Friday, May 18, 2007

Sony Buying Club Penguin?

Several blogs, including PaidContent, reported today that Sony is in "advanced talks" to buy ClubPenguin a social networking and online game site geared toward kids that was launched in October 2005. The price is reported as in the ballpark of $450 million. The subscription-based (six dollars per month) ClubPenguin takes the form of a massively multiplayer online role-playing game (MMORPG), where children play games, amass virtual goods, and interact with each other, all while participating as penguin avatars. According to PaidContent, the site rakes in about $60 million in revenues and is already profitable despite being fewer than two years old. In March, ClubPenguin had 4.5 million visitors.

The ClubPenguin acquisition by Sony hasn't been confirmed yet. But it's already clear that Sony has interest in the MMORPG and virtual world space: it's in the process of launching its own virtual world (for grown-ups), called "Home" and accessed via the PlayStation 3 console. While social networking sites with teen and adult audiences, like MySpace and Facebook, tend to monopolize the press buzz, their younger-skewing brethren are a force to be reckoned with. Recently, Webkinz have proven popular among the single-digit set, and NeoPets was a hot acquisition for MTV Networks in 2005.
After all, with kid-oriented social networks like these, it's Mom and Dad--not teens or 20-somethings on a budget--who have the wallet power.

Sunday, May 13, 2007

The Endless Debate Continues - Subscription or Pay Per Play?

Arguably the highlight of the Online Game Development Conference in Seattle was Friday's panel focusing on new payment models for online games. The blue-ribbon panel covered topics ranging from Microsoft’s points and iTunes to secondary markets and farming, as well as the history of payments in the Asian market. Rich Wickham, business manager for Microsoft’s Games for Windows program, began by discussing the amount of people in the marketplace: “We do have to find new and different ways to get people into these games.”

John Maffei of Affinity Media (which owns Allakhazam and other sites aimed at MMO players), noted that users of his site spend an average of 22 hours a week playing online games. “I think a subscription model is fine,” he said, but noted that “diversification is a key thing.” Maffei believes that players might spend time in disparate worlds, but wouldn’t devote their time to two nearly identical games. “Can I see someone signing up for a hack-n-slash game and a sci-fi game? Yes.”

Joshua Hong, founder of K2 Network and moderator of the panel then introduced the topic of ‘free to play.’ Peter Gollan of EVE Online developer CCP said that it depends on the content inside a game is supported. EVE is a subscription game, and new content is released twice per year. Perhaps, said Gollan, if content isn’t regularly updated, maybe the game doesn’t deserve subscriptions.

Tony Park from Chinese publisher The9 said that, in Korea, there are only ten to twelve subscription games. None of them, he noted, were casual games or developed in the past two years. The market is moving towards subscription, though in terms of the profits, not necessarily the number of total games in the market today. When the secondary market was introduced, a lively exchange began.

“When it comes to micro-transactions, it’s a massive barrier to something becoming successful outside Korea, and to a lesser extent, China.” Park detailed that the history of micro-transactions. He noted that in the days of Lineage, Korea had – very uniquely – a lot of cybercafés with fixed IPs. That way, publishers were able to bill the stores based on the IP address. Customers would purchase coins, and then give those coins to the cybercafé, with the café then directly making bank payment to publishers. “People didn’t have to worry about micropayment.” The changes came about from looking into the Chinese market, and other places, and the subsequent need to find newer payment models.