Gaming

Micropayments are a very viable option and most suited to gaming for charging small amounts (e.g. $1 to $10 a level or an hour of game play), this has proven to be very successful.
Micro-transactions make games more fun and increase revenues. In games where people play together, the value of the game increases with the number of players.

Everyone understands that $10 per month adds up to $120 per year. A big commitment limits the market. A free game removes the barrier to entry, connecting as many of a player's friends as possible. It is easy to spend more than $10 a month in one-dollar-and-fifty-cent impulse purchases. Plus, we all play what our friends play.

In the United States, a handful of online offerings have adopted a similar model to Asia -- notably Linden Labs' Second Life. It's free to use, but charges players to purchase and develop virtual property, and allows users to make and sell items to one another. But these games are the exception, not the rule.

How can game companies turn tiny online payments into serious revenues? Micropayments are slowly emerging as the answer. What price would you put on a game of checkers? How about a shiny new axe for your warrior? Fifty cents? Two dollars? That spare change may seem like nothing, but game companies are looking to turn gamers' tiny money into large piles of cash. In fact, some companies are already making a killing with digital transactions that can range from a penny to $5. The buzzword? Micropayments.

Major players are ready and willing to make the jump to micropayment plans. Gamers will be able to spend points that they purchase ahead of time on add-ons such as weapons, character outfits, cars, and game demos.

There are now some online game companies that are forging the way for micropayments. One example is Hangame.com, a gaming service from Korea’s NHN Corp. that specializes in games like checkers, bingo, and mahjong.

Your typical hardcore Half-Life 2 gamer might laugh at online mahjong players, but NHN Corp. is the one laughing to the bank. Hangame launched in 1999, and by 2004 it was pulling down income of over $250,000 per day, resulting in over $90 million for the year. This revenue was accomplished with average payments of just 50 cents.

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