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The Green SheetGreen Sheet

The Green Sheet Online Edition

September 24, 2012 • Issue 12:09:02

Players profit from open currency

sellingprepaidThe latest twist from gift card exchange operator Plastic Jungle Inc. gives gamers the option of paying with gift cards for in-game enhancements in the virtual worlds of free-to-play online games. Not only does the new service further Plastic Jungle's goal of "freeing" the $40 billion trapped on unused gift cards every year, it is also evidence that gamers are increasingly primed to use prepaid cards to enhance games.

For the service, Plastic Jungle partnered with open currency platform provider Zeevex (acquired by prepaid card distributor InComm in 2010). When gamers click to pay for in-game enhancements from their online Zeevex accounts, they are given the choice of paying with the gift cards from any one of approximately 130 brand retailers in Plastic Jungle's network. Funds on the gift cards are converted into Zeevex virtual currency.

"One of the reasons we were so excited to launch this product is that Zeevex also represents choice," said Bruce Bower, President of Plastic Jungle. "We present choice in being able to make use of gift cards that you have that you'd prefer to use for something else. Zeevex represents hundreds of online and mobile gaming experiences."

The solution provides incremental revenue in new ways for both online game publishers and retailers. Publishers receive revenue from unlocked gift card funds in the form of micro transactions that represent as little as 25 cents per in-game enhancement. But many gamers resist paying for such enhancements.

However, they are more likely to spend that little bit of money for a better sword or magic potion if the money comes from a gift card laying unused in a sock drawer, said David Etling, Vice President of Business Development at InComm. "It provides an opportunity for that publisher to convert and monetize that consumer that may have been playing that game for free," he added.

For retailers, the incremental profits come from a lack of hesitation by consumers at the POS, according to Bower. When consumers purchase the closed-loop gift cards of national retailers, like Best Buy Inc. and Gap Inc.'s Old Navy, buyers no longer have to worry that recipients of the cards will not like the brands.

"Now it may not be the right fit," Bower said. "But it's certainly not going to cause them to hesitate and not buy that card. … So you actually can have a consumer that says I'll go ahead and buy a Target card, knowing [the recipient] can convert it into Zeevex points."

The play for Zeevex

sellingprepaidEtling said InComm acquired Zeevez to expand its footprint with the two primary consumer groups for game cards: teenagers and young adults. The principal way InComm reaches those consumers is through the Zeevex Virtual Currency Card available in over 50,000 retail locations.

The Zeevex card allows InComm to consolidate hundreds of different online games onto one card. That is important for retailers, where shelf space is limited, but it is also advantageous for game publishers, Etling noted.

"There are literally hundreds, if not thousands, of different online games that consumers play," he said. "And they have a very finite audience. They may have half a million users or 200,000 users that are very engaged in playing that game."

Such publishers do not have enough players to justify their own game cards. An aggregate card thus allows smaller publishers to reach players and "turn the peg in retail," Etling said. Additionally, gamers routinely play more than one online game, Etling added, so the card provides them greater choice over what games they can spend money on.

A new way to play

sellingprepaidIn Payment Preferences of Worldwide Online Gamers 2012, free-to-play game market consultancy SuperData Research Inc. said the top three preferred payment methods for online gamers in the United States are e-wallets, credit cards and prepaid cards. Almost one in five U.S. gamers (19.1 percent) spent $526 million on games with prepaid cards in the first six months of 2012, up from 17 percent of gamers who spent $238.5 million on games via prepaid in the first half of 2010.

Dr. Joost van Dreunen, Lead Analyst and Managing Director at SuperData, said the Plastic Jungle-Zeevex partnership highlights how important prepaid cards have become to game publishers in driving customer loyalty. "It's really a good way, I think, a very intuitive way of convincing and cultivating those customers," he said.

The business model can be especially beneficial for smaller publishers. According to van Dreunan, gamers are like general consumers in that they demonstrate loyalty to the brands they know and recognize. "So you see a lot of these emerging brands and payment brands finding it hard to establish themselves as a brand because people are really showing some inertia in terms of jumping over to new brands," he said.

Game publishers can bridge that divide by partnering with name brands like Disney or The Home Depot U.S.A. Inc. via the Plastic Jungle-Zeevex open currency solution. "I think that's a great way to associate your beginning brand as a payment option with an established brand," van Dreunan said. end of article

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