sports games co-developed with EA Asia studio. Actually, Neowiz Games became one of the most important partners of EA after the success of micro-transaction model in EA’s licensing games like FIFA Online. Neowiz Games is helping EA realize their dream, dominating the Asian online market. FIFA Online has been super-successful in Korea and China.
CJ Internet also reported their sales and profits records at the almost same time as Neowiz Games. Their sales record during the 4th quarter in last year was 52 million dollars with a profit of 14.5 million dollars. Compared to the sales in the 3rd quarter in 2008, it increased by 17 percent. The profit increased by 11 %. Their yearly sales record in 2008 was 190 million dollars and their yearly profit in 2008 was 55 million dollars. Currently, their online game portal Netmarble has the most popular game in South Korea called Sudden Attack, which is a FPS game having item-selling based micro-transacton model.
NHN which runs the biggest online game portal Hangame also reported incredible sales record in 2008. Their yearly sales record in last year was 360 million. Their yearly sales increased by 51 percent since 2007. Various games are in service in Hangame ranging from casual puzzles to MMO RPGs. However, their revenue mostly comes from casual board games including some casino games. In those games, players spend lots of money to buy numerous in-game items continually.
When it comes to the factors of the success of Korean online game portals last year, two things should be mentioned: Fully mature online game market environment, established micro-transaction models. For the past 8 years, Korean online game portals have made hard efforts to cultivate the market and user communities. Recently, their efforts have started to pay off. Now that each of them has tens of millions of subscribers, they easily make money from the huge amount of users having high loyalty. Actually, they don’t even need to spend money for marketing their new games. When they release a new game, their game users give the word to spread the information of the game each other in their own community. That is much better way to advertise their games than TV commercials or any other promotional methods. In order to intensify this process, the online game portals are focusing on community raising game play or social game play early on the concept design stage of a game project. Also, almost all games in service in the online game portal websites are free-to-play games. So, their only revenue comes from item-selling micro-transaction model. For more than 7 years, they have designed, tested and revised various effective micro-transaction models. Finally, they have just found optimal micro-transaction models not messing the game balance. In addition, they have surely found the method to make micro-transactional games not frustrating any user, even users who don’t spend a penny for in-game items.
In the point of view from the global game industry, these incredible results of Korean online game portals in 2008 show free-to-play online games adopting micro-transaction models could be a promising breakthrough for this dismal situations caused by the terrible global recession.