The Business Blog at Intuitive.com

Dave Taylor has been involved with the Internet since 1980 and is widely recognized as an expert on both technical and business issues. He has been published over a thousand times, launched four Internet-related startup companies, has written twenty business and technical books and holds both an MBA and MS Ed. Dave maintains four weblogs: The Business Blog at Intuitive.com, Ask Dave Taylor, Dave On Film, and Attachment Parenting Blog. Dave is an award-winning speaker, sought after conference and workshop participant and frequent guest on radio and podcast programs.

Glimmers of the virtual economy: Nexon's $250 million Kart Rider

I'm just fascinated by an article in BusinessWeek entitled Dude, where's my digital car? It's about Korean gaming company Nexon Corporation and its wildly popular Kart Rider [Korean language site]. Why's it interesting? Because much more so than Sony's Everquest and other online virtual games, Kart Rider is free, phenomenally popular and makes Nexon millions of dollars every month!

I know what you're asking: If it's free, where's the revenue stream coming from?

What a great and obvious question! The answer is that Nexon has figured out how to apply the Razor Blade theory of marketing to online gaming, in a spectacular way. The Razor Blade theory, you might recall, is that you should give away the razor so you can sell the blades.

In this context, Nexon allows Koreans -- and remember that about 75% of the Korean population have broadband connectivity -- to play the multi-player cartoon racing game for free.

The money comes from selling virtual upgrades. From fancier looking cars to rockets you can fire at other racers, to balloons and other cute things, these $0.50-$2 items add up fast.

BusinessWeek even cites a 9-year-old who paid $2.50 for a new avatar, $3.50 for a faster car, $2.50 for goggles that prevent smoke from blocking your vision while racing, and more. To a total tune of $150 USD.

But it's more amazing than that: there are now professional Kart Rider racers who are paid by sponsors to have company logos on the side of their little Karts. A true 21st century job if I've heard of one.

One of the secrets of Kart Rider is that it's also a short game, perfect for a 5-10 minute break at work or as a break from a more demanding task. Compare that to the weeks or months of a full Everquest campaign or any of the other massively multiplayer worlds. Certainly Nexon knows quite well that there are manyfold more casual gamers and people online seeking a quick entertainment that's fun, funny and not particularly demanding. And, with an income last year of $110 million and a projected 2005 revenue of $250 million, they're right.

Image from The Korea Times

They're really, spectacularly right. In July of 2004 Nexon reported 0.9 million registered users. By November of 2004 they had 5 million registered users. January of 2005 saw 8 million users, March of this year had 11 million and Nexon reported that there are now more than 12 million registered Kart Rider users, as of May 2005.

But here's the figure to chew on: More than 25% of the population of Korea have participated in at least one Kart Rider race.. Wow!

If you'd like to try Kart Rider but aren't based in Korea, don't worry. Nexon has announced plans to expand to Japan and China in the near term, and further down the road? Who knows, sounds like a brilliant game for someone like Yahoo Games to be investigating, doesn't it?

If you've played Kart Rider, I'd love to hear your experiences too!

Posted by Dave Taylor at July 12, 2005 10:06 PM

Comments

I am korean and I live in Korea,and of course I belong to a quarter of population of Korea have participated in at least one Kart Rider race.

You mentioned Razor Blade theory as you explain the secret of Kart Rider. I totally agree with your idea. But Razor Blade theory as a source of game revenue was applied to some games several years ago. A lot of Korean game publishers chose this marketing strategy and they succeed in it.

I recommend you to focus on another revernue source of Kart-rider. In this virtual racing game there are a lot of billboards and ad-places.
As Kartrider is getting more registered users, its billboard and adplaces are getting occupied.

Posted by: pilseok on July 24, 2005 8:28 PM

I live in Korea and play this game from time to time.Its simplicity is part of its appeal. The only down side to this software is for those of us (like me) that do not speak Korean. If Nexon opens up the languages, I think they would have a significant leap in users and the finacial benifits that go with that.
Julian

Posted by: Julian on February 14, 2007 11:07 PM

kart rider is gonna be released in like 15 hours.

The global international open beta release!!!

www.kartrider.com

cant wait!!!

Posted by: Nofan on October 2, 2007 1:11 AM

I live in America and I'm currently play Kart Rider.
Sometimes when I'm starting the game my computer (its a Windows 2000) it mostly logs out on me or puts an error on the computer screen. Well, thats what I'm NOT here to talk about. When I go onto youtube and when I type in "KartRider", I sometimes get videos of the Korean version. And it makes me think, "Wow, in Korea, the KartRider there has LOTS of NEW cars and characters!" I found out why because KartRider is a Korean game, so its obvious. And I find on youtube KartRider techniques during races. I watch them and they show rifting skills. Its amazing. Also I fould a video which shows a 5 year old Korean kid playing KartRider with excellent drifting. Wow. Anyways my characters name is "MarioMario". I'm not very skilled. And I play the AMERICAN version of KartRider. So remember that...
-Super Mario
Video gamer
:)

Posted by: Super Mario on November 9, 2007 7:17 PM

Hello friend,

Let me cut some of your cookies post up there, 25 MD is my sweet threat for the end of this week, 110 MB of ram is cool but production line demand more input and many employees have come for interview, additional input may seem optimum to leverage the plainfield. Master of Tangible economy + virtual economy = Tangible asset banking. In the virtual world connecting with world seems more money making opportunity but plain field isn't well leverage and competition oligopoly exist among players, Listen help me cut your cookies and I will show you how to swim like shack under deep water.

Posted by: Blackstone on May 12, 2009 3:19 PM

I have been awaiting the full release of Kart Rider in North America for more than a year now. Does anyone know what Nexon is delaying for?

Posted by: Rev. Deutsch on June 24, 2009 7:16 AM

"Listen help me cut your cookies and I will show you how to swim like shack under deep water."
-Blackstone

I cant wait to swim like a shack, but can you first teach me how to dive like a house?

Posted by: Whitestone on December 28, 2009 6:53 PM

Sorry for the wall of rant, but it has been pent up for quite some time now, so please, bear with me.

I'm one of the lucky ones that got to try out the beta testing on Kart Rider for North America. I was so excited for it, it was extremely exciting, and the freedom to play with anyone online was extremely liberating, unlike a certain well known kart racing game we all know about. (This was during the times before Nintendo Wii, and it's new Kart racing game.)

Suddenly one day, the website goes down, promising to come back with a full release. With bittersweet feelings, I waited in hopes of new upgrades, new maps, and an extended 1 player storyline mode. (God I love those 1 player challenges....). And so I waited. and waited. and waited a little longer.

Now it's present day, February 2010, and all hopes of ever playing has been dried up, and lost. All I can do now is browse through the Korean website time to time, feeling envious of the Koreans who get to play such a great game. There's absolutely no official news about what happened, all information I come across is generated by the general public, who are just as clueless as I am. Nexon America just plainly covered it up, and wont release any news on Kart Rider. They continue to pretend it never existed, and never will exist.

If anyone has any real information about what has happened, please please, I beg you let me in on it, send me a link, or anything. Thank you.

Posted by: Aniki on February 25, 2010 1:25 PM

Before you leave a comment, a tip: If you're interested in blogging, you should sign up for my Blogsmart News so you can stay up to date on the latest insider tips and ideas for your Internet business and marketing efforts. Sign up right now and you'll get a free copy of my "Insider's Guide to Blogging" ebook too!