Q&A: Nexon America Talks Maple Story

South Korean MMO developer and publisher Nexon Corporation is best known for MapleStory, an online casual RPG aimed primarily at teens. The title, which was first released in South Korea in 2002, is currently distributed worldwide, and has an estimated 50 million users, including 14 million in South Korea alone. The game is free to download and subscription free, and generates revenue through microtransactions for items like clothing and weaponry. The company began its expansion into the US market in 2005 as NXGames, though MapleStory had previously been released by Nexon affiliate Wizet two years previous. In September 2006, NXGames became officially known as Nexon America. A month later, the company announced a partnership with MTV Networks, who will be promoting Nexon’s games through its “TV and digital media properties”, though further details are yet to be announced. The parent company has also announced a partnership with Nintendo of Korea, with MapleStory set for release on the DS in September of this year, though a worldwide release is yet to be confirmed. Asked to comment on this and numerous other queries related to the Nintendo partnership, a Nexon representative commented that the company is “not ready to discuss them at this time”. Gamasutra spoke to Min Kim, Director of Game Operations for Nexon America, and asked about microtransactions in the Asian and US markets, and the benefits of this financial model. When did Nexon move into the US market, and what prompted the move? Nexon America officially opened its doors in September 2006. We quickly moved in after seeing the market opportunity with our progress of MapleStory. The English service of MapleStory was a litmus test for us. With MapleStory already serviced in the major Asian online gaming markets, Nexon needed to find the next market with appetite for the product. A global English beta of the product was released to test the viability of the product in the West and locate the next market for expansion. For years, the industry has said item selling (microtransactions) would not work with the console driven North American market. However, we were pleasantly surprised to find similar adoption patterns in the US, as in Asia. Not only did MapleStory’s registrations take off; many players were purchasing Nexon Cash to access our virtual items. How did the release of MapleStory by Wizet prior to Nexon's move into the market affect its re-launch? To be precise, Wizet is not a third-party company but a part of the larger Nexon corporate family. So, when Nexon America took over the ongoing localization and operation of MapleStory in North America, it was not really a re-launch of the game. As we are both part of one corporate identity, as well in continuous close contact in operating MapleStory, it was 1) a cosmetic change from Wizet to Nexon, 2) a boost in development support, and 3) increased financial support. The players found the service better because Nexon dedicated more resources and gradually moved the operations to the US in 2006. They are getting more customer support, stability in the service, better localization, and more content. As proof of the seamlessness of the hand-over, our numbers have continued the steady increase we’ve seen since day one. What has the reception to the game been since its Western launch? The reception to MapleStory has been great, which has been reflected in the game’s registrations and success of our business model. The registration numbers have been climbing since we launched. Prior to any significant marketing, MapleStory registered close to 2 million users in North America. This tells us there is a serious market for Nexon’s gaming experience, which is expanding daily as people spend increasingly more time online. For many users, MapleStory is much more than a game. MySpace, cell phones, email, chat: today’s teens and adults are finding added ways to interact. Online games like MapleStory give people a place to virtually gather, which has had a viral effect as players bring more and more friends to their virtual hangout. One of the early challenges for Nexon was billing. MapleStory is free to play, and all revenue is generated through item sales. The items are one of MapleStory’s most unique features as they allow players to create truly distinctive avatars. However, at the outset with PayPal being the only payment vehicle, the good majority of our user base (teens to early twenties) could not purchase our virtual currency, Nexon Cash. This issue has been ameliorated by the release of our prepaid cards at all Target outlets nationwide. The cards have been flying off the shelves, and we have had several reports of stores with no stock several days after the initial release on January 16th, 2007. They are performing very well, and we have already gone into reprinting. Until other payment options such as SMS become viable, we feel the prepaid cards will be at least half of our market. Why? Because half of our audience has no access to credit cards for online payments. How viable a business model is microtransaction gaming in the Asian market? Nexon pioneered microtransaction gaming in the 90s, and we have survived due to this business model, which is generally called “Item Selling” in Asia. We interchange the terms, but there is nothing “micro” about paying ten dollars for a virtual kart! The item sales model is an extremely viable model in Asia, and it is proving to be so in North America as well. To put it simply, Nexon reported $230 million in revenue for 2005, the bulk of which stemmed from millions of “microtransactions”. How accepting of microtransactions do you think Western gamers are? MapleStory has shown us that Western gamers are as accepting of the business model as Asian gamers. It will take some education, but gamers are smart. Western gamers are quickly picking up on the benefits of microtransactions. Why do you think microtransactions are so popular in the Asian market, and which regions have you found them to be more popular in? I feel microtransactions are popular in Asia because it has only been offered in Asia. There are several reasons for its success and popularity in Asia and now North America. Low Barrier to Entry: Not everyone can afford to pay $60 for a package game or $15 per month for a subscription game. Item Selling games allow gamers to enjoy rich online experiences without the financial and psychological burden of upfront fees. Players can then choose to make purchases when the game becomes meaningful to them. We find this low financial barrier opens the door to reach a truly massive audience. Choice/Low Switching Costs: Players do not have to choose between one subscription game over another. MMO players are often lacking in time to try another game. Having to pay a subscription on top of their time commitment to a game makes it very difficult for subscription players to try new games. Customization: We find players like to customize their characters. For some, it is a way of showing off. For others, it is a way of expressing their unique identity. Item selling games give the player an opportunity to be different and create avatars that better reflect themselves online. We have found the microtransaction business model to be viable in every Asian market we have entered. Many times, what restricts growth is not the model itself, but the status of the underlying Internet and payment gateway infrastructures in that particular country. For example, in South Korea - the home of online gaming and microtransactions - household broadband penetration is one of the highest in the world and there is a very robust Internet café scene. Also in South Korea, numerous economically feasible payment gateways exist, such as payments via mobile phone, aggregated prepaid card networks, etc. In the US, broadband penetration rates only recently hit critical mass and many payment systems are still in a nascent stage and do not make economical sense for companies to utilize. Why is this kind of financial model beneficial for your company, and what advantages does it have over a more traditional retail, or even subscriber based, model? All of Nexon’s games are free-to-play/microtransaction-based. Much of Nexon’s success has been attributed to our development and adoption of this business model. This combined with the richness of our IP’s gameplay allows us to keep our games more accessible and reach a broader audience - Nexon prides itself on providing high quality gaming experiences online with no up-front financial burden. This allows everyone from the experienced gamer to the uninitiated to jump right into our games, for a few minutes or for hours on end. People that are playing other online games can try our games without any commitment, [which allows the company to] grow the market In Asia, games like MapleStory and KartRider have allowed Nexon to break out of the core gamer market. In Korea, Kart and MapleStory have both independently been played by roughly a third of the population. Because our products are free-to-play, it allows current players to easily bring their friends into their online gaming environment. Our games also allow for great advertising and co-promotional opportunities. In Korea, we have done deals with Coca-Cola, Mini Cooper, etc. Because our business model allows us to target a much broader market - the interactive mass market - we are the best option for product companies to reach their consumers. Also, our monthly patches allow us to create and insert new content frequently, and we look forward to product placement opportunities. Nexon has also entered into a marketing partnership with Viacom’s MTV Networks. Although the terms of the deal cannot be disclosed, MTVN believes in our products, and their reach, and will be marketing our products across their TV and digital media properties. What other games will the company be pushing in the US market? Although I can’t make promises of future launches, we have had some highly successful games in Asia that should be making their way to the US. We are also constantly creating great new games as well as on the look-out for third-party games to publish that meet our demanding standards. As recently announced, Viacom and MTVN will market MapleStory, KartRider, and Asia’s most popular online dance game Audition. Additionally, we have opened up a new development studio in Canada headed by industry veterans Alex Garden [formerly head of Homeworld creator Relic Entertainment] and Steve Rechtschaffner [formerly of EA Canada]. Needless to say, we are excited to see what they are cooking up. [EDITOR'S NOTE: A recent interview with Rechtschaffner reveals further information on the studio, as follows: "Working with Nexon and establishing Nexon Publishing North America (NPNA), we've created the Humanature Studio. My old friend Alex [Garden] is the CEO and I'm the CCO. We've been joined by some amazing talent, including Chuck Osieja, who is our Director of Design. Chuck and I worked together on numerous projects at EA and he went on to create The Need For Speed Underground games. Together we're starting to design the first games that will created for Nexon, primarily for the North American player."] What plans does Nexon have for MapleStory in the future? For starters we’re planning much more content and online events, which our players have come to love. We also have numerous off-line projects in the works, including an animated series in the works with one of Japan’s top animation studios. Of course Nexon America has quite a bit up its sleeve and many gigantic surprises featuring our pint-sized heroes, so stay tuned!