Virtual Goods Summit: Americans Buy Shields Before Swords, Europeans Buy Swords Before Shields

Day 2 of the Virtual Goods Summit started with executives from some of the largest free-to-play companies in the world discussing the importance of virtual goods.

Atul Bagga from ThinkEquity moderated the session and kicked off the panel by discussing how the per capita gaming spend in China is 50% higher than the US spend. If you look at the models, it’s pay to play in the USA and free to play in China, and Korea is a mix of both.

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BigPoint CTO Jan Wergin explained that they opened a new SF market and feels that America is growing rapidly, and that their model of developing $200K games and determine whether it catches on or not, and if so, continue to add content. He pointed out how the virtual goods model properly adapts itself to gamers’ wallets: players can pay $1 or $100 depending on their budget and enjoyment. This is in contrast to the subscription model, where you put all users in one bucket, even though they’re not. He talked about how their psychological profiles found that European gamers tend to be a little “more strategic” than other gamers, and that means their game style should adapt.

Nexon CEO Daniel Kim explained how at this point, US revenues are still only 10% of their total revenues, but they’re seeing the US market expand rapidly as players adopt the free-to-play model.

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Alan Chen, CEO of Perfect World USA, thought that the future is a unified type of ‘console’ or game playing system. That’s why they are aggressively pursuing browser-based games, and he believes that free-to-play is the natural extension. A free to play game is a service, and by its nature emphasizes user feedback to iterate on their games based on user feedback, and Alan felt that will always prevail over standard games.

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Jan made an interesting point about customizing your game for the various locales, and one thing he found with BigPoint was that Americans tend to buy more shields and Europeans buy more swords, first. So they adjust their game markets to represent that.

Key Numbers:

  • Perfect World expects to increase revenues to $20 million in Europe, and Alan expects them to double their US market share over the next year
  • Nexon mentioned that China’s business has a lower ARPU but a huge user base, our China revenue was very close to the Japanese revenue but Japan had far less users. Korea and US fall in the middle. Overall paying users represent 10% or more of total users.
  • If a game has less than 200,000 concurrent users to be a successful game in China, according to Alan Chen from Perfect World