Introduction
The VARS framework, created by Professor Deepak Somaya, gives a thorough overview of a business model and the associated business strategy. It provides a detailed review of a chosen company’s business model and highlights the probable reasons for its success or downfall. Hence, using VARS, Nexon’s business model and its changes can be inspected.
Company Background
Nexon is a Japanese video game company known for popularizing several monetization models. Established in 1994, it is a pioneer in interactive entertainment and has brought about a number of advancements (About Nexon, n.d.). These include the first freemium game and the first graphical massively multiplayer online role-playing game (About Nexon, n.d.). Thus, Nexon is a long-established company in the video game market and is known for pioneering freemium and microtransactions in the industry.
Application of the VARS Framework to the Company’s Business Model
According to the VARS framework, Nexon has a distinguishable value proposition and revenue model features. Regarding the “V” in the VARS model, Nexon has distinguished itself from its rivals by allowing customers to play its games for free. Monetization is also the main part of Nexon’s revenue model, or “R” in the VARS framework. As they advance through the game, gamers could feel pushed to utilize microtransactions for various reasons, such as the need to advance in the game or the opportunity to customize their appearance (Nations, 2020). This business model has allowed the corporation to generate a sizable and consistent income stream, which it has continued to do.
Future Changes of the Business Model
However, Nexon had to change some parts of its business model to retain customers. In 2021, the company received backlash from players due to including a gacha system in “Maplestory” (Royce, 2022). Users are encouraged to spend money in the gacha system to win exclusive characters and items.
Users could keep spending money and never be pleased because there is no guarantee of receiving the desired items. Thus, due to the uncertainty about the value proposition that the customers faced, Nexon has made an untraditional move for gacha systems, disclosing the probability of receiving items in the system (Royce, 2022). Thus, the company had to change the established gacha model to improve the game’s value proposition.
Conclusion
Hence, Nexon has a successful business model that was revolutionary when it was created. Being the first company to pioneer the freemium and microtransaction models, it created an attractive value proposition to attract new customers and gain a high income due to its revenue model. While some of the parts of the models required changes, Nexon is still a stable and successful company, and it will probably stay so in the future.
References
About Nexon. (n.d.). Nexon. Web.
Nations, D. (2020). What Are Freemium Games? Lifewire. Web.
Royce, B. (2022). Nexon Q2 2022: MapleStory’s dramatic turnaround is attributed to monetization transparency. Massively Overpowered. Web.