Parks Associates Blog

Wednesday, September 17, 2008

It's Official-Nexon Made $30 Million in the U.S. Last Year

I'm in San Jose busy preparing for tomorrow's Parks Associates workshop so I've missed all the live action in Austin. Many interesting articles based on various speeches and panels have been published by Gamasutra and other sites. One that caught my eye is on Min Kim's speech on the Free-to-Play market in the U.S.

I've heard rumors about Nexon's U.S. revenue for a while now and Min Kim went on record to confirm that Nexon's 2007 revenue in the U.S. was indeed $30 million, compard to less than $1 million in 2005, when microtransaction was almost a foreign concept to MMOs in the U.S.

"In 2005, Nexon America’s revenues were around $650,000. In 2006, when they added Paypal as a payment option, sales rose to $8.457 million, based on item sales. In 2007, once Nexon released its Nexon Cash cards to retail stores, revenue jumped to $29.334 million."

Based on my conversation with industry insiders, F2P, microtransaction based MMOs already represent a business worth $150-200 million in the U.S. Nexon is the leader, followed by companies such as Acclaim ($30 million 2008 revenue expected), K2 Network, Outspark, Three Rings, and many other players. Although the market is still much smaller than subscription-based models--WOW alone makes $0.5 billion in the U.S., the momentum is strong. Our consumer data already shows that among non MMO players, interest in a F2P/Microtransaction based MMO is 6 times more than that in a subscription-based MMO. There's no question Warhammer will do well, but it will mainly draw its audience from WOW alumni and dormant MMO players, not fresh blood.

Interest among developers is also very strong. "Min asked his Austin Game Developers Conference audience how many people were developing or interested in developing free-to-play MMOs -- and roughly 70 percent of the audience raised their hands." In addition, large publishers such as EA have also recently introduced F2P games to the western audience.

With a whole generation of kids growing up with F2P games and virtual worlds like Habbo, Webkinz, and Neopets, microtransaction may overtake subscription to become the predominant MMO model in the U.S. in the next five years.

Min Kim will be on my panel next week at the NY Games conference. I'll surely have my chance to grill him and spur some healthy discussion among my panelists, which represent companies from both camps.

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