South Korean developer Com2uS is betting a transition to free-to-play gaming will make it a global smartphone gaming leader. The company is releasing 43 games this year on iOS and Android, spanning a variety of styles and genres in order to find broad, international appeal.
Com2uS got its in start in 1998 making Java-based games for feature phones, but was an early adopter of smartphone gaming. In 2011, the company reported smartphone game revenues had risen 159 percent year-over-year from $7.7 million to $20.2 million. Overall, 64 percent of Com2uS’ 2011 earnings came from smartphones, up from just 29 percent the year before. As of 2012 the company is predicting 88 percent of its income will come from smartphone games with overall revenues predicted to hit $47.9 million, up 51 percent year-on-year.
With the profits and revenues increasing, Com2uS’ goal now is to expand globally with a library of free-to-play games, explains the company’s U.S. general manager Don Lim. Although fourth quarter earnings of $7.2 million were not as high as they could have been due to the cancellation of some paid game projects, Com2uS is confident the switch in tactics will help it in the long run.
“Paid-download games are more of a hit-or-miss model, but free-to-play games are a service-and-fix model,” says Lim. He goes on to explain that if a free-to-play game doesn’t succeed at first, Com2uS will tweak the game until it does. The company is also betting that free-to-play games will improve its long-tail monetization, offering gradually increasing returns rather than a “waterfall of income” that drops off quickly after the game’s release.
Aiding in the transition is the 10 million user strong Com2uS Hub. Acting as the company’s internal social network, it allows Com2uS to connect users with one another and provides the company a large cross-promotion network to work from. That said, a cross-promotion network can only go so far, especially when trying to make games that appeal worldwide, something Lim acknowledges.
“It’s a hard line to walk, appealing to audiences all around the world who have very different cultures of play, not to mention consumption,” he says. “South Korea has a longer history of consuming mobile content, especially games, and [they’re] more used to hardcore game elements, even on a casual platform. This is in contrast to the U.S. market and play culture, which doesn’t pay for mobile content as much and also sees less time invested in many titles.”
Of the 43 titles Com2uS is releasing this year, 20 are being developed by other studios. The company is working with developers from China, the U.S. and Europe, releasing games that range from casual-social titles like the Korean-developed Magic Tree to the U.S.-developed hardcore sports title SummitX Snowboarding. “If our catalog can appeal to many sub-genres, then that’s good in our book,” says Lim.
The company has been making progress too — almost half of Com2uS’ 2011 income came from outside South Korea. However, looking forward, the company also has to factor in billing and monetization, a huge issue outside South Korea.
According to Lim, Android users monetize at a much higher rate in South Korea because telecom providers offer carrier billing. A low-friction purchase option, it allows users without credit cards to purchase digital goods and boosts conversion and monetization rates in the South Korean Android market. Com2uS’ game Tiny Farm has a 10 percent conversion rate in South Korea and a 6.5 percent conversion rate in Japan. In the U.S., where all billing is run through Google Play, just 3 percent of users pay.
Com2uS is bullish on the prospects for Android, even outside of its lucrative home market. “We see a bigger potential in Android this year for a couple of reasons,” says Lim. “There are more devices worldwide and the market is more suited for free-to-play. Although there are many issues such as market fragmentation, device fragmentation and billing, it could be an opportunity for larger developers who have the resources, experience and scalability. It’s similar to J2ME platform days managed by the wireless carriers in the past but with more freedom to developers.”