Innovative online digital services and devices increasingly affect everyday life. We communicate with friends and business partners through social network services such as Facebook, LinkedIn, Twitter and Flickr. Macs, iPhones and iPods are brought on the subway, to the gym and to school. Computer and video games have become a social phenomenon with games such as Singstar, Guitar Hero and Buzz, and online gaming is becoming mainstream entertainment. In fact, according to the Entertainment Software Association (ESA), the average US gamer is 35 years old and 40% are women.
Banks and card issuers in the US have adapted to these habits and launched credit cards that both subsidize monthly subscription fees for online games through card use, and that give bonus points redeemable as iTunes music downloads. Nordic card companies, however, have yet to realize the full potential of digital content and the gaming industry.
World of Warcraft Visa
To illustrate, in May 2007, Blizzard and First National Bank released the World of Warcraft Visa card. World of Warcraft is the world’s leading MMO (Massively Multiplayer Online game). The MMO market, measured in terms of estimates for active player accounts, doubled in size from January 2005 – January 2008. Estimated active player accounts for World of Warcraft as of January 2008 surpassed 10 million worldwide, with 2.5 million in the US, according to statistics provided by mmogchart.com. This is an enormous customer base with the majority being potential cardholders. Furthermore, the main revenue driver for World of Warcraft is automatically renewed subscriptions paid for on a monthly, quarterly or biannual basis. This provides a minimum card spend of USD 13-15 per month – or USD 156-180 per year, depending on the payment plan, for an active player who charges his game account to the card.
The World of Warcraft Visa card provides a 1% cash back bonus redeemable in playing time, and the first purchase made with the card rewards the cardholder with one month of gaming (value USD 15). There is no annual card fee, a 6-month 0% APR introductory offer, and the player currently can choose among 13 game-related images for the card’s visual design.
Entropia Universe
The Swedish software company MindArk has designed the virtual universe Entropia, an MMO marketed as “The first virtual universe with a real cash economy”. The games uses a currency called PED (Project Entropia Dollars), which is exchangeable for USD at a rate of 10 PED = 1 USD. Players can purchase items and services in the game using PED acquired through playing the game or by purchasing the virtual currency using real world money. Similarly, the player can sell items and services in the game for PED – and exchange the virtual money for real world money, which can be transferred to an international bank account.
For a time money could be paid out in cash at ATMs through Entropia Universe Cash Cards issued by CardOne Plus, available for purchase inside the game, but the product was suspended in January 2007 due to problems on CardOne Plus’ end. Rumors have since persisted of a new MasterCard-branded card in development, possibly a prepaid card.
UPDATE: 18 March 2009: The Swedish Financial Supervisory Authority has granted a license to conduct banking activities to Mind Bank AB, a wholly owned subsidiary of MindArk PE AB. Mind Bank will be the first bank that fully incorporates real money transactions with activities in a virtual world. According to the press release, Mind Bank will function as a central bank for all virtual worlds in the Entropia Universe, but also offer services to customers on the conventional market.
Opportunity: Funcom
The Norwegian game developer Funcom has created several MMOs. The most recent release with the highest number of players is Age of Conan, which was launched in May 2008. At one point, Age of Conan had 700,000 accounts, but attrition has been higher than expected, and an estimate at the beginning of 2009 is 100,000 active accounts. It remains to be seen whether Funcom can reverse the trend for Age of Conan, but the company has a new MMO under development, The Secret World.
Both of these MMOs could represent opportunities for card companies in the form of a co-branded card program inspired by the World of Warcraft Visa card. Card companies could also investigate the prepaid subscription products sold through retail outlets for MMOs, which are targeted at young players without access to credit and debit cards required for online payments options.
This article is an excerpt from the report Nordic Card Trends and Opportunities 2009-2010.
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