with rapid, worldwide improvement of internet penetration and overall environment surrounding the online industry, the online game market has consistently grown to a market size estimated at over US$8.5 billion as of 2008, accounting for 9.9 percent of the world’s entire gaming market. Online gaming is increasingly being recognized as a next-generation media platform that any player in the entertainment space or from traditional media would be wise to leverage. Described as a “global, social, interactive entertainment company”, Nexon has very much led the way in the development of ‘free-to-play’ gaming – a model born in Asia, more specifically South Korea, that is rapidly gaining traction elsewhere in the world. Figures from the Korean Game Development and Promotion Institute indicate that online gaming is growing at a CAGR of 26 percent, now accounting for around ten percent of a world game market worth over US$85 billion. Asia accounts for 54 percent of the world’s online gamers, of which 44 percent are from South Korea, followed by China at 27 percent. Japan at 12 percent, Taiwan at nine percent, and others at eight percent. Korea’s position as the leader in online gaming, accounting for 30 percent of the market share in 2007, stems from the fact that 79 percent of the population have PC’s, 67 percent have access to broadband internet, and there are over 21,000 internet cafes. Of its 46 million population, 23 million are Nexon subscribers; Kart Rider has 16 million subscribers in South Korea – equal to one-third of the country’s population. E-Sports are also incredibly popular, with pro-gamers commanding earnings of around US$100,000 per year; and there are two TV channels devoted to gaming – ON Gaming and NBC Game. Asia’s leading position in the online gaming movement stems from a number of factors including the leapfrog of technology over the West – in terms of both higher performance PC’s and hi-speed broadband penetration, as well as rampant game piracy in the region. “It’s too easy to go out and buy a 4GB chip for a (Nintendo) DS, containing all the current DS games. Console games aren’t making money in Asia because of piracy – in fact only 20 percent of Nexon users actually purchase anything on-line.” Given that Nexon has over 350 million subscribers worldwide, that’s still the spending power of 70 million people; and while Kwon declined to give any ARPU figures on the basis that they were both confidential and market-dependent, he did reveal that Nexon Corp. saw revenues of US$300 million last year. Although ‘free-to-play’, Kwon says that much of people’s propensity to buy stems from the social element of this interactive entertainment. “TV and radio is one-to-mass broadcasting, console gaming is stand-alone interactivity, but online gaming is massively social interactivity.” Kwon says that people can recreate themselves inside these games, “In an ideal world I’d like to be a rock star, my wife wants to be a super model – but in reality I’m the CEO of Nexon Corp and she’s an academic,” he laughs, “but online we can be whoever we want.” He points to the example of ‘attack me if you want heaven’s punishment’, a player with something of an online reputation and following. “In real-life she’s a 30 something suburban housewife with two kids.” A whole new social class has sprung up around the games, with over 210,000 guilds that meet both on- and off-line. “MapleStory has more guilds in South Korea than there are religious organizations,” says Kwon. “60,000 couples have got married within the game since 2007, and in Pusan, Korea’s second biggest city, 20,000 couples got married in MapleStory – the city’s population is only four million.” He says that because it’s social interactivity, people want to show off to their peers, hence they buy virtual items to boost their on-line charisma or performance. “We tried selling decorative items on Nexon Mobile, but people didn’t buy them because they had no-one else to show off to. But online, we trialed a luxury item, limited edition of only 5,000 pieces, selling at US$100 each. They sold out in five hours.” You can also buy functional items that improve the performance of your online self, and Kwon sees especial potential for the co-promotion model – of product placement and sponsorship integrated into the game. One online solution, tailored for the BMW Mini, was able to showcase the (real) functionality and attributes of the car. “Having sold 2,000 cars in the real world in 2005, two million such cars were sold in cyberspace,” says Kwon. Another hugely successful foray into co-promotion was the Coke Play game, in line with Nexon game Kart Rider. “In the age of the attention economy (Herbert Simon 1971, Umair Haque 2005) where consumers’ attention will become increasingly scarce, the average duration time for on-line gaming is two hours, and average players of MapleStory are immersed for 200 minutes at a time,” quotes Kwon. Continuing to push the on-line game as a great advertising medium, Kwon said that MapleStory has some 80 billion players worldwide, and Nexon has 150 million subscribers in China. He says that the functionality of the product can be very implicit within the game, without interfering with the game itself. Pop-up ads within games are too intrusive, annoying the player, and therefore not good for the advertiser. “In Korea, research has shown that 80 percent of young people would rather be gaming than watching TV.”