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August 29, 2006



You are absolutly right (you are a VC after all ;-). I believe subscription is not the answer for casual games as it requires too much involvement from end users. Only hard core fan can commit to such plans.

Some people solve the monetization issues with advertizing. One way to look at the issue is to think in terms of how many hours casual players are spending with their games. And then you insert ad into the casual game experience, either within the game (a bit complicated) or "around the game" (we have done it, check it out at the beta version of http://www.clickgames.com).

One other, much more promising imho, is to look for micro transactions with the games (the model is called "Items"). you actually buy cheap stuff to improve your gaming experience. In asia this model is VERY advanced and has literally killed the subscription model. High quality games are entirely free but you can buy add ons. For example, you have this korean company called Nexon. They have a game called Kart ridder (very casual). While it is a private company and they keep their number secret, my sources indicate they make as much as $400M, in korea alone ! (they will probably go public soon). Another successul company is QQ in china, I'll write a post later on this company, the numbers are absolutly amazing...

So I believe it is possible to monetize casual games, maybe with a slighter lower ARPU but with a *much* bigger reach. I am convinced the market will be many times bigger than the core game market...

Fred D

hey ! welcome back. you are talking about greater reach, but for a fuller analysis would be interesting to really compare the economic value of each segment given the strong subscription models and churn assumptions and so on...

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