Microtransactions in social networking and Korean gaming show the way, claims game publisher

The culture of micro payments that exists in social networking and free casual gaming points towards the future revenue for mobile gaming, according to a Korean firm.

Microtransactions, which are popular in online games, are on the rise in mobile games, claims publisher Gamevil.

"Subscription-free services like Facebook and MySpace are already common in the US as broadband connections improved and people began living online," the company said.

"On Facebook, users can enjoy the basics of the site for free and have the option to send gifts to friends for $1 each, an example of how microtransactions benefited a subscription-free service with a casual community."

Despite that example, Gamevil said most online games in the US used the World of Warcraft model, where players purchase the game at a fixed price and pay on a subscription basis to play online.

However, the publisher said this model deterred less committed gamers from taking part.

"World of Warcraft is not a casual game and not all players can and are willing to pay $15 a month," Gamevil said.

"Some casual gamers wouldn’t pay that much per month if they were only going to play a couple times."

Gamevil said a model that developed in Korea for online PC gaming could be used to draw in this audience and had already spread to mobile gaming in that country.

"In the US, most consumers are willing to buy PC packaged games but in Asian countries like Korea, most consumers have chosen to download copies of PC games online, given the high-speed broadband networks," Gamevil said.

"This posed a problem, especially when people could easily download pirated copies and because of this, packaged games did not sell well in Korea and companies were not able to make as much money off of this."

Gamevil said free online games became extremely popular, but the challenge then became to find a revenue stream from them.

"This is where microtransactions come into play," Gamevil said.

"Around the same time, companies like Neowiz had introduced microtransactions through selling clothes and accessories for the avatars used in PC chatting."

Gamevil said the model was so successful that online game companies started giving out the games for free.

"As these free games became popular in Korea, so were there intense microtransactions of special items and additional features in games. The customers were free paying users."

Gamevil said this model shows the future of mobile games, as microtransactions have also proved successful on mobile phones in Korea.

"In Korea, publishers have used microtransactions in their games to generate additional revenue," said Gamevil.

"The users have the option to pay an additional price for extra features, items, or upgrades on their mobile phones."

However, currently this model still charges the end users the initial download cost and then adds microtransactions on top of it and Gamevil said there were attempts to release free games that rely only on microtransactions.

"Just as subscription-based online games became free games with microtransactions in the US, we believe that the same might happen in the mobile games industry in a couple of years," the publisher said.

"There wouldn’t be payment inconveniences for microtransactions, as purchases done through a mobile phone could be charged directly to the customer’s phone bill."