Inside Asian Gaming

INSIDE ASIAN GAMING | March 2008 22 Korea, where CryptoLogic recently launched an online poker room, was chosen as an important target market because of its combination of high broadband penetration, clear regulation and opportunities to operate a new revenue model. “Korea’s rules are very specific,” says Ken Crouse. “You are allowed to have an online poker tournament, but you are not allowed to have a winner.You are,though,allowed a final table payout to the top three players.You can give them a prize such as a trip to Las Vegas, but you can’t announce in advance what the prize will be. The reality is that once you’ve given out prizes of a trip to Vegas the first time, players know what to expect.” The Korean online poker market is also supported by a unique feature that boosts operating margins for content and service providers. In order to take part, players are required to select an on-screen persona or ‘avatar’, rather like in the cult PC role-playing game Second Life . Avatars in cyberspace usually owe more to the user’s daydreams of how he or she would like to look in front of the mirror than to reality, but their sales are a potentially lucrative revenue stream. “Avatar sales are a distinctive feature of the Koreanmarket,”says Mr Naik,adding “we make a better margin on avatar sales than we do on the game play.” “Poker margins are becoming increasingly complicated and competitive,” adds Ken Crouse. “In Korea,players are also dressing up their avatars—buying a hat,or even buying an avatar girlfriend or boyfriend. All these little things are generating revenue for the site. “People are playing poker in Korea for money, but also because they like the whole user experience,” adds Mr Crouse. “We’re also seeing advertising sponsorship in-game. These are revenue models that the video game industry has been working on for a number of years and starting to put in place in Korea. Ultimately, we could see some kind of virtual currency exchange.” Theadventofnewrevenuemodelsisanexcitingdevelopment in an increasingly crowded market, says Mr Crouse. “The margins are being driven out of the online poker market except for the top three or four sites that have a brand and are able to attract players. We don’t really want that to happen in the category games market. “Margins on games of chance are typically high. Margins on games of skill and role-playing are not so high, so we would like some of those skill game and RPG customers to come over to games of chance.That latter market in itself is so large that we think this will be as big, if not bigger, from a revenue standpoint, than our traditional online gaming markets.” One website powered by CryptoLogic that was targeted at Chinese customers attracted two million regular users after just nine months of operation and claims 20,000 concurrent users. “Wehavecasual gaming,subscriptionbasedmahjongandsubscription card games, including poker,” says Mr Naik. “We have now the ability to deliver in China games that would be recognised as games of chance elsewhere, but are actually legal in China. We’ve also made a minor investment in an RPG company which takes games out of Korea and distributes them elsewhere, and we hope to make an announcement soon about operations out of Macau and also a South Asia- facing licensee.” Mobile Gaming Korea – an exciting newmodel