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BestBuy launching prepaid cards for online games August 20, 2008

Posted by jeremyliew in business models, games, games 2.0, gaming, mmorpg, virtual goods, virtual worlds.
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Although some still doubt that free to pay games have a viable business model, this month’s launch of game cards at Bestbuy may change some minds. Reports Virtual Worlds News

Stardoll, Meez, AdventureQuest, and Gala-Net have all partnered with GMG Entertainment to launch individually branded prepaid cards at Best Buy. The Meez card will come with an exclusive virtual good, and Stardoll, which has previously worked with GMG Entertainment, is expanding its prepaid offerings to include a $15 card that will unlock various virtual goods.

I’ve noted in the past that prepaid cards at retail are an excellent way to monetize MMOG players. Earlier this year, Raph posted on the game card endcap at Target who have pioneered this category.

Sean Ryan
, MEEz’s CEO, notes:

So why should anyone care about old-line retail stores and physical goods when we’re all selling cutting edge virtual goods? Isn’t it all going to be virtual? The reason is that retail still matters a great deal, especially when addressing a somewhat unbanked audience like teenagers. We all know teens acquire an estimated $60B each year, whether it’s from allowances or part-time jobs – however, they don’t have an easy way to send it to their favorite virtual world or Massively Multiplayer Online (MMO) game company since they don’t have credit cards, are not happy borrowing them from parents, and aren’t as comfortable with PayPal, even though it can be linked to a checking account. Plus, teenagers still go shopping a lot, and that retail foot traffic is incredibly important since it provides another way to reach that audience when they’re not online. Finally, parents or friends are more comfortable giving gift cards these days so it’s easier for a teenager to ask grandpa for a $10 Meez card for graduation vs asking for cash – it’s a big Win/Win for the category.

Retailers are notoriously data driven when it comes to what they will give floorspace. Music is already getting cutting back according to Silicon Alley Insider:

… the three big retailers who comprise most of the industry’s sales — Best Buy (BBY), Wal-Mart (WMT) and Target (TGT) — will likely make significant cuts in the amount of floorspace they devote to CDs. We are hearing predictions of cuts that range from 20% to 40%, with Wal-Mart making the most aggressive pullbacks.

If retailers are giving shelf space to free to play games, that is a big vote of confidence in their future.

Comments»

1. Q dub - August 20, 2008

But what about the markup that retail is asking for? The 40%+ markup normally expected maybe quite difficult to stomach. Hopefully, given the minimal floorspace needed, markups are drastically lower…


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