The Benefits of Zong To Make More Money For Your Games…

David, founder and CEO of Zong, talks about having players pay for games via their cell phone

You can download the podcast here…
http://www.indiegamepod.com/podcasts/zong-podcast.mp3

Or listen to it here…

[wp_youtube]aLjRcAFrGiI[/wp_youtube]

Show Notes:
Interviewer: I’m here at the Game Developers Conference in San Francisco and with me today is a special guest. How about you introduce yourself?

David: Hi, I’m David Marcus, the Founder and CEO of Zong.

Interviewer: What’s Zong about?

David: Zong is a frictionalized mobile payment system for games and social networks. Basically, what we do is make the payments a lot easier than with credit cards or any other payment method which results in much, much higher conversion rates.

Interviewer: So, you’re saying now that players are actually paying with their cell phone or exactly what?

David: That’s right. They pay with their cell phone. That charge gets added to their phone bill at the end of the month.

Interviewer: What’s the specific benefit then of paying via cell phone versus credit card?

David: Paying with a credit card involves you standing up and getting to your wallet, wherever it is, taking your credit card out, typing 16 digits, expiration date, billing address. When you want to buy something which especially is virtual goods or points for a game, it’s just too complicated, too much friction to actually get to what you want.

And so, there’s a lot of leakage. You draw probably 19 percent of the people who want to pay versus 40 percent for these mobile sales. In other words, we can get about 60 percent of the people want to pay versus 10 percent with other credit card based payment systems.

Interviewer: Can you talk about that simplicity of your payment process? Exactly what does a player do?

David: The first time ever a user pays with Zong, there is no registration whatsoever. You need to know your mobile phone number, but everybody now knows their mobile number by heart and they always have their phone next to them.

So, they type in their cell number, get a pin code, get back on the web and in 10 seconds you’re finished.

Interviewer: Great. Are there any other interesting stats? For example, is it just an initial rush of players that use this service and then after awhile the revenue goes down or how does that work?

David: There’s definitely an initial rush, but generally the players try lower price points at first, and then the repeat usage becomes pretty high and they go to a higher price point. So, the initial rush is actually supplanted by less transactions but at a higher price point, so ultimately more and more revenues. We have now most of our games that we power are having a monthly growth of more than 20 percent a month in absolute revenue from Zong.

Interviewer: So, they put in your service, and then after that they’ve got 20 percent additional revenue.

David: No. When they plug in the service, they get about 40 to 50 percent more absolute revenues, but then that grows more than 20 to 25 percent in an aggregated base every month.

Interviewer: Can you talk about then the revenue range that some of these developers are actually making off of these social games and Zong service?

David: The range is pretty large, the small indie games and some of the virtual worlds we power. We cut a check the other day of more than a half a million dollars for a virtual small world. It’s a small app, so the conversion works and that’s a small team. It’s three people. It’s not the biggest check we wrote, obviously, but it works.

If you bill the payments the right way; in other words, if you consider payments as an integral part of your game rather than a commodity and just leave it on the side, then you can generate a lot of revenues from that.

Interviewer: Can you talk about this integration, and what do you mean by well integrated versus just passively integrated?

David: Well, it’s all about user experience. I am limiting the number of steps that one needs to take to complete a transaction and also enticing the user to make that transaction. So, if it’s like early on in the game, you are presented with the opportunity to buy something. It’s, maybe, too fast for the user. He needs to get more engagement with the game and in the game before he is ready to purchase something.

It’s all about timing, and it’s all about how you present the payments. If it’s really well integrated with our iteration is an I-Frame, a small I-Frame, so if you can display the I-Frame within the game experience – don’t navigate away from the game or don’t leave the user environment from the game because otherwise you just lose a lot of people as well.

Interviewer: Can you talk about more specific virtual goods or virtual items that developers should offer to raise revenue or to increase revenue that they can get?

David: It depends what type of games. If it’s games targeted to men, it’s always the streak that is the ultimate motivation, the competitiveness. I am going to defeat you, right? So, it’s always games that involve some kind of weaponry. Virtual weaponry that improves game play works really, really well. So, that’s for men. For girls, it’s like collections. It’s like you’ve got this virtual pet and you want to buy a lot of virtual goodies for that virtual pet.

It networks extremely well, but it’s always something that needs to improve the rank or status of the player in that game.

Interviewer: So, it can’t just be for expression. It can’t just be so much flare. It’s has to actually improve the game play stats or something.

David: It could be expression, but then again it needs to improve the perception of others of that user if it’s a MMOG or an RPG or the score of that player in that given game.

Interviewer: Can you talk about adoption rates in terms of… Is this more effective if you have players in the United States versus players outside the U. S. versus eastern or Asian countries?

David: It can virtual everywhere. We’re in 15 countries, and we’re adding 25 countries within the next 10 months. It works well everywhere, actually. Players are actually playing with mobile because either they don’t have a credit card or bank account, or if they do, it’s just faster, more convenient and less painful to pay with a mobile phone than a credit card where you had previous bad experiences or receiving a bad invoice at the end of the month.

Interviewer: There are other mobile payment platforms. So what’s the benefit of using Zong versus other ones?

David: It’s very simple. It’s actually as you said. Mobile transactions can be expensive. So, you need to have super high conversion rates. Our flow is really the best in the marketplace. It’s three clicks, you pay in 10 seconds. You don’t have to select your country. You don’t have to select a carrier. You just type in your number, and you are done. That’s one.

Two, we’ve got 84 carrier relationships and of these 84 carrier relationships, 80 percent of these are direct relationships. None of the other payment platforms have a single direct carrier relationship. They go through aggregators that add more costs and instability to the whole transaction.

And then the fourth thing is we understand the space, and the brand shows that we understand the space more than traditional payments. We understand the gaming space and social space real well, and we optimize the flow for our clients just to make sure they make more money.

Interviewer: Sure. Now, you guys then are focused mainly on, say, apps on Facebook and MySpace then, or are you also focused on MMOGs outside because I know that your service has been used by other applications or games on Facebook.

David: Well, both. You know, we’re involved everywhere where there is a need to purchase virtual currency, virtual goods or now we’re going to be announcing shortly, subscriptions as well. So, you know, subscriptions can be for all kinds of stuff. It’s really any type of environment that has virtual currency, virtual subscriptions or virtual goods that can be purchased.

We’ve got a lot of the Facebook developers and MySpace developers using us because it works well in the environment and demographic, but the same demographic is actually playing the MMOGs.

Interviewer: Sure. Since virtual currency and virtual goods are a huge profit driver, do you see then applications actually converting? Are developers are converting then to this virtual economy? Is that something that you guys help with, or is it mainly once converted you guys offer a service for monetizing it?

David: Well, generally it goes hand in hand because mobile payments make it work. In other words, if you convert to enabling a virtual goods transaction, a virtual economy in your game and you don’t have the right billing mechanisms, then it just doesn’t work.

So, it’s kind of a virtual circle between payments that are mobile and an integration of virtual currency and virtual goods.

Interviewer: When is this virtual subscription service or option going to come out?

David: It’s a few weeks out. So almost by the time your audience listens to that, it should be out.

Interviewer: If a developer wants to find out more about how to use this, where can they go?

David: Zong.com.

Interviewer: Any other last words then for indie game developers who are trying to make money off their games?

David: Well, Zong is a no-brainer; absolutely, really. And I am being very objective here. It just works.

Interviewer: Thank you very much.