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November - 2007 - issue > Company Profile
Trade-while-you-play
Aritra Bhattacharya
Monday, November 5, 2007

You are zipping along the highway that runs through the countryside. The music is high and the cool evening breeze tousles your hair into a halo-like formation. Suddenly, a group of baddies emerge from nowhere, rob you of your car and cell phone, and flee. You must travel another twelve miles before you can reach the next level. You wish there was a way you could rent another car. The problem is that the game you’re playing online doesn’t enable you to transact. So, you opt out of the game and try locating a virtual bicycle on other sites?

Not necessary, if the game you’re playing is built on the PlaySpan platform. The platform allows you to indulge in in-game search, commerce, and communication; you could sound out about your peril to millions of fellow gamers from over 60 countries and rent or buy a virtual car without going out of the game even for a minute.

“Gaming 1.0 was characterized by unconnected consoles while Gaming 2.0 saw the gaming consoles like X-Box and Playstation being connected to the internet,” says Karl Mehta, Co-Founder & CEO, PlaySpan. This new era of Gaming 3.0 pioneered by PlaySpan is characterized by large virtual economies inside games and virtual worlds. PlaySpan, co-founded by Mehta’s 11 year old son Arjun with his dad, addresses a virtual goods transaction market worth “well over $2 billion”.

Though PlaySpan had the backing of investors like Easton Capital, Menlo Ventures, STIC and Novel TMT Ventures, getting games list their virtual economies on PlaySpan exchange wasn’t easy. “The virtual economy for digital media and virtual goods is growing rapidly and users need Nasdaq style electronic, efficient, and liquid exchange. However, most publishers don’t want to deal with startups. We had to prove our technology with a real platform, show traction and attract brand-name investors with financial backing before game publishers and developers will sign up,” says Mehta.

PlaySpan’s win with marquee publisher accounts like K2 Network, a leading name in online gaming changed the dynamics. Once the early adopters and industry thought leaders made the move, other companies followed suit. Among the biggest customer gains in the last one year have been Gala Net and Urbaniacs. Many more are in the pipeline.

For publishers, using PlaySpan’s platform proves beneficial in attracting new gamers, ones who wish to transact, make money, and connect with friends in the virtual world. For PlaySpan on the other hand, the royalties-per-transaction business model works to its benefit in the long term.

Pointing out the scope of in-game commerce, Mehta notes that a majority of the gamers are males in the 18-35 age group and have access to credit cards, Paypal, et al. Currently, there are around 100 million active online gamers. This number is expected to rise to 500 million in the next two years.

With such proliferation in online gaming, how does PlaySpan plan to outwit the competition? “Firstly, we are early movers with publisher-deals, IPR, and platform development,” says Mehta. “As more gamers use our platform, we are seeing a network effect in building the largest online virtual community. With our user base and usage, we see publishers that want to leverage our platform not just for our technology but for driving more user base and stickiness to their games. We help our game developers to de-risk the hit-miss nature of the content and title business and generate revenues from secondary market transactions.” Further, anticipating that mobiles are going to be the internet-enabling device in emergent markets, Mehta’s team—15 in Mumbai and 8 each in Shanghai and Silicon Valley—has plans on adapting the platform for mobile devices.

Currently, a majority of the virtual goods trading market is addressed by unsanctioned marketplaces like ebay that do have game integration. As the company expands the list of publishers it has signed up and strives towards tapping online gaming on the mobile phone, 11 year old Mehta Jr’s venture could turn into a big name.
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