Inside Social Games

Virtual goods transactions are still evolving within social games in the US and many other parts of the world, but the business model has already matured in parts of Asia. But are established gaming companies still able to grow revenues? Recent statements by Korean gaming companies Nexon and Gamevil suggest the answer is yes.

Nexon, a privately held casual gaming site, said its revenue was up 35% year-on-year revenue, with its number one contributor being the virtual goods-driven title MapleStory.

With a stated 92 million registered users (6 million of whom are in North America) and a peak concurrent user count of 70,000, the tremendous popularity of Nexon’s MapleStory is certainly apparent. An increase in revenue indicates the company has refined its virtual goods economy, and is benefiting from US growth. In fact, Nexon said that in 2005, the year MapleStory was launched in North America, revenues were upwards of $230 million with a $75 million net profit, and in 2007, U.S. sales of virtual goods were around $30 million. Assuming the company didn’t take a revenue hit in 2008, the 35 percent growth number means it is likely bringing in a lot more money now.

Of course, not all Korean growth is coming out of the MMO market. Mobile game publisher Gamevil is also seeing significant revenues — and profits.

In the second quarter, the company reported sales growth of 67% in year-over-year total revenue, reaching $4.3 million. Operating income increased 188% to $2.6 million, net profits increased 214% to total $2.1 million — around a 50% profit margin.

Based on earnings from the prior quarter (Q1, 2009), fiscal growth was reported to be up 30%, operating income up 74%, and net profits up 55%. Again, these numbers have come primarily from virtual goods transactions, most from completely free-to-play mobile sports titles, and role-playing games such as HYBRID: Eternal Whisper. Note that the company has also launched iPhone versions of its games, but those versions have been minimal contributors to Gamevil’s growth, at least so far. The games have yet to utilize virtual goods transactions since Apple doesn’t allow the feature in free applications.

Despite the hang-up, Gamevil seems confident as the company states that it plans to grow in throughout 2009 with the release of new sequels and franchises within Korea, while new, upcoming international titles (including the remakes for the iPhone) could help the company’s growth elsewhere.

[via Worlds in Motion & PoketGamer respectively]