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"For browser-based games, we eliminate the barrier to download something," says Kongregate CEO Jim Greer. But the site will soon allow game developers to charge players a premium to play in a multiplayer mode.
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started microtransactions last November and reported $6.7 million worth of virtual gems were purchased to upgrade features through June.Īds have been the major source of revenue for Kongregate, a new Web-based gaming startup that attracts nearly a million users a month.
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Earlier this year, Boonty launched gaming platform, which offers casual games for free and charges for game items and personalized avatars. "The casual gaming market is pretty young, and the microtransaction model is really new, but it's really taken off in Asia, so it could be just as successful in North America," says James Kuai, a research analyst at Parks Associates. That same year Chinese casual gaming companies like Tencent caught on to the concept. Nexon made $250 million in revenue in 2005, mainly from microtransactions off two hit games, Kart Rider and MapleStory. To combat piracy, Korean casual gaming companies started charging consumers to purchase skill levels or the right to change avatars. The microtransaction model is hugely successful in South Korean and China. "Let users play for 5 or 10 hours, and hopefully they'll spend money to get that t-shirt or just to see what happens with the story." "For casual games, we have to be cautious with how much we give away for free," Welch says. They're offering free access to online games but charging a premium to upgrade features and unlock new levels of play. Now PlayFirst has become the first leading casual gaming startup to experiment with a "microtransaction" concept that's been a hit with kids' social networking sites like Club Penguin. Publishers have typically charged players $20 to access online casual games. "We've had a problem reaching hundreds of millions of dollars." "We have no problem reaching hundreds of millions of users," says CEO John Welch of PlayFirst, publisher of Diner Dash, which stars a businesswoman who becomes a restaurant entrepreneur.