Interview with K2 Network’s Joshua Hong

April 23, 2007
OGDC2007

This week we are taking a closer look at one of the hottest topics in the world of online gaming: payment models. To offer subscription or microtransactions? Free2Play? Other kinds of premium plans? Joshua Hong, Founder and CEO of K2 Networks, gives us his insight into this critical consideration for persistent online game developers.

Edward Van Duering: Thank you for taking the time to answer these questions, Joshua. Please introduce yourself to us and describe the role you play at K2 Network.

Joshua Hong: You are welcome. It is my pleasure to answer these questions, and I appreciate you circulating this information to the other attendees of the Online Game Development Conference. My name is Joshua Hong, and I am a co-founder and the CEO of K2 Network. To best answer your question regarding the role I play at K2 Network, I must tell you about the creation of my company.

In 2001, I established K2 Network according to three principles: 1) Put Gamers First™; 2) Community is the Experience; and 3) Our Model is Free2Play™. “Gamers First™” means recognizing who owns games: Gamers. K2 Network exists to serve players, and honors players in everything it does. Saying “community is the experience” is a way of expressing my belief that the social-based element of online gaming is central. Players may try an online game for many reasons, but whether they leave or stay depends on how the game is serviced and how its community is supported. We are dedicated to making the community experience in our games the very best, a network of games that players can not only enjoy but also be a part of. Last but not least, K2 Network games are Free2Play™. K2 Network is devoted to removing barriers between players and games. Players should experience a game before they invest any money in it and so K2 Network digitally distributes games for free. Gamers can also PLAY our games for free. Why? Because players are individuals and should be treated as such, so we offer a range of play options; players can choose between completely free, discreet item/service purchases, and monthly premium services.

Now that you know the founding principles of my company, I can more easily answer your question. The role I play at K2 Network involves setting the vision of the company, defining who we are and what we are to become. Those three principles make up much of that vision, and my role is to forward that vision and make it a reality. I do that by building teams, hiring the people who will work with me to realize my vision. I am also very active in working to secure more games for K2 Network players.

What impetus first brought K2 Network to re-consider the way payment methods in games are handled?

If you think about K2 Network and what it is about, especially with respect to putting Gamers First™ and the ideas behind Free2Play™, re-considering the way payment methods in games are handled is inherent to our identity. I want gamers around the world to join this enormous global club where the community experience is awesome. I want this club to be something that anyone can join. So, really, the way payment methods in games are handled is not just ancillary to K2 Network but is a vital dimension to how we operate.

In the bottom line, do you feel that new and alternative payment models have enhanced the reception of your MMO games in North America?

Absolutely.

Given how micro-transactions are handled differently in North America versus Korea, do you feel such means of payment will become as popular as it is in Pacific Rim countries? Do you anticipate the use of cell phones to purchase credits, for example?

Yes, they will eventually become as popular. It is only a matter of time, I think. In Asia, micro-transactions truly are micro, as players can make quite small purchases. Currently, in North America, due to a number of factors, there is an intrinsic threshold keeping transactions around $5. As for the use of cell phones to purchase credits, that could certainly happen in the future.

K2 Network pursues a wide variety of payment models, from in-game advertising to micro-transactions. Is that new approach to the revenue stream reflect a view from your company that the subscription model is outdated or irrelevant?

No. K2 Network does not view the subscription model as outdated or irrelevant. We are already blending a variety of payment models, including subscriptions, and I feel that a combination of many methods is what the future will be about. It is all about offering gamers choices, making it as easy as possible for them to enjoy games and the online communities they create for themselves.

With the advent of the Xbox Live and their payment system, do you feel new content delivery and payment models are spreading to consoles? Does K2 Network plan to be involved in that new market also?

Yes, I feel that new content delivery and payment models are already spreading to consoles. As for Xbox Live, we are looking into that as a possible publishing platform.

How do you feel a changing revenue model will alter the landscape of game publication and distribution (retail versus online distribution)?

K2 Network has already combined online and retail distribution, delivering the same Free2Play™ game, but with the retail version offering exciting bonus content. We did that with War Rock, and we shall do the same with Sword of the New World: Granado Espada. I believe we are the first to do this. It is not easy, but it is doable. Overall, I do think that over time the landscape of game publication and distribution will shift more and more to electronic distribution.

Just as a taste, what new and unique information do you plan to share with Online Game Development Conference attendees regarding new payment models?

I hope I have already done just that! In addition, I want to say that I am looking forward to the Online Game Development Conference.