While the U.S. social networking giant struggles to establish a concrete business model of its mobile platform, Ani Pang has become the biggest grossing application in Korea, generating an estimated 200 million won a day on average since smartphone messenger Kakao Talk’s game center launched in late July.
Some 16 million people have downloaded the game, nearly 10 million are daily active users, and 2 million play it simultaneously, according to the developer, Sundaytoz.
The marriage of an online game and a social networking service provider is nothing new, but Ani Pang succeeded because it understands the free-to-play business model that Korean game companies de facto invented and that has flourished for nearly a decade here. Mobile games like Ani Pang are believed to be the latest evolution of the free-to-play model.
“We’ve developed social games for the last three years. Our paid-for content is only served through micro-transactions,” said Yann Heo, director of business management at Sundaytoz.
Also called freemiums, the free-to-play model allows users to play a game for free, but they will pay when they need extra lives or extravagant in-game items.
British mobile technology consultancy Juniper Research forecast in late 2010 that revenue from in-game purchases would “overtake the traditional pay-per-download model as the primary source of monetizing mobile games by 2013” and total annual revenue will surpass $11 billion globally by 2015.
Moon Young-tae, leader of the global business team at Korean game company Dragonfly GF, says that the core element of the free-to-play model is communities.
Before social networking services appeared, Korean online games built up strong communities in which gamers intensely competed using both their own skills and purchased performance enhancers.
In essence, it manipulates the human desire to show off and outperform peers.
Now the platform has moved away from online PC games to wider social networks and now to smartphones. But the basic concept involving communities hasn’t changed, and Ani Pang is skillfully designed to make the most of it.
Players log in to the game via Kakao Talk, Korea’s ubiquitous smartphone messenger with nearly 60 million users worldwide. The game shows the rankings of the players’ Kakao Talk friends. It’s the rankings that drive many to keep playing. To this point, Ani Pang is faithful to the basic structure of a social game integrated into a social networking service.
But the game isn’t just about competition. Friends on Kakao Talk play a crucial role in helping each other play for free. Each game costs a heart, which is replenished every eight minutes. A game lasts a minute and one can only have a maximum of five hearts.
When the hearts run out, players can buy a set of “topazs” that is convertible to heart. Ten topazs are priced at $0.99. The revenue is then split among Sundaytoz, Kakao Talk and app store operators.
A large network of friends comes in useful here. Instead of buying topazs, friends on Kakao Talk can send each other a heart every hour free of charge. Users can also earn hearts by inviting their friends. It’s a clever method that has helped the network of players balloon exponentially.
Ani Pang’s strategy is different from worldwide hit Angry Bird, which is downloaded for $0.99. The Finnish-developed game partially adopted micro-transactions by charging for stronger weapons and extra levels.
Ani Pang’s sophisticated expansion strategy wasn’t developed in a day.
Korea is home to not only lighthearted casual free-to-play games but also serious online PC releases.
Nexon introduced the business model to the online game scene when it switched the payment method for QuizQuiz in 2001 from subscription- to micro-transaction-based.
Since then it has continued to make money from micro-transactions. When the Tokyo-listed company acquired a stake in NCSoft, analysts expected that the latter, which still charges players flat rates, can learn from the former’s innovative pricing system.
Even when foreign companies expand to Korean markets, they convert their packaged console games into free-to-play online games. Electronic Arts’ FIFA Soccer series is one of the most successful examples.
While a packaged disk of EA FIFA Soccer 13 for Sony’s PlayStation 3 sells for $59.99 on Amazon.com, a similar version called FIFA Online 2 can be played for free. The famous console game was redeveloped into an online version here and even adopted the micro-transaction model. Players can buy a gamut of items ranging from a unique goal celebration and a personal trainer to a knee band that improves shooting skills. The online game grossed so much money that the relationship between EA and Neowiz, which provided FIFA Online on its game portal, soured.
The free-to-play model is spreading fast within Asia. “It is now a universal method in parts of Asia. It has been adopted in China, Taiwan and South Asian countries,” said Moon of Dragonfly, which currently services Special Force 2, known as Tornado Force in China. Japan, a console-controlled market, is also adopting it fast, he added.
In North America, the business model has been actively used by developers of casual games such as Zynga. In 2010, Facebook signed a five-year agreement with social game company Zynga to have its games exclusively released on the social networking service.
However, the payment method has been criticized for spoiling fair competition. Some in-game purchases boost the skills of players and help them outperform others. Those games are likely to lose their communities soon.
Sensible game companies instead make items purchasable with “game points” which can be either accumulated by playing the game or by being bought. Players of Ani Pang can obtain a heart by spending eight minutes on the game or by spending topazes.
One game firm official said that people, in effect, end up buying time through purchasing virtual goods or in-game lives.
“People want to do better than others in a short period of time, and free-to-play has turned that desire into a business model. If it takes one gamer an hour to finish one level, those who pay can complete 10 levels within the same time. You are buying nine levels,” the official said.
The payment model is popular for several reasons. For Moon, it is a source of innovation. Because players test the games before they make any purchases, bad products would fail in a short period of time. To keep players, companies have to keep innovating by constantly launching new events and promotions and adding more content.
“Innovation takes place when a new idea creates a product and the feedback on it leads to meaningful change,” said Moon.
“In the case of conventional products, it takes ages to receive feedback from buyers and apply it. But with online games, tens of thousands of people play simultaneously and constantly share their feedback, driving the innovation process very fast.”
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