25+ Digital Content Cards at Retail; Will it Hurt New Developers?

When Raph Koster was looking at the slowing growth of Club Penguin earlier this week, he posted a shot of a Target shelf lined with prepaid cards meant to drive subscriptions and microtransactions for digital goods as a way of pointing out that the overall market is still going strong. That prompted Nabeel Hyatt, currently the CEO of Conduit Labs, to note that there are now over 25 digital content cards being sold at retail, more than double what there were six months ago. (Target alone lists 19.)That raises new problems for him, though: The Web market, long insulated from the competition for physical retail space, is back to worrying about shelf placement.

"This is creating a funnel problem that every creator or player should be a little worried about," Hyatt wrote. "It means that anyone can create an online game, but there is going to be scarcity around who can make money at it. Big media companies, communities that are already at critical mass, and big-hype start-ups get shelf space - while the next big thing in a garage doesn't get a shot in hell at monetizing."

His solution? a universal gift card that would allow multiple companies to sell virtual currencies through one card.

"For the same reason that just about everyone is happy to rally around Visa or Paypal, the goal is to get people who want to pay to be able to pay, not to become a payment company," explained Hyatt. "Perhaps Habbo and Nexon won't be the first on board, it would be a little too progressive even for them. But for the online communities #3-32 it's perfect. And a deal could easily be structured whereby brands could use their own branded card in addition to the Online Gift Card."

When Nexon and MTV partnered to introduce premium item sales to Neopets, it led to Neopets eventually introducing its own card to the market. The two cards are next to each other in stores, and, I believe, were created through a partnership, but there's no apparent cross branding or functionality. (Someone please correct me if I'm wrong about that.) So Hyatt's pretty accurate: there are definite nods in this direction, but it seems like it might hit the same problems as the general question of interoperability in virtual worlds.

The winners are already winning; why open the playing field?

There are companies trying to solve the problem already. PayByCash, for example, offers a wide variety of options for letting users, particularly those without credit cards, put money into virtual worlds and online games, including Nexon's own MapleStory, Puzzle Pirates, Club Penguin, EVE Online, and, recently, Cookie Jar's MagiNation.

The most innovative method, though, is exactly what Hyatt is talking about: The Ultimate Game Card. It comes in both generic and branded flavors, but gives buyers access to over 150 online games and worlds regardless.

What do you think? Raph Koster held up Target's wall-o'-cards as a sign of hope for the market. Nabeel Hyatt is looking at as potential problem that the industry needs to overcome to preserve innovation. I think it's a bit of a mixed bag with some potential solutions already out there.

What other solutions have you found? Are cards a boon or bane? Is Target primed to become the most important brand in the booming youth worlds market?

Comments

[Christian Batist]

"Perhaps Habbo and Nexon won't be the first on board, it would be a little too progressive even for them."

Habbo happens to partner with multi-merchant prepaid card distributors in nearly every European market (UK, Germany, Switzerland, Austria, Netherlands, Belgium, France, Finland, Denmark, etc) and they would welcome an opportunity in the US just the same.

[Ulf]

The early pioneers in online gaming in the US slogged along for years with no retail support. I for one am glad that some of these guys finally managed to get into stores like Target.

I don't get why we should begrudge them their first-mover advantage and whine that the next guy in line won't get the same chance. Guess what? The next guy in line didn't do the work or have the timing that these pioneers did.

Will it hurt new developers? As compared to what? An environment where retail isn't even an option? New developers can attempt to draft behind these leaders. That's a huge advantage the pioneers didn't have. I think newbies owe companies like Nexon a big fat thank you for prying retail open for them.

[charlie salem]

Hi
I totally agree with this post and as someone who has (agent:David Wyman (retired) now Prof ) devised and licenced 7 interactive games via the likes of Hasbro & Mattel and recently made money from a whole range of virtual tools & character (e.g. Text Ms Cellulite - Rap Queen of Suburbia for E! Entertainment www.txtmsc.com )
I am aching to team up with others interested in doing this sort of thing in Europe. Have access to (possible) capital due to track record and am keen to find people here or in the US to work with (programmers, designers and new busiines types who want to challenge)
Please feel free to mail me at charlie12@totalise.co.uk with whatever you feel you might have to offer - big or small and you never know......
Best
Charlie

[Christian DeBaun]

Nice article and thanks for the mention!

PayByCash has been solving the “how can customers pay” question for the online gaming space for ten years now. The Ultimate Game Card (UGC) is our answer to provide a unified retail presence in the United States and Canada. The UGC was recently picked up by 1500+ Walmart stores, with Blockbuster, 7-11, and Future Shop (Best Buy/Canada) are coming soon, so it’s truly nationwide. The UGC is offered as part of our full suite of PayByCash 70+ payment methods, so merchants get prepaid card acceptance in the EU, China, and Mexico as part of the same bundle (and dozens of others,) on more favorable terms than credit cards or PayPal.

Please feel free to contact me at any time for further information.

All Best,

Christian C. DeBaun
Director of Business Development
PayByCash – Internet Payment Solutions, Inc.
434.220.2491 phone
www.paybycash.com