Live Gamer acquires N-Cash to deliver “one-stop shop for virtual goods”

Live Gamer has acquired Korean micro-transaction provider N-Cash for an undisclosed sum as part of a bid to expand into the red hot market of primary virtual goods.
New York-based Live Gamer is already a player in the secondary market for video game virtual goods — game publishers use Live Gamer’s platform to let online game subscribers trade virtual goods they earn in games such as Sony’s EverQuest. In the past, gamers trading such goods on a black market, cutting game makers out of valuable transactions. Live Gamer legitimized the practice of trading goods and gave a share of the proceeds back to the game publishers.

But the market has evolved so that game publishers are now designing primary virtual goods transactions into their newest games. That’s where N-Cash comes in. The Korean company was one of the very first companies to create a platform that lets game makers sell virtual goods to players for real money. It has evolved into a huge business in South Korea and has spread to all of Asia. Virtual goods is rapidly surpassing advertising as the best way to monetize online games in the Asian market. The phenomenon has finally spread to the U.S. market, with game companies such as Electronic Arts, Sony Online Entertainment, Outspark and others embracing virtual goods.
That’s what makes this acquisition so timely, said Andrew Schneider, president of Live Gamer, in an interview. He said that N-Cash has a top-to-bottom approach to handling virtual goods systems that are paid for via a variety of payment systems.
“That’s what game publishers want: a one-stop shop for virtual goods,” said Schneider.
N-Cash got started in 2001 and now has a full electronic commerce business that can handle the operations some game publishers try to handle all by themselves. Over time, the virtual goods market has grown to a $4 billion market. N-Cash handles 150 million transactions a year for 56 million users. The N-Cash system is now used in 100 games in 23 countries.
David Cole, lead analyst at research firm DFC Intelligence, says virtual goods is the wave of the future as it moves from Asia to the global market. Under the deal, N-Cash chief executive David Seo will remain president of N-Cash while Joon Seog Park will become the company’s CEO. Mitch Davis is chairman and chief executive of Live Gamer.
Rivals include PlaySpan and Twofish. Live Gamer has 22 employees, while N-Cash has 48. One of N-Cash’s backers was Samsung Electronics.