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The Free Zone: The F2P Consolidation Trend

Column By Richard Aihoshi on February 12, 2013

Since the previous column, a couple of announcements about relatively prominent western F2P publishers got me to wondering if they signal the start of something I've been expecting for a while now. As you can gather from today's heading, it's a consolidation in the F2P publishing industry here in North America and also in Europe. One piece of news to which I'm referring is the acquisition of Gala-Net / gPotato by Webzen. The other is the closing of Outspark plus the transfer of the regional rights for its most popular title, Fiesta Online, to the auspices of its European operator, gamigo.

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At first glance, the former seems like a positive move by Webzen. It has been trying to serve the West through its global operation, which is located in Korea. I wouldn't go so far as to say it's not possible to do this effectively, but such a strategy does come with some rather substantial hurdles attached. One obvious example is that it's not so easy to find adequate numbers of staff who can interact with players in their native languages. Communicating in English is often possible with Europeans since many speak enough to get by, but having both parties in a conversation use their common second language should be a fallback, not a frequent necessity. As for here in North America, well, let's just say some of us can be less than highly tolerant when communicating with those we judge to be foreigners.

Purchasing Gala-Net would seem to address this concern without incurring the cost or the considerable effort associated with creating a new company or division from scratch, especially one located thousands of miles from the home office. The price was reportedly about $US 16.7 million. Although this is a huge amount by most individuals' standards, mine most definitely included, it seems pretty reasonable on a corporate scale. One possible fly in the proverbial ointment is that some licensors may not be overly keen on seeing their titles operated by an arm of a competitor. However, this isn't an immediate issue; it can be dealt with over time as the various contracts come up for renewal.

One curious thing about this situation is that back in the summer of 2010, Webzen merged with NHN Games, which had a Western portal, ijji.com. I say “had” because it was sold to Aeria Games just over a year ago. As a result, the purchase of Gala-Net seems like something of a quick about-face. The fact that I haven't heard any plausible reasons or even rumors as to why this may have happened only makes me wonder more.

In any case, I suspect it won't be long before we start to see a stronger presence for Webzen's portfolio, particularly its two upcoming sequels, MU2 and ArchLord 2. The latter is farther along; the domestic version in beta. Another is R2: Reign of Revolution. The last I heard, which was around a couple of months ago, it was headed for global service, although without a firm date yet, so it wouldn't come as a shock to see it offered through gPotato, perhaps as soon as the second half of this year.

My state of knowledge about the Outspark news is similarly sparse; I only know what I've read, which has all been in the public domain. One pretty obvious thing is that it gives gamigo a much larger presence in North America, apparently big enough to occasion a shift of its regional office all the way across the continent from the east coast to the west.

What kind of puzzles me about this situation is that gamigo chose to acquire “substantial assets” of Outspark rather than buy it lock, stock and barrel. This would seem to to mean the latter's other games were deemed not worth continuing to operate. Granted Secret of the Solstice, Luvinia Online, etc. aren't exactly household names, I can't say I'd have guessed none would survive.

Regardless, this still looks like it may represent a step toward industry consolidation. In effect, gamigo has grown in this region by absorbing a large part of Outspark instead of buying it in its entirety. The net change is directionally the same. One publisher became larger while another closed shop.

These two things aren't enough to constitute a consolidation trend, or even the start of one. However, I'll definitely have my eyes open for further indications. One possibility that immediately springs to mind is other Korean companies following Webzen's lead and looking to boost their presence in the West by acquiring existing F2P publishers.

As for gamigo, I can't help but wonder if its move signals larger aspirations in North America and perhaps elsewhere as well. Would you move your regional office from New York to San Francisco just to operate Fiesta in this market? That scenario doesn't seem particularly plausible, which suggests there's more to come, be it further acquisitions, increased visibility to build share of mind, a combination or something else. I also can't rule out its European rivals reacting. So here too, I'll be watching with interest to see what transpires. 


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The Free Zone
Richard Aihoshi has been writing about MMOGs since the mid-1990s, always with a global perspective. As a result, he has observed the emergence and growth of the free to play business model from its early days in both hemispheres.

He is the former Editor of RPG Vault and his column, focusing on free to play MMOs, appears on MMORPG.com every Monday.
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