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Monday, April 6, 2009

Boom time for prepaid game card market

Just as moviegoers see value in handing over $10 per person to experience make believe worlds in films, online gamers see value in loading real-world money onto game cards to enhance their online characters' experiences in virtual gaming realms. Prepaid card distributor InComm is capitalizing on this growing phenomenon.

The Atlanta-based company reported nearly 200 percent growth in game card sales in 2008 over the previous year. Brian Parlotto, Senior Vice President of Products and International Sales at Incomm, attributed the increase to its channel distribution strategies.

"We'll continue to see aggressive growth numbers due to the fact that we continue to add new retailers and partners in this space," he said. "We have a lot of runway in front of us."

Lift off

InComm distributes cards from over 60 online gaming companies to more than 145,000 retail locations, such as big-box and convenience stores. Parlotto said additional growth will come in new merchandising tactics at retail locations and new product assortments InComm expects to add to its current lineup in the coming months.

Nexon Corp., one of InComm's gaming partners, launched a promotion on fountain drink cups at a major convenience store chain, Parlotto said. Nexon marketed its virtual worlds on the cups and offered free trial codes (for in-game time) on the bottoms of the cups to lure in new gamers. , Parlotto said that in the last six months Nexon and the convenience store experienced "significant lift" from the promotion.

"In some cases, partners have decided to put bonus content on the higher denominational products to drive consumers to buy that higher denomination," Parlotto said. "It's really interesting to see how that dynamic happens."

Additionally, product placement within stores is an area in which Parlotto sees improvement. Recognizing the potential of game cards, retailers will set aside store space for digital content alone, he said. Game cards, along with cards for digital music downloads, for example, will occupy their own sections, akin to video or music sections.

The main purchasers of game cards are teenagers and young adults, Parlotto said. Therefore, the types of stores young consumers gravitate toward have been the most successful in selling the cards. One of InComm's partners relayed to Parlotto that game cards in convenience stores have become popular because such stores are hangouts where youths buy food and drinks after school.

Of the retail environments InComm has targeted for game cards, grocery stores have been the least successful, Parlotto said. He thinks it is directly related to who primarily shops there – adults, not teenagers.

Upward trajectory

In its 2007 prepaid card benchmark study, Mercator Advisory Group touted the digital media category, which includes music downloads, ring tones and game cards, as one of the fastest growing prepaid card segments. While Mercator found load volumes for other segments slowed down in 2007, the digital media category experienced an increase, up from 37 percent growth in 2006 to 39 percent a year later.

Mercator predicts the digital media market will almost double in three years, reaching nearly $9 billion by 2011.

"In general, gaming is surpassing prerecorded video [DVDs]," Parlotto said. "This should lead us to a very nice spot with our retail partners and gaming partners in the next three to four years."

Parlotto recognizes the synergy created between retailers and gaming companies. Through game cards, retailers become part of the value chain in online gaming, he said. And through the retail channel, online game developers are given another way to reach their core audience and expand their number of users.

"It allows for our product partners to interact with our retailers and be able to really develop a program that they didn't have the opportunity to do in the past," Parlotto said. "And the retailers never had gaming as a category as it relates to virtual worlds." end of article

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