Interview: Alex St. John Talks Digital Distribution, Microtransacations, and the Future of Gaming, Part One

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The MMO Gamer: You mentioned game size a moment ago, and that was going to be a part of my next question:

If digital distribution does eventually become the mainstream, how would you address some of its shortcomings?

Particularly the time it would take to download large AAA titles in areas without broadband, and lack of hard copies for things like boxes, manuals, and install materials, etc?

Alex St. John: That’s a good question. I’ll tell you how we’re addressing it with our WildTangent Orb console.

Of course we can download anything, it’s just a matter of time. But, for the impatient we can custom burn DVDs of any games in our catalog you like and ship them to you within 24 hours.

Hard copies of materials are an interesting thing because although most gamers would say they value them, if you told them the game would cost say $10 less without them about 50% of game buyers would choose not to pay for them and just get the game.

In the online world physical materials aren’t something you’re forced to buy to get the game you want, they’re an incremental upsell for people who want them in addition to the game itself. In our service if you want physical CDs, boxes, or books, you can just add them on to your electronic game purchase and we’ll ship them to you.

The MMO Gamer: You also spoke of cash cards and microcurrency… Microtransactions, in general, have not yet really caught on with Western consumers the way they have in the East.

Why not, and what do you think can be done about it?

Alex St. John: That’s easy, people don’t have credit cards in Asia, microcurrency is bought at retail locations with CASH in those markets. We don’t have a strong link from the cash register to online gameplay here and kids here don’t have credit cards.

Once people can buy game currency in retail like they buy iTunes cards, that model will also come to dominate this market.

We have a very vibrant microtransaction based economy at WildTangent driven by advertisers buying the currency and giving it away to consumers. We also sell microcurrency in retail at all Target locations in the US. I’d be willing to bet that in 3-5 years our online gaming market will be based on microcurrency and advertising.

The MMO Gamer: We’ve already seen companies start to do this on a somewhat smaller scale than what you envision; Nexon sells cards at 7-11, you can purchase WoW game time at Best Buy.

But, as you said, it’s basically the “teenagers without credit cards” demographic that are really buying them in any sort of numbers in North America. Is that demographic really so large it can cause a shift sufficient to draw the rest of the industry along into a real cash economy?

Alex St. John: Yes. Kids without credit cards are the largest online game playing demographic we see.