MapleStory has translated across borders around the world. And that has helped contribute to Nexon’s bottom line. The game company, which is publicly traded on the Tokyo Stock Exchange, reported revenues of $379.5 million in Q1 2012, which was up 46 percent year-on-year and 37 percent quarter-over-quarter. Net income climbed 60 percent year-on-year to $154 million.
Although Nexon’s game library is free-to-play, its gamers are paying to play. The average revenue per paying user (ARPPU) increased from $17.87 a year ago to $22.05 in Q1 2012. The company’s foray into mobile has also had success. Its Kartrider Rush game was downloaded 8.2 million times on Apple iOS and Google Android devices. Daniel Kim, CEO of Nexon America, talks about the success of MapleStory and the impact free-to-play games are having on the industry in this exclusive interview.
What impact do you feel MapleStory has had on the overall micro-transaction model that has taken over gaming?
MapleStory really changed how online gaming is viewed as a business. When we first introduced the game to the North American market in 2005, our free-to-play model was a completely foreign concept here and many in the industry confidently wrote it off as an Asian model that will “never work.” Once we gained traction and started attracting millions of loyal and enthusiastic players, it demonstrated that free-to-play would work in the West and it helped pave the way to widespread adoption of this business model that we are seeing today.
We don't disclose revenue by game. However, last year, for the full year of 2011, North America reported revenue of ¥6.34 billion ($79.8 million).While we have a total of eight games in service in North America generating revenues, MapleStory contributed the most.
How much does a typical MapleStory player normally spend over the course of a year on in-game transactions?
I can't speak to specifics of Nexon America's MapleStory service, but worldwide, we have reported that in the first quarter of this year, our average revenue per paying user (ARPPU) for all of our games was $22.05
What are the demographics of MapleStory players?
A majority of MapleStory players in North America are between 18 and 29 years old, with approximately 40 percent of them being female.
Can you give us a sense of how successful Nexon is today?
Last year, NEXON Co., Ltd. reported ¥ 87.61 billion ($1.1 billion) in revenues, an increase of 26 percent over fiscal 2010. As a global company, we experienced growth across all our key metrics and we are forecasting growth in revenue this year as well. MapleStory has been a major success in North America and to see so many players take advantage of the depth and richness of the game and create so many characters stands as testament to our success.
I think you are already seeing more and more publishers adopt this business model. There are many companies that switched their games from a subscription or packaged goods model to a free-to-play model in the last year. Console platforms have been still very slow to adopt or allow the free-to-play model so far, due to their dependence on package games, but I would not be surprised to see free-to-play being adopted by all of the major gaming platforms in the future as publishers learn how to create payment systems and how to monetize to their customers. Having been the first in the territory, Nexon had to pioneer many of the business infrastructures for the free-to-play model, like payments and prepaid cards. Our prepaid cards were the first their kind and we recently launched Karma Koins, which is a new brand of pre-paid digital currency card that offers extensive retail distribution offered with our prepaid cards.
Could the new generation of gamers used to getting things for free kill the subscription model that The Old Republic and World of Warcraft rely on?
I think you are seeing that already happening. In some ways the subscription business model is a bit of an anachronism. The free-to-play model gives us much more flexibility in what we can offer players and how they can pay. It is also an added benefit to our players because to keep the free-to-play model viable, we have to deliver new content much faster than the subscription-model games without sacrificing the quality of the games. Free as a value proposition is hard to beat from the players' perspective, but it's a difficult and challenging model as a service operator, because you have to earn the business all the time, with new content and new episodes.
The one thing we do know for sure is that each game has to be handled in its own way. From our experience with MapleStory, we can see that the free-to-play model works. The challenge is applying a winning formula to each new game we bring into the market that strikes the balance of value and fun with our players. There is no magic formula for that. We've also learned that players should be able to have fun and play for free and pay for items that enhance their gaming experience, while not throwing the game out of balance.
What is Nexon's focus heading into E3?
We haven't announced our plans for E3 yet. Regardless of E3, we are focused on continuing to grow the audience and lead the industry with quality live games.
How would expanding into FIFA's online soccer through Asian distribution with EA help solidify your games portfolio?
As a matter of corporate policy, we do not comment on rumors and speculation.
