Online Gaming Updates

Earlier this week Korean Internet company NHN announced that its U.S. subsidiary had launched ijji.com, an online game destination offering a variety of casual and hardcore multiplayer titles free of charge. We caught up with NHN USA marketing manager Richard Chae to discuss his company's strategy for breaking into the North American online market.

GameDaily BIZ: To begin, please tell us about NHN. A lot of Americans are probably unfamiliar with your company.

Richard Chae: NHN USA is a subsidiary of NHN -- a Korean multi-national company operating the most successful search engine portal in Korea as well as multiple online game and entertainment sites, all with leadership positions in their markets. NHN Corp. has the largest market cap on the KOSDAQ (Korean equivalent of NASDAQ) at around $5 billion USD.

NHN has ventured out into the Chinese and Japanese markets with our popular game destinations -- now ranking No. 1 in both countries. To put it in perspective, in China alone, NHN has more than 170 million registered members.

NHN USA has recently launched a beta version of its highly anticipated U.S. game destination, ijji.com. ijji.com offers a variety of games ranging from casual to serious titles.

BIZ: How long have you been planning your entrance into the North American market?

RC: NHN has been interested in the U.S. market for some time, but broadband penetration was not sufficient until recently. With broadband rates exceeding 60 percent of households in the U.S. now, we feel the market is ready for the next generation of online gaming. Enter ijji.com.

One thing we did to prepare for NHN's U.S. market debut was to create a user research center in our offices in Mountain View, Calif. The ijji site and all of the games are subjected to tests designed to see how the American market will react. We then modify the site and the games depending on what we find from these tests and make sure the product is localized to American preferences.

NHN is very committed to the U.S. market, as evidenced by the relocation of NHN Corp.'s two founders to the United States more than a year ago.

BIZ: What are the major differences between the Asian and North American online markets from your view point?

RC: In the end, gamers are gamers; without geographic borders. That is why there are many other overseas companies making games that are enjoyed in multiple markets. Sony, Nintendo, Vivendi, Ubisoft, Atari and many other foreign nationals have achieved popularity in the U.S.

NHN knows this online, social gaming segment better than anyone; we are the No. 1 company in the world in this sector. Our experience, knowledge and track record of success in Asia will help us cater to the U.S. gamer market.

One unique thing about the online game market that is different from the retail/title-based market is that the products we offer do not need to be the finished 'final' product. Unlike a console game that is a hit or miss once it hits the shelves, NHN's online games are built to be changed and improved based on player feedback over time. Online games have a longer life cycle as we continue to add patches, characters and maps, and modify game play. These features really allow us to interact with our users and implement changes they want to see in the game.

BIZ: Your game destinations have been #1 in Korea, Japan and China. What do you believe has led to this success?

RC: We attribute NHN's extensive track record in Asia to our knowledge of the online gaming community and our ability to tailor this know-how for each individual market. In Japan, for instance, players love the avatar functionality -- perhaps because of the long history and popularity of anime in that market. In China and Korea, users seem to enjoy the accessibility to different types of games. Since we offer such a wide variety of games, we can cater to a broad range of target groups as well.

NHN created the first game destination of its kind in Asia and we believe ijji.com will be the first game destination of its kind in the U.S. market, too. We provide fun games and that's the key to this industry regardless of market.

BIZ: But can this success be translated to the U.S.?

RC: Our experience and success in Asia will definitely be a factor in our success here in the U.S. Not only are we the No. 1 Internet company in Korea, but NHN has also successfully penetrated the Japanese and Chinese markets. We have a solid track record with entering new markets and we feel the United States is the next step toward our goal of becoming a global player.

BIZ: NHN's games will be offered free through ijji.com. What kind of business model allows you to not charge players? Is it advertising supported?

RC: We expect some revenues to come from advertising and in-game product placement.

However, NHN USA plans to derive its primary revenues from in-game purchases and transactions, such as item sales and personalization of characters. This is the business model NHN uses in Asia, and it has worked out very well for us. The gamer comes on the site and enjoys game play and a lot of social interaction features like chat and message boards for free. But, if the gamer wants, he or she can purchase items to increase functionality of characters or play to acquire in-game currency to make similar upgrades.

This "micro-transaction" item-based sales model is something that was actually created by our Global CEO, Beom-Su Kim in the early phases of NHN in Korea. Last year in Korea alone, micro-transactions brought in $96 million (USD) in revenue.

BIZ: Where did the name ijji come from? Don't you think a more "Western" name would be a better choice for the North American consumers you're targeting?

RC: Although ijji sounds foreign, it is not an Asian word; it's actually as foreign to the Asian ear as to the American ear. When looking for a name, we wanted to find something that expressed fun and community. The letters in the word ijji are meant to look like a community of people. We feel ijji personifies social interaction and fun, and fits perfectly into our description of ijji as an online playground. Similar to Pogo or Nintendo Wii, our strategy was to choose a fun name that expressed the key social elements of what NHN USA has to offer.

BIZ: Many of the casual gamers in the U.S. are older women. Who exactly do you believe will comprise your audience? Are you also trying to attract the coveted 18-34 male demographic that plays more console games?

RC: ijji offers a new gaming experience through a wide variety of games. These games range from casual to serious titles, providing something for a broad range of players. Each ijji game is positioned for a specific target audience, however.

NHN's primary target for ijji is the social gamer. NHN believes there is an untapped segment of players in the United States who are "social gamers," i.e. people who like to play games with others online when they have some free time. Social gamers tend to play games leisurely, really looking for the social interaction element. They enjoy competing so they like multiplayer games. They also love the interaction they can get by chatting and communicating with the people they meet online and during game play.

ijji does offer casual games that cater to an older female audience, but we also feature FPS and fighting action games that are geared toward the social and hardcore 18-34 male demographic.

BIZ: In North America, you'll have some tough competition from other leaders in the casual space, such as Pogo.com, PopCap Games, etc. What will set NHN and ijji apart?

RC: NHN games are built for the new broadband era. Unlike our competitors who tend to offer games designed for narrow band, dial-up services, ijji.com provides much higher-quality graphics and game play and, therefore, appeals to a much wider audience.

ijji games offer higher-quality graphics, much like title-based PC or console games.

Each ijji game is geared toward a specific target audience. But, by offering a wide variety of game genres, we cater to a broad range of audiences. Our 'competitors' tend to cater to one segment of the market; we provide online fun for a vast, diverse audience looking for social, multiplayer game play -- whether casual or hard core. Our games appeal to young and old, male and female.

A big difference is that our games are almost all multiplayer. This allows users to play with or against friends, which surveys show is more appealing than playing against an AI.

NHN has the experience and know-how to provide fun, online entertainment and social interaction for a diverse user group.

NHN also created the micro-transaction, item-based sales business model, which we feel is the next step for the U.S. game market.

Through ijji, NHN USA's goal is not only to take away market share, but to expand the whole gaming market as well.

BIZ: Obviously multiplayer gaming and community aspects are very important to NHN's strategy. Have you thought about how to leverage this with message boards, friend's lists, and more?

RC: ijji offers message boards, a messaging center, buddy list, personal profile, in-game chatting and customizable avatars. Our avatar system is one of the most extensive (if not the most extensive) -- with customizations to the face, clothing, accessories, pets and even backgrounds. It is used during game play and offers animations that can be controlled by the gamer. ijji's premium games have a MMORPG element to them with a character growth system, which allows a leveling and ranking system. As players continue to play, the levels of these characters will rise. For example, in our golf game, as one builds up experience and levels up, the user is eligible to take a jr. amateur test to become a jr. amateur-level player, then amateur, etc. Gamers can also win merits in the game showing that they shot a birdie or eagle on each hole.

BIZ: Finally, does NHN foresee itself branching out onto other platforms (consoles or handhelds), or is this strictly an online PC business?

RC: Anything is possible; however, at this time we are only operating on the PC-platform and focusing on building mind share for ijji.com in the States.

BIZ: Thanks, and good luck.