Micropayments make money

The conventional European/US business model for making money from online games is to charge a monthly subscription in exchange for a player gaining access to the servers that contain the gaming environments they want to play on. And it has proved a very successful model, World of Warcraft has over 5 million subscribers paying £8 ($14) per month (if you play WoW and see 'bjmonkey', that's either Zak or Brook spending their dad's money).

Wired reports that Asia's growing online gaming market is letting people in to their online worlds for free, then enticing them to make small purchases while they're there.

Here are some excerpts from the article:

Some of the most popular games in Asia are given away for free and charge no subscription dues, but collect micropayments for custom avatars and other items. Social networking is a key feature of the games, and it turns out players are quick to fork over yen and yuan to tweak their appearance to their liking.

At Hangame, Japan's number one internet game portal, customers wind up spending between 30 cents and $10 an item to customize the look of their avatar, visible during social interactions and in the otherwise free games.

The popularity of online gaming in Japan, China and Korea dominated more than a few sessions at the 2006 Game Developers Conference in Silicon Valley last month, where U.S. companies looked for advice on developing games that appeal to the massive Asian market.

"Microtransactions make Asian games more fun," said Nicole Lazzaro, president of XEODesign. "In games where people play together, the value of the game increases with the number of players.

"Everyone understands that $10 per month adds up to $120 per year," said Lazzaro. "This big commitment limits the market. A free game removes the barrier to entry, connecting as many of a player's friends as possible. It is easy to spend more than $10 a month in one-dollar-and-fifty-cent impulse purchases. Plus, we all play what our friends play."

In the United States, a handful of online offerings have adopted a similar model to Asia - notably Linden Labs' Second Life. It's free to use, but charges players to purchase and develop virtual property, and allows users to make and sell items to one another. But these games are the exception, not the rule.

Female players, rare in Western gaming circles, are in ample supply in Asia. In fact, they're a coveted demographic. Korean developers have learned they can draw teenage users of both genders by winning over the women first. "They tell me, 'If we get the girls, the boys will follow,'" said Steele.

Declining to state specific numbers, Kim said money spent on customization was "a lot more than people usually pay for subscription fees," and that the game's concurrent user numbers were higher than every U.S game except WoW.

Based in Seoul, GoPets offers a mix of social networking, games, chat and virtual pets that can wander off your desktop to visit other GoPet owners around the world. Already localized in more than 10 languages, GoPets is hoping for a worldwide audience, with a messaging feature that uses pictures instead of words, and an extensive list of items players can buy.

But experts caution there are plenty of pitfalls awaiting westerners hoping to break into the Asian game market, as the makers of Hearts of Iron 2 discovered when they crafted a game world with an independent Tibet and attempted to market it in China.
------------