Glimmers of the virtual economy: Nexon’s $250 million Kart Rider

I’m just fascinated by an article in BusinessWeek entitled Dude, where’s my digital car? It’s about Korean gaming company Nexon Corporation and its wildly popular Kart Rider [Korean language site]. Why’s it interesting? Because much more so than Sony’s Everquest and other online virtual games, Kart Rider is free, phenomenally popular and makes Nexon millions of dollars every month!
I know what you’re asking: If it’s free, where’s the revenue stream coming from?

What a great and obvious question! The answer is that Nexon has figured out how to apply the Razor Blade theory of marketing to online gaming, in a spectacular way. The Razor Blade theory, you might recall, is that you should give away the razor so you can sell the blades.
In this context, Nexon allows Koreans — and remember that about 75% of the Korean population have broadband connectivity — to play the multi-player cartoon racing game for free.
The money comes from selling virtual upgrades. From fancier looking cars to rockets you can fire at other racers, to balloons and other cute things, these $0.50-$2 items add up fast.
BusinessWeek even cites a 9-year-old who paid $2.50 for a new avatar, $3.50 for a faster car, $2.50 for goggles that prevent smoke from blocking your vision while racing, and more. To a total tune of $150 USD.
But it’s more amazing than that: there are now professional Kart Rider racers who are paid by sponsors to have company logos on the side of their little Karts. A true 21st century job if I’ve heard of one.
One of the secrets of Kart Rider is that it’s also a short game, perfect for a 5-10 minute break at work or as a break from a more demanding task. Compare that to the weeks or months of a full Everquest campaign or any of the other massively multiplayer worlds. Certainly Nexon knows quite well that there are manyfold more casual gamers and people online seeking a quick entertainment that’s fun, funny and not particularly demanding. And, with an income last year of $110 million and a projected 2005 revenue of $250 million, they’re right.

Kart Rider, Nexon, Image from The Korea Times

They’re really, spectacularly right. In July of 2004 Nexon reported 0.9 million registered users. By November of 2004 they had 5 million registered users. January of 2005 saw 8 million users, March of this year had 11 million and Nexon reported that there are now more than 12 million registered Kart Rider users, as of May 2005.
But here’s the figure to chew on: More than 25% of the population of Korea have participated in at least one Kart Rider race.. Wow!
If you’d like to try Kart Rider but aren’t based in Korea, don’t worry. Nexon has announced plans to expand to Japan and China in the near term, and further down the road? Who knows, sounds like a brilliant game for someone like Yahoo Games to be investigating, doesn’t it?
If you’ve played Kart Rider, I’d love to hear your experiences too!

10 comments on “Glimmers of the virtual economy: Nexon’s $250 million Kart Rider

  1. I am korean and I live in Korea,and of course I belong to a quarter of population of Korea have participated in at least one Kart Rider race.
    You mentioned Razor Blade theory as you explain the secret of Kart Rider. I totally agree with your idea. But Razor Blade theory as a source of game revenue was applied to some games several years ago. A lot of Korean game publishers chose this marketing strategy and they succeed in it.
    I recommend you to focus on another revernue source of Kart-rider. In this virtual racing game there are a lot of billboards and ad-places.
    As Kartrider is getting more registered users, its billboard and adplaces are getting occupied.

  2. I live in Korea and play this game from time to time.Its simplicity is part of its appeal. The only down side to this software is for those of us (like me) that do not speak Korean. If Nexon opens up the languages, I think they would have a significant leap in users and the finacial benifits that go with that.

  3. I live in America and I’m currently play Kart Rider.
    Sometimes when I’m starting the game my computer (its a Windows 2000) it mostly logs out on me or puts an error on the computer screen. Well, thats what I’m NOT here to talk about. When I go onto youtube and when I type in “KartRider”, I sometimes get videos of the Korean version. And it makes me think, “Wow, in Korea, the KartRider there has LOTS of NEW cars and characters!” I found out why because KartRider is a Korean game, so its obvious. And I find on youtube KartRider techniques during races. I watch them and they show rifting skills. Its amazing. Also I fould a video which shows a 5 year old Korean kid playing KartRider with excellent drifting. Wow. Anyways my characters name is “MarioMario”. I’m not very skilled. And I play the AMERICAN version of KartRider. So remember that…
    -Super Mario
    Video gamer

  4. Hello friend,
    Let me cut some of your cookies post up there, 25 MD is my sweet threat for the end of this week, 110 MB of ram is cool but production line demand more input and many employees have come for interview, additional input may seem optimum to leverage the plainfield. Master of Tangible economy + virtual economy = Tangible asset banking. In the virtual world connecting with world seems more money making opportunity but plain field isn’t well leverage and competition oligopoly exist among players, Listen help me cut your cookies and I will show you how to swim like shack under deep water.

  5. I have been awaiting the full release of Kart Rider in North America for more than a year now. Does anyone know what Nexon is delaying for?

  6. “Listen help me cut your cookies and I will show you how to swim like shack under deep water.”
    I cant wait to swim like a shack, but can you first teach me how to dive like a house?

  7. Sorry for the wall of rant, but it has been pent up for quite some time now, so please, bear with me.
    I’m one of the lucky ones that got to try out the beta testing on Kart Rider for North America. I was so excited for it, it was extremely exciting, and the freedom to play with anyone online was extremely liberating, unlike a certain well known kart racing game we all know about. (This was during the times before Nintendo Wii, and it’s new Kart racing game.)
    Suddenly one day, the website goes down, promising to come back with a full release. With bittersweet feelings, I waited in hopes of new upgrades, new maps, and an extended 1 player storyline mode. (God I love those 1 player challenges….). And so I waited. and waited. and waited a little longer.
    Now it’s present day, February 2010, and all hopes of ever playing has been dried up, and lost. All I can do now is browse through the Korean website time to time, feeling envious of the Koreans who get to play such a great game. There’s absolutely no official news about what happened, all information I come across is generated by the general public, who are just as clueless as I am. Nexon America just plainly covered it up, and wont release any news on Kart Rider. They continue to pretend it never existed, and never will exist.
    If anyone has any real information about what has happened, please please, I beg you let me in on it, send me a link, or anything. Thank you.

  8. well i figured out what happened they wernt making alot more money in north america since they werent complete with cash items so they close kartrider for good but in korea they made a sequal called air rider same people same animation samy compny just in air it isnt going to relase soon to north america but it will relase in somewhere 2010 for open beta then close down for 1 year for full relase so aniki dont lsoe your impition air rider will come and KARTRIDER WILL BE BACK IN A NEW FORM!

  9. Well, how could Nexon North America make money on Kart Rider when they never released the full version and opened the Cash Shop to buy things. I mean really…I had already bought a gift card and entered the numbers to spend…then there was no Kart Rider to spend it on…Nexon North America is fradulent, as they stated that the Full Version would be released on an exact date…look at this posting…and then never released it. Even several years later we wait.
    So look at the screen shot here:

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