Microtransactions aren't very well understood in the US, and so that was a big part of the massive subject that Nexon America's Min Kim delved into this morning at the Worlds in Motion conference. Beginning with a rundown on Nexon's ramp up to the RMT-based juggernaut it is today, he went into a great deal of detail about the tiny transactions that have built an industry (almost) overnight.
The rest of his talk centered on Nexon'f foray into the United States. If you've been wondering about those MapleStory commercials, the cards at Target and 7-11, or all that adorable art - Nexon is the source. Read on for a discussion of how a foreign title built in South Korea can become so integrated with our own culture that they can offer up a Vegas-style wedding ceremony.
Hail to the king.
The history of Nexon began in 1994, when it broke out the first graphical MMORPG; They expanded to the rest of the Asian nations through 2005, and then moved into the US and Europe in the last few years. When they began, Korea was a core gaming market, but the explosion of mass-market gaming has lead them to huge revenues; some $230 million as of last year. In the late 90s they expanded the concepts of items sales, and with titles like Kart Rider and MapleStory those virtual goods now make up the company's primary revenue source.
These sales are primary of decorative components, or those that offer functional advantages. They range between $1 to $10, and allows the company to approach gamers scared off by the $15/month fee. This allows for discriminating pricing; some people 'use' the game more than a flat fee would otherwise indicate.
Their expansion plans involved a lot of research: consumer behavior, internet usage, the history of gaming, average household income. They actually rolled out to the US too early; in 1997 the internet presence in the states was just not robust enough to support the company. He discusses the use of a publisher to understand the quirks of global markets; ie: a publisher on the ground is going to understand holidays, spending habits more readily than a foreign company. Making games culturally relevant is an incredibly important element of the publishing process.
From there, Kim moved on to the rocky road in getting Nexon (back) into the US market. They originally launched in 1997, but pulled out in 2003. The very next year they went back in, with MapleStory arriving again in the states in 2005. The user appetite was there, they found, as the casual/hardcore They offered payments via PayPal, and set up new offices in the states two years ago. January of 2006 they launched the payment cards with Target - they're now the second most successful content card with that retailer. Target now also has an entire section for virtual world cards - something Nexon launched.
He reiterates their commitment with other products, like Audition (already out) and Mabinogi/Kart Rider in Beta. He views many of the big products in the states of the future as coming from the East. Many microtransaction ideas are often moving West, resulting in games like Battlefield Heroes. Translation is one of their biggest hurdles in making content available for the states; deeper understanding of the product and a native language speaker is required to make sure the game hits big. Poor translation relegates a title to a niche ghetto, essentially. The goal is not to be seen as a translated game. He offers and an example of a terrible translation: "I dropped the egges and fell the hen." That kind of work makes a game irrelevant. They have an internal team that ensures translations come out fluid.
Some changes to the game were made for the new market, such as additional skin tones, North American-centric items (like football helmets) and culturally relevant content. Music in Audition includes J. Lo songs and Brittany Spears - making the game familiar to the local audience. Additional NPCs fleshed out the world's story in MaplesStory, and a local 'garage'/chatroom allowed NA customers to chat with each other more freely. Business models are also tweaked; Mabinogi has a two-hour free limit in Korea, with for-pay service afterwards. In the US it will be a free-to-play/microtransactional offering.
He shows off some sketches and concept art for newly added content - a haunted house, an Elvis avatar. He is of the opinion that many of these kinds of elements wouldn't be created in Korea just because of the background of artists growing up. Holiday events have been ramped up to match with US customs as well. These kinds of adoptions lead to players interacting with the game world for 30-40 hours a month; very high for this kind of game.
Hacking and Fraud is one of the biggest problems they've faced in North America. Without a social security number free accounts allow for a lack of responsibility. He discusses the major difficulties faced by online companies mentioned by John Smedley in our recent interviews; credit card companies don't give you any warning. They ended up having to remove a 'gifting' feature because of chargebacks and fraud. They also had to implement spending limits to ensure that players don't fall for the worst scams. They joined the Platinum Members list in the Merchant Risk Council - noting the amount of money you should dedicate as a company to fighting this problem. It's a huge, industry-wide issue.
Hacking wrests user accounts away from legitimate accounts, and turns away current users/ makes new users reluctant to participate. Farmers created an abusive community, and pushed down spending; why buy something if your account is going to get stolen? They developed new tools and extended GM support, but GMs are not the solution. Only by moving elements to the server-side and creating numerous tools, using third party solutions, were they able to crack down on the problem. They took legal action as well, which was surprisingly successful for them. Initially they had a very loose user policy, and that was changed as well. They don't want to turn people away, but incredibly important to work on. "Combating hacks and abuse requires trust and cooperation between the service teams and development teams."
Their first card, at Target, was a huge success; they're now at over 20,000 locations across the US. Retailers include 7-11, Best Buy, Rite Aid, CVS, Future Shop, and similar companies. Over 50% of their player base have no access to a credit card. These cards also bring down hacks, by allowing desperate players to gain in-game items without hacks or fraud. They included quests that lead players to in-game representations of the retailers, which led to these same players buying real cards offline.
They now have over 5 million registered users, and have reached 60,000 max concurrent users. They announced 1.6 million in sales and 600,000 items sold by February of last year,, and cracked a million items sold at the end of last summer. Future improvements will include more product placement in Kart Rider and MapleStory and product expansions like the Wizards of the Coast card game. They're planning to launch an animation product in the states, which will allow for even more tie-in opportunities.