As of late I seem to have developed a slight obsession with Kart Rider - a cute and insanely fun little racing game (similar to Mario Kart) with a really interesting business model. Unlike many commercial games it's a free download, with no monthly subscription fee required to play - this greatly reduces the barriers to entry for potential customers and ultimately gets more people playing the game. Instead the company makes money by selling digital merchandise and upgrades which enables players to personalize their in-game avatars and trick out their karts. So, how much can you make selling digital goods (and related services)? Apparently, quite a bit!
Now, there's a mobile aspect to Kart Rider that I find absolutely fascinating. How do you sell digital goods to young people (who don't have credit cards) without having them constantly harass their parents? How about using micropayments via mobile phone.
One of hidden supports for the Nexon’s (the company behind Kart Rider) great success is easy and convenient payment systems/methods which are backed by financial intermediaries. Especially, payment by cell-phone is the key factor. For example, a child who wants to buy Luzzi (in-game currency) would normally tease her/his parents to pay her/his money. What if the price is as high as usual MMORPG? What if another bothersome procedures need to be done? Just enter your cell phone number, and say identification code to your lovely daughter or son. What is better, there is much less resistance or hesitation to pay than paying by cash or credit card.One other interesting tidbit to note is that this model (free software + paid upgrades/services) is starting to to garner interest outside of the gaming industry. Reminds me quite a bit of the business model adopted by razor manufacturers - give away the razor once, sell the blades for years to come.