Transitioning from Subscriptions to New Business Models

Transitioning from Subscriptions to New Business Models

<o:p> </o:p>I am very excited to be living here in <st1:country-region w:st="on"><st1:place w:st="on">Korea</st1:place></st1:country-region>, the center of online game world.  The rate of change here in <st1:country-region w:st="on"><st1:place w:st="on">Korea</st1:place></st1:country-region> is strongest anywhere and I thrive in midst of change.  In particular interest to me is the fast movement from the subscription-only based business model to a business model that is driven by individual items sales.

<o:p> </o:p>Traditionally in Korea new MMOs would spend a ton of money on marketing during the Open Beta stage and after the felt that their “free users” were about 5 to 10 times the amount of users that they “need”, then they would pull the plug and force everyone to either pay the flat subscription fee or quit. 

<o:p> </o:p>This open-beta ramp-up subscription business model is superior to the console package goods model in the USA where consumers pay $50 for a game and take it home and then find out if it is fun.  Consumers have been burned by bad games countless times and thus now stick only to the games that have built huge brand awareness most typically by being a sports or movie franchise.  This has stifled competition and innovation.

<o:p> </o:p>However superior the subscription model may be to the package goods console market in the <st1:country-region w:st="on">USA</st1:country-region>, <st1:country-region w:st="on"><st1:place w:st="on">Korea</st1:place></st1:country-region> is here in the center of the online Asian gaming world and as such a grueling pace of innovation governs the success and failure here and thus subscriptions are on their way out.

<o:p> </o:p>An item-based business model has obvious advantages to the player as they are able to choose exactly how much of the game that they want to pay for – if the game is great and they are having a lot of fun, then the player may incrementally extend their spending as meets their mood and confidence in the game.

<o:p> </o:p>The item-based model has advantages to the game company as well – if you have a truly great game then the players are quite willing pay well beyond the price of the subscription for the entertainment value they are receiving from the game.  This most clearly illustrated with players going to online auction sites and trading items back and forth to each other for real-world cash.

<o:p> </o:p>As the rest of the world races to catch up with Korea, especially China, the boldness and speed in which Korea drives through business models in the online game space will be its most critical competitive advantage alongside with it the experience and talent of the Korean game developers.  

<o:p> </o:p>Again, I am fortune to be here.

Erik Bethke / 베유성

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Originally posted on LiveJournal