DUDE, WHERE'S MY DIGITAL CAR?
Nexon's sales of virtual doodads for Korean online gamers are burning rubber
After graduating from college this spring, Kim Hyun Wook of Seoul had been expecting to launch into a career as an engineer. Instead, he has joined the ranks of professional race car drivers-though he never has to leave home to hit the track. Every morning, Kim logs on to his computer using the screen name of Sarang (Korean for "love") and races against rivals in an online game called Kart Rider for at least eight hours. For his cyber-driving, he gets paid real money by a local clothing company, which in turn emblazons its brand name on the virtual driver of a virtual car. "I feel like a star," says Kim, 21. "My fans send me gifts, and I have a sponsor supporting my life."
Sound wacky? Not to the millions of Koreans who play Kart Rider and other games like it. And certainly not to Nexon Corp., the game's creator. Nexon has built a booming business selling avatars - digital representations of players online - and virtual accessories such as cars and goggles. The company chalked up revenues of $110 million last year, some 85% of it from selling such digital doodads. This year, Nexon expects sales of $250 million. "The avatar market is prospering in Korea," declares Min Yong Jae, chief marketing officer.
Blame it on broadband. In Korea, where about three-quarters of households have fast Internet connections, people are increasingly looking to the web for entertainment. Nexon says more than 12 million people-a quarter of all Koreans-have particpated in at least one Kart Rider race since the game was launched a year ago, and that as many as 200,000 of their colorful avatars might be piloting their cyber-cars through virtual forests, icy caves, or villages at any time.
The genius of Kart Rider lies in how Nexon makes money from it. Online gaming companies typically rely on subscription fees for games where players live a cyberlife in a fantasy world. But Nexon and a handful of others offer games such as Kart Rider-and basic avatars and cars-for free, then sell spiff ed-up accessories. Kart Rider's online store offers more than 100 digital items such as special $1 paint jobs and tools like 40¢ balloons that can protect a player's car by lifting it above the track when an opponent launches a missile (90¢). The most expensive car will set you back $9.80 (it handles a bit better than one costing $1.50). "Most of my classmates play Kart Rider, and I want to look cool in the game," says 9-year-old Park Kun Hee, who recently bought an avatar costing $2.50, a car for $3.50, goggles for $2.50 (to see through smoke thrown off by opponents), and more. His father cut him off after he spent $150 on the digital stuff.
RACING ACROSS BORDERS
Now the pros have arrived. Kart Rider competitions have been broadcast on two cable channels, and Kim - who has won several of them - has emerged as a pop idol among gamers. A local apparel company, Spris Corp., sponsors Kim and three others as professional Kart Rider players. Some tournaments have been sponsored by the likes of Coca Cola Co. and offer as much as $50,000 in prize money.
For Nexon execs, the party is just beginning. They are hoping their success in Korea will be repeated elsewhere. "I'm 100% sure [the avatar business] will boom in China, Taiwan, Japan, and Thailand in three to five years," says Min, the marketing chief. Nexon is already seeing rising sales of digital items offered in those four countties for Nexon's other games, and the company expects revenues there to double, to about $40 million this year. Though Nexon has no immediate plans to offer Kart Rider in the U.S., it's a pretty good bet that people across Asia will soon be racing around the digital track in personalized virtual cars. Could a World Cup of Kart Rider be far off?
- By Moon Ihlwan in Seoul for BUSINESS WEEK / July 4, 2005
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Peace, the anti-Bush.
