Micro-payment, a Korean reality

January 11th, 2006 Jun Sok Huhh Posted in news |

Micro-payment(MP) is one of promising ways to get more money from players. By the lessons from economics, price discrimination which based on extracting information from potential buyers is always good to sellers. The service called ‘Marketplace’ in Xbox360 Live is a sort of strategic arrangement for accomplishing this.

In Korea, MP has been a serious pricing method for some of MMO games. Especially, MMOGs based on simple arcade-like style, these are called “casual games” in Korea, have been designed for this business model from their scratch. Kart Rider by Nexon might be the most important one among them. It swiftly rose up to ‘national’ videogames that only games like StarCraft, Lineage in Korea had reached. Kart Rider is just a sort of Mario Kart style battle racing games, but its business model for MP is really unique one.

The entry fee of Kart Rider is zero. Nominally, it’s free. But, if you would want to do level-up faster or buy a good and nice Kart for winning, you could not help buying Luzzi(in-game currency for buying various items) with real money. So, what about players who already bought good enough Kart for their uses? So to speak, do players have reasons to pay so frequently?

There are two major playing modes. One is “speed battle” that is basically competed as maneuvering or driving skills. The other is “item battle”, as you already get, where using various items is permitted. People should pour a lot of time to get real joy from “speed battle,” for operating Kart need practicing. But, “item battle” is somewhat different in that the novice could get instantaneous pleasure by using items strategically. Actually, “item battle” gives players more chances of reversals where the first might plunge down to the last.

So, what’s the hidden and real price for staying in entry-free game Kart Rider? A Korean gaming website Gameshot calculated those hidden costs. Upshot is following.

Prices of Lineage series are most expensive one among all of MMORPGs serviced in Korea. Hourly item prices applied for Kart Rider and Yu-Gi-Oh! Online are obtained by experimental playing for calculating. It is apparent that players pay as much as in case of playing the most expensive MMORPG. If s/he be die-hard Kart Rider player, the price could be twice higher than those of Lineage series!¹

Entry fees of conventional MMORPGs are much higher than those of MP-based games. But, real price is not so cheap than it appears. Moreover, ‘free to enter’ is a strong momentum to get larger user base. How lucrative is it?

Last year, total revenue of Nexon amounted to 200 billions Won(around 200 million dollars), which was only comparable to that of the most powerful publisher in Korea, NC Soft. Judging from most of Nexon’s games are based on MP models², this might be next big thing in MMO gaming.

Just a moment, please. Here is a trivia. How could this be possible? One of hidden supports for the Nexon’s great success is easy and convenient payment systems/methods which are backed by financial intermediaries. Especially, payment by cell-phone is the key factor. For example, a child who wants to buy Luzzi would normally tease her/his parents to pay her/his money. What if the price is as high as usual MMORPG? What if another bothersome procedures need to be done? Just enter your cell phone number, and say identification code to your lovely daughter or son. What is better, there is much less resistance or hesitation to pay than paying by cash or credit card.

Many a pickle makes a mickle? It’s not such an old saying, but real one in MMO gaming of Korea.

1. If we consider prices of most MMORPGs are cheaper than Lineage, MP can be more lucrative business model than conventional one of monthly fee. The hypothetical price of Yu-Gi-Oh! Online is also listed for comparison. This MMOG version of the franchise is not so popular in Korea. But, the financial result might excel quite an MMORPG [back]
2. Last year, Nexon turned most of its line-ups into the MP based [back]