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Korea Rising: Five Crucial Interviews

January 4, 2008 Article Start Previous Page 2 of 21 Next

Nexon: Stephen Lee, manager of international business development

From your perspective how is the expansion into the U.S. market going, from the Korean side?

Stephen Lee: We launched the MapleStory service back in late 2005, and it was the first time we actually started off by just putting our service there, without conducting any marketing activities or anything. We just launched our server there, and managed it remotely from Korea. We found out that... actually, the users were coming in without any marketing activity or anything. We thought that the market might now be mature enough.

In fact, we tried to service our game back in early 2000 -- I think it was 2001 or something like that -- and we haven't actually quite succeeded. We had that experience. But because of the success of MapleStory, we really saw how the market was going and how people were becoming more adoptive of the online experience.

Obviously through our studies, we saw that infrastructure and necessary surrounding environment for our online gaming was becoming more and more mature. We think that the U.S. market, as a market, it's big enough for gaming, but mainly until now, it was focused on the console game side. I think it has a lot of potential and still has to grow.

What do you think of the results so far? Obviously you're trying to get in there before everyone else with microtransactions and that sort of business model. Are you pleased with the results so far, or is there a long way to go, you think?

SL: We are very much satisfied as of now. We have seen pretty good numbers for our game service, and we have actually received a lot of spotlight from all of the gaming industry. We have closed a deal with some major companies in the States as well.

You mean like the ad deals?

SL: Yeah, like the Viacom deal [and other deals which are] not necessarily for the North American market. Again, we have a lot of interest. Considering the market size and the existing number of gamers, I think we have a long way to go. We think in a couple of years, the situation will dramatically change.

Nexon was, I guess, really at the forefront of the microtransactions, even in Korea here. I heard that the first largely successful game that used that as a business model was QuizQuiz [released by Nexon in 1999]. I don't actually know -- at the time, was it a pioneering thing to go that route, or had there been some other models already?

SL: Actually, the way that we discovered our new business model was somewhat incidental. We didn't actually plan to switch to this model. First, it started off as a subscription model, but then we discovered that we had been losing users dramatically. We tried to fix the problem and figure out how we could re-attract the users that were leaving the game. As a way of that, we created a system where we could allow users to decorate avatars and things. They could purchase their decorative items through microtransactions. Surprisingly, users started to gather back, and we thought this could actually be a business model for the future market.

It seems like now microtransactions have started, they'll never stop. I don't think there's any going back to subscription from here. What do you think?

SL: I can't rule out the merits of the subscription model. These days, almost all games adopt the microtransaction model, but games like World of Warcraft are successful. It's one of the most successful games in the world. It depends on content, actually, not necessarily the trend. We could have both models combined, just like Mabinogi service in Korea. It's actually a combination of microtransaction and subscription-based model.

Do you think console will ever be important in the Korean market? Will it ever be something where people can actually make a profit? The console market in Korea is so small right now.

SL: Nintendo actually expanded their branch into Korea early this year. They're performing pretty aggressive marketing activities throughout the year. It's not as expected, compared to what Nintendo has been achieving in other markets, but it's doing fairly well, from what I've heard, and it's a good relationship with them as well. We'll have to see, but there has been piracy in most of the Asian territories, and that had been one of the main hindrances for the console market from growing. If gamers become aware of the fact that the copyright issue will eventually deprive them of their entertainment, and if the market... we hope that the gaming market as a whole will grow together. We'll eventually have to see how it goes, because we're also developing console games.

Article Start Previous Page 2 of 21 Next

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