In recent years, retailers, processors and online game developers have enjoyed the exponential growth of the game card market. Prepaid card distributor InComm reported nearly 200 percent growth in game card sales in 2008 over the previous year, while 7-Eleven Inc. saw over a 50 percent increase in 2009. But a Nexon America move shows that the market may be primed for another kind of expansion.
In September 2011, the U.S. arm of the free-to-play online game developer Nexon Corp. began transitioning from the popular Nexon Game Card to the Karma Koin card. Given its nearly 5 million Nexon Game Cards purchased in 2009 and 2010, and a distribution network for the cards of over 70,000 retail outlets in the United States, Canada, Australia and New Zealand, one may wonder why Nexon would want to mess with a good thing.
Barry Chiang, Technical Program Manager at Nexon America, said the phase-in of the Karma Kard is designed to give gamers greater usage flexibility, as well as provide a charity component that helps gamers contribute to the greater good.
New skin in the game
Chiang called the Karma Koin card a "re-skinning" of the Nexon Game Card. "The Nexon Game Card gave Nexon's customers the freedom to make online purchases with cash," he said. "Nexon intends to broaden that freedom with Karma Koin, and we envision it to be a cash-based payment solution that consumers can use at a variety of online game, entertainment and merchant sites."
But in repurposing the Nexon Game Card, the game publisher also identified another consumer need. "We firmly believe people want to do good in the world, and digital natives are no different," Chiang said.
Nexon's solution is to give digital natives (primarily teenaged gamers) "the ability to create positive change just by buying the things they want online," Chiang added. Thus, for every Karma Koin card redeemed online, Nexon said it will donate a percentage of that amount to charity. (Nexon has not yet established the charities that will benefit from the program; until then, the funds will be pooled into a trust account, a Nexon spokesman said.)
The Nexon Game Card, which debuted on CD racks at Target Corp. stores in 2007, is distributed via Atlanta-based InComm and Safeway Inc. subsidiary Blackhawk Network. Chiang characterized the experience with the Nexon Game Card as one of trial and error, with its success having paved the way for other digital content providers.
The North American market for game cards has reached a point of channel saturation, according to Chiang. However, he does not see that as a hindrance to profits. "The volume coming out of the pegs should see multiples in the coming years as buyers weed out the poor performers and identify the successful players in the space," he said. "There will be a natural rise in the business as more developers and products enter the digital goods business, but we all know that the rack space is limited.
"Lower volume players will be dropped or will focus on one or two retailers, resulting in lost opportunity for both the retailer and merchant. We believe Karma Koin will solve this real estate problem."
Chiang said Oceania (Australia and surrounding islands) is one growth market for Nexon's game cards. Chiang noted that Nexon is testing the possibility of expanding the company's game card reach via mom-and-pop stores through an online reseller program. 
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