Posts Tagged ‘FTP’

Nexon’s Min Kim on the North American free-to-play market

Thursday, September 18th, 2008

When Nexon’s Min Kim took to the podium at the AGDC this week, he first asked the audience a rather logical question: “How many of you here are interested in developing a free-to-play title”?  Approximately 70 percent of the willing and able audience raised their hand.  Fair enough, when you want to get into the game, who better to turn to than one of the experts?  Kim took the question a bit further, by asking, “And how many of you have played Maple Story”, a few hands amongst that 70 percent sank.  Kim ventured one further and asked about Kart Rider, and only about 20 percent of the hands stayed in the air.

Kim jovially scolded his audience with, “The first step to developing free to play MMOs is to play the games. People think they know how to make these games, and yet they’ve never played a FTP MMO before. I think it’s really irresponsible.  If you can’t do it, get an intern to do it and tell you what it’s like.”
Talk about a swift kick in the pants as a wakeup call for developers.  And rightly so.  Basic business sense dictates that you’ve got to know a bit about the industry you’re looking to enter, and a thing or two about what your competitors are doing.

Kim continued on into his talk, speaking to the misconception that free-to-plays are sub quality titles in the North American market.  Pulling some fantastic data from his Nexon magic bag, Kim provided audience members with 2005-2007 North American numbers.  The results speak for themselves:

Nexon America Revenues

  • 2005 – Approx. $650,000
  • 2006 – $8.457M – with the addition of paypal as a payment method
  • 2007 – $29.334M – with the addition of Nexon cash cards in major retail stores

While Nexon and many other developers and publishers hail from Korea, Kim sees the future of free-to-play in Western titles.  We’ve seen this happen in other places like China.  The big games now are from Chinese developers. I think the same thing will happen in the West, with Western-developed titles.”
And while most Westerners view free-to-play titles as casual or n00b gamers only, Kim is quick to point out the gross misconception, “We don’t make games for non-gamers. We make games for gamers that are accessible to non-gamers, and that’s a big difference.”

Developers looking to produce a quality free-to-play should be visiting and playing a wide variety of in play free-to-plays.  And not just play, but head to the milk house as well.  “…try out and study all the shops. There are tens of games out there that are free to play. I think if you visit those shops, see those games, I think you’ll take one piece of learning from each one.”

Warning producers of common pitfalls, Kim also points out, “Don’t have all your items and categories pegged out. Make sure you have a fun game, first.” 9 times out of 10 the ideas you’ll have at the beginning will be wrong. The players will tell you what they want to buy.”  Another warning comes via the gaming lifecycle and time-limited play, “It’s not about shareware. Expansions and content are generally free; it’s all about extending the lifecycle so you can continue to sell items, or subscriptions. Do not lock players out of real content.”

Towards the end of his talk, Kim also spoke to the new and incoming gamers, and how to treat them.  He admits that Koreans have not been the best at this procedure, and how he envisions the western markets doing it a bit better.  “This is something Korea hasn’t done well and I think something that North American developers could do a lot better. And that’s carefully building the initial experience of free to play. It’s incredibly important is to protect those new players. Veteran players will spank a new player who just happens to wander in, so make sure they start in a safe place where they won’t just get headshot 15 times.”

While this is certainly not Min Kim’s first public address regarding free-to-plays, and probably won’t be his last, the AGDC audience was a bit warmer to the topic than previously seen.  The question of does free-to-play have a place in the market is dead.  Obviously it does.  With Nexon’s Combat Arms receiving (dare I say it?) recognition and a nod from ‘core gamers’, EA jumping into the pool and id Software bringing a free-to-play offering to market, it’s no longer a question of “should we?”, but rather “how good, and how fast can we make one?”  The day and age of each top tier developer/publisher with a quality free-to-play is rapidly approaching.  How many of these developers have the necessary experience to monetize this title via micro-transactions?  Who better to speak to than fatfoogoo, because There’s Money in Your Game.

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Gaming takes top spot in Asia Pacific Online Content Market

Tuesday, July 29th, 2008

New analysis and a report by Frost & Sullivan places gaming in the top spot of ‘What’s driving the Asia-Pacific Online Content Market?’ Asia is not free of the global piracy concern, but revenues for paid online content rose 25.6% in 2007 and are looking at projections of another stellar year (an expected 21%), reaching a market size of US$4.67 billion by December 2008.

The study shows that online music and video have felt the impact of piracy yet gaming remains relatively unscathed, accounting for 81.3% of revenues generated in 2007. To put that in perspective, 10.8% came from the music industry, and 7.9% is owned by video.

The study conducted by Frost and Sullivan covers the Asia Pacific Online Content Services Market – 12 Asia Pacific countries. The study places the combined earned revenues of US$3.86 billion in 2007 and estimates this to be worth US$9.2 billion by the end of 2013, at a CAGR (compound annual growth rate) of 15.6% (2007-2013).

Online gaming is projected to lead this massive growth of digital content at a CAGR of 14% and will continue to be the big player in the premium or paid content revenues in 2013 with a market share of 75.1%, US$6.9 billion.

Premium content services including news, greeting cards, research, dating and credit reports are more of a niche product and are not included in this study.

Frost and Sullivan’s industry analyst Kamlesh Kalwar said, “Today’s Internet has come a long way from being just a medium for disseminating information and is now increasingly becoming the mainstream channel for distributing and accessing ‘infotainment’ content as well.

“As the percentage of people accessing the Internet for leisure time entertainment grows rapidly, the market for both paid online content services as well as ad-revenue supported free online content services is expected to grow in tandem with this shift in the consumption of entertainment content,” he says, adding that the Internet has become a great alternative to traditional media channels for music, videos and games thus spawning a digital culture.

As expected, China and Korea are the largest consumers of premium online content. Together, they count for a massive 79% of revenues in 2007. China is the single largest gaming online gaming market with the increased penetration of entertainment applications reaching the top of the list. Gaming in China is blazing new paths, and China is expected to contribute up to 46.7% of the Asia Pacific content revenues by the end of 2013.

One of the factors driving Asia Pacific consumption of premium online content is the increased availability of broadband internet connections. “As faster Internet speeds enhance the overall online experience, users are spending more and more time online playing games and visiting social networking sites,” Kalwar says. “The growing broadband penetration has not only expanded the netizen base, but also created a conducive environment to encourage users to spend a greater amount of time online engaging in entertainment activities by enabling the convenient sharing, personalisation and sourcing of relevant content.”
He adds, “As such, premium online content services and applications like audio- and video-streaming and downloads, as well as online gaming is expected to see a surge in demand.”

Kalwar also mentions that with widespread availability of net speed, comes the unfortunate side effect of illegal downloads, piracy, and BitTorrent and other P2P networks. While piracy runs rampant in Music and Video, it remains a relatively small problem in the gaming world. The main factor combating this problem is that users need to be registered with a certain game publisher before they can play the game.

Kalwar says, “In an effort to shake-off the ghosts of piracy, stakeholders are grappling with the right business model to monetize content. For selected content, particularly online video and music streaming services, the ad-sponsored revenue model has been widely used.

“Game providers on the other hand have adopted the FTP (free-to-play) revenue model where gamers are not charged an upfront cost to play games online, and instead aim to profit through in-game advertising and virtual sale of in-game items like weapons, ammunition and such. In nascent markets, there has been a consistent attempt to increase sampling by giving the base version for free and charging for the advanced versions once the subscriber is hooked,” he adds.

Such FTP billing models, richer and wider product offerings, and the growing popularity of MMORPG (massively multiplayer online role-playing game) is expected to drive growth in the online gaming segment.

If you are interested in a virtual brochure, which provides service providers, vendors/manufacturers, end users, and other industry participants with an overview of the Asia-Pacific online content services market, then send an e-mail to Sarah Lourdes at sarah.lourdes@frost.com, with your full name, company name, title, telephone number, fax number, and e-mail address. Upon receipt of the above information, an overview will be sent to you by e-mail.

About the Asia Pacific Online Content Services Market Study:

The Asia Pacific Online Content Services Market study is part of the Communication Services Growth Partnership Service program, which also includes research in the following markets: WAN services, enterprise mobility, IPTV, user-generated content (UGC), social networking, broadband access technology, mobile content, telecom services, managed and hosted services, and network transformation case studies. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Analyst interviews are available to the press.

About Frost & Sullivan:

Frost & Sullivan, the Growth Partnership Company, partners with clients to accelerate their growth. The company’s TEAM Research, Growth Consulting and Growth Team Membership empower clients to create a growth-focused culture that generates, evaluates and implements effective growth strategies. Frost & Sullivan employs over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 30 offices on six continents. For more information about Frost & Sullivan’s Growth Partnerships, visit http://www.frost.com.

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