Electronic Arts is adopting Live Gamer‘s virtual goods platform as part of a drive toward new pay-as-you-go business models.
The deal is the third major partner announcement in a week for Live Gamer, which also signed up game publishers THQ and Real Networks. It shows that virtual goods is gaining acceptance after a long limbo in the American video game market. Zynga and other social game companies have proven that the model — where gamers play for free and then buy virtual goods in a game with real money — and now major game publishers are giving virtual goods their blessing.
“It’s a trend among all U.S. game publishers, not just the casual and social game companies,” said Andrew Schneider (pictured), president of Live Gamer in New York. “It can work in all manner of games.”
Live Gamer makes everything that companies need to adopt a virtual economy, such as the ability to create, sell, merchandise, and track the trading of virtual goods. It essentially outsources a function that is increasingly important for making money in video games as gamers shift online and buy fewer $60 games. Game publishers offload the virtual goods transactions to Live Gamer so they can focus on building games.
“The software is mature and big companies can trust it,” Schneider said.
Market analyst firm DFC Intelligence estimates that the virtual goods business will grow to $7 billion worldwide by 2015. Live Gamer is in a good spot because it acquired N-Cash, the Korean firm that pioneered the business model in Korea in 2001 as a way to beat piracy. Now the model is bringing back the pay-per-play days of the arcades, where you plopped quarters in a game machine for a few minutes of enjoyment.
The model works as long as a small percentage of players decide to pay for virtual goods. Live Gamer has more than 83 million users in 23 countries. They are buying virtual goods in games published by the likes of Sony Online Entertainment, CCR, Funcom and NHN USA.
“We selected Live Gamer due to its unique e-commerce functionality and payment methods, which will augment EA’s current e-commerce capabilities” said Dennis Self, EA’s chief information officer.