Exclusive: How Microtransactions Rule Korea

With digital downloads and microtransactions increasingly a hot topic for gaming in North America and Europe, Gamasutra has been talking to Pearl Research's Allison Luong about the company's new report on the ubiquity of game microtransactions in Korea. According to Pearl Research’s 'Games Market in Korea' report, microtransactions (usually consisting of "selling and buying in-game assets or content for $0.25 to $15") make up at least 50% of South Korea's $1 billion online games market in 2006, a massive percentage compared to the Western market. Luong explained to Gamasutra: "A critical success factor in growing the online games market is having a reliable and inexpensive system to bill, make payments and collect micro-payments. In Korea, the development of a mobile billing system, capable of processing small payments of less than $5 has been instrumental in helping publishers monetize gameplay." Interestingly, although many people associate microtransactions with more 'casual'-style online games, two of the most popular games played at Internet cafes in South Korea are Neowiz’s Special Force and CJ Internet’s Sudden Attack. Both are multi-player first-person shooters, and both monetize gameplay through the selling of in-game items. Overall in Korea, 7 out of 10 online games used in Internet cafes are free to play, but with extra payments to advance or master the games. The casual game market is also growing swiftly too, at 30% of the overall online game business, according to Pearl Research. Luong also notes of the business model: "In order to help facilitate [online gaming payments], Korea has extremely diverse and sophisticated methods to pay for online content. Gamers can select from more than a dozen payment options including paying by cell phone, by landline, credit cards and prepaid cards." In fact, statistics obtained by the company indicate that 58% of South Korean online gaming payments are done through phone bills, with just 27% by credit card, significantly different from the Western market. Pearl Research's conclusion? "Many game operators believe users end up spending more under an in-game item sales model than they would have under a subscription model. The amount that a gamer ends up spending is less transparent since many of the items are not priced in dollars. Publishers will often convert real money into an in-game currency or points that a user can purchase items with." It's clear that the Western market is swiftly starting to consider such models for complex online games - for example, Sony Online Entertainment announced in late 2006 that an upcoming SOE online title will allow users to play the basic game for free, and pay for additional items and services. In addition, Vivendi is launching South Korean online title FreeStyle Street Basketball in the U.S. in 2007, and it will follow the same 'free to play, pay for items' model that has made the game a hit in both South Korea and China. For more information on Pearl Research’s Games Market in Korea report, interested parties can visit the company's official website to sign up for newsletters or purchase the report.