Nexon is a worldwide leader in free-to-play online games and provides deeply immersive online games with rich content across a variety of genres, demographics and geographies. Nexon currently services more than 50 games that are enjoyed by over 82 monthly active users in more than 100 countries worldwide.
In 2011 the American operations of Nexon, launched ‘Karma Koin’ as a separate brand to replace the Nexon Game Card, a prepaid card the company offered in the North American market beginning in 2007. Since then, the company confronted the limitations of operating an on-premises system, brought on by rapidly increasing demand and overseas expansion.
The company transferred the Karma Koin platform, from an on-premises system using the IaaS and PaaS cloud models which incorporated middleware, database, and storage, over to Windows Azure..
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Nexon, Korean online game company, is setting the standard through its success in online payment services. The Nexon Online Game Card which started in 2007. This prepaid card met unprecedented success. October of 2011, Nexon launched the independent brand, ‘Karma Koin’.
With Karma Koin, Nexon became the number one North American prepaid card service. Behind Nexon’s continued success and increase in sales, however, the company had other worries. The IT operating costs were higher than expected and the company found it was not easy to ensure the same service quality to customers around the world as it tried to expand its service to all countries. Nexon decided to try Windows Azure, determining that an on-premises solution was not rational in terms of making ‘Karma Koin’ truly global.
International online gaming company Nexon has a remarkable and varied history, finding success in North America. It’s most momentous history is that of the birth and growth of its online prepaid card service. Nexon set up shop in Silicon Valley in 1998, but met failure in its first endeavor. Korea’s small size has set it up to have one of the fastest Internet infrastructures worldwide, whereas the sheer size of the United States has left it weak in terms of communications infrastructure, a prerequisite for of the growth of the online gaming market and this caught Nexon unprepared. In 2006 Nexon made a second attempt, experiencing success in the online gaming market. The company identified impediments to the growth of the online gaming market and quickly came up with a solution.
Nexon realized that there was no payment option suitable for its service. In order to succeed in the American market, Nexon needed to promote its strategy to U.S. users. American users were comfortable with buying titles for video console games and monthly subscription fees. Partial payment, the use of a game at no cost, but with purchasable game item, was unfamiliar. A bigger problem was that the teenagers who make up the largest proportion of online game customers did not have available payment options for purchasing game items. The Korean market offers payment options including micro payments via mobile phone, gift cards and bookstore gift cards to those with Korean IDs (excluding international gamers), whereas gamers without their own or parental credit card access in the United States did not have another option for buying game items online.
Nexon determined that it would develop its own system and began to sell a prepaid card in major supermarkets and convenience stores. This prepaid Nexon Game Card became so popular that the sales network expanded to retail stores throughout the Unites States and contributed greatly to Nexon’s success. Nexon widened its influence in the online game market and in June 2010, decided to spin off the Nexon Game Card as a separate brand, ‘Karma Koin’. The decision was due to increased demand from online service providers unable to find appropriate payment options via the Nexon Game Card. Given the market conditions at the time, Nexon had the opportunity to capture this market segment if it applied itself. At the time, a lot of online service prepaid cards were limited to certain brands, and a general-purpose prepaid card service without restrictions was provided by only 2 or 3 companies.
Nexon was assured of the potential of this new market. The company completed development of the system in December 2010 and officially launched Karma Koin in October of 2011. From the very beginning, Karma Koin distinguished itself in the prepaid card market, quickly becoming the number one company in the a market, distinct from Playspan and Fanup, which are mobile payment services, leveraging its long experience operating online game related billing and membership systems.
The success of Karma Koin created another source of trouble. Sales of cards were much higher than the company expected and the sales network expanded to 75,000 retail stores across 4 countries (the United States, Canada, Australia, and New Zealand). Growth continued to exceed the company’s expectations and the work burden of its employees increased along with the costs required to ensure service stability, availability, and reliability. “It is almost impossible to expect the amount of service that will be used at the planning stage. Most services face a serious performance problem when the user-traffic is much higher than expected. To solve this problem, extra equipment is sometimes brought in quickly. When sales do not stabilize, however, the extra equipment is a huge pressure on a company. If a company predicts high sales of in the early stage, however, and purchases quality systems, but user response is poor, then the high priced systems are soon worthless,” said Nexon America team leader Kim Hyoung Soo.
Another problem was that it is difficult for IT to keep pace with the business strategy. “Karma Koin was scheduled to expand its service to more countries. We had to think about how we would provide the best service worldwide while supporting this business strategy”, said Kim Hyoung Soo.
The dynamic market response and increased number of countries serviced caused Nexon to change its Karma Koin operating strategy from its on-premises solution to a cloud service. In December 2011, the company began to look for a cloud service provider. Nexon made its selection based on two criteria. The first was whether or not the provider offered both IaaS and PaaS with the choice coming down to Microsoft and Amazon. “At that time, Google did not support both IaaS and PaaS and accordingly, was not on our list. Though many companies used Amazon, it was not reliable due to frequent errors. Compared to Amazon, Windows Azure was definitely more convenient in terms of management,” Kim Hyoung Soo said.
The second criterion involved how many data centers the provider managed globally. To ensure the response speed and service quality needed for North America, a cloud service provider with many data centers around the world seemed most suitable. Windows Azure again took the lead. Amazon has its data centers located mainly in North America, but Microsoft has 8 data centers for Windows Azure on three continents and the ideal conditions for Karma Koin and global service.
Nexon selected Windows Azure, and in January 2012 began to transfer the Karma Koin platform. This project progressed quickly and the transfer was completed in just three months. “We did not need any special support apart from questions we asked of Windows Azure customer support by e-mail or telephone. We completed a technical review internally, so we had no difficulty in completing the project with three engineers in three months, without outside help,” said Kim Hyoung Soo.
The Windows Azure services used in the Karma Koin platform include Windows Azure Compute, Windows Azure SQL Database and Windows Azure Storage. Windows Azure Compute is middleware, handling communications with VAN mobile operators and prepaid card retailers. Windows Azure SQL Database is a Data Warehouse (DW) to analyze the database and all types of data to process transactions. Windows Azure Storage is used to store application logs.
The most significant aspect of the project is that Nexon selected a sequential migration model. “There were a lot of things to be transferred, including middleware, the payment related data processing system and the DW system, which presents analysis, reports to the prepaid card retailer. We intended to transfer and run certain systems monthly according to predefined sequences instead of transferring everything at once and operating on Windows Azure. In the third month, we started to transfer the middleware for communication and said good bye to the on-premises system on the last day of the project,” Kim Hyoung Soo added.
Nexon plans to use other Windows Azure services. To strengthen its position as number one in the North American prepaid card market, the company is making preparations for Karma Koin 2.0. Additional services will be used to provide technical support for the new version. “With Karma Koin 2.0, more sophisticated API and protocols will be provided to partners. In addition, we plan to expand the existing system’s data layers to Enterprise Service Bus in order to more smoothly develop additional services and functionality. To this end, Windows Azure Service Bus is currently under review. We are checking whether or not Table Storage can be used as storage for transaction and audit logs and are thinking of using Cache to process the large amounts of master data,” Kim Hyoung Soo said. “A promotion site, karmakoin.com, was developed using PHP and Ruby on Linux and we are thinking of converting this to a .NET based CMS tool and uploading it on Windows Azure. After looking at the Windows Azure Site service presented, I realized that everything that I had thought of was already implemented. It is just a matter of time before we transfer the site platform, there are no technical issues,” he added.
Reduce costs by 40% for the next three years
The transfer of the Karma Koin platform to the cloud has quite a large effect in terms of cost. “TCO was the most essential reason why we decided to use Windows Azure. The value we found after subtracting the expected cost reductions after transfer was surprisingly similar to the value found using the TCO calculator on the Windows Azure site. Both values indicated that TCO would be reduced by about 40% for the next three years, if the systems are run in the cloud”, said Kim Hyoung Soo.
Free from routine maintenance at dawn
Karma Koin needs to ensure the level of availability and safety required by the financial sector. As Karma Koin handles business transactions involving money as in the financial sector, even minor errors are unacceptable. Since Karma Koin is a mission-critical service, it is not easy to perform routine maintenance at off-peak times like dawn, as with services provided in just one country. It is difficult to stop the service check the system for any amount of time, as Karma Koin provides service globally. Nexon found a true solution to this problem with Windows Azure.
“Any engineer who runs a large-scale service would agree that it is difficult to perform routine maintenance, which requires operating system updates and rebooting. If these are set to be done automatically, the service might stop when the update starts. To prevent this problem, the engineer should disable the auto-mode first and then start the updates in order. As this maintenance is done manually, the engineer needs to check normal operations after maintenance and this process requires a great deal of work. In Windows Azure, the update is performed orderly by instance and if any problem is detected with the reboot, it is immediately stopped and replaced with new one. As all these operations are automated, engineers do not need to worry about operating system and database updates, “Kim Hyoung Soo said.
Improved service development efficiency
Another change brought about by Windows Azure is that developers and engineers can concentrate on more valuable work. “Developers and engineers are often said to be in a separate world. When developing a new service, developers deliver diverse requirements to server, network, and security engineers, but these engineers each have a different perspective on the same issues. Sometimes development and implementation go back to square one while narrowing this gap from their perspective, or unexpected costs are incurred. As we have begun to implement IaaS and PaaS through Windows Azure, we are now able to concentrate more on design, make decisions quickly and take action on changes or modifications,” he said. Ensuring the same service quality to customers around the world
Without public cloud services like Windows Azure, Nexon would have to seriously worry about ensuring system response time whenever it launches the Karma Koin services in new markets. “In the past, we had to set up the system at the local data center over and over again, whenever opening a new market. Thanks to Windows Azure, we are now able to select the data center located nearest to the relevant country, and expand and manage the system with several clicks” Kim Hyoung Soo said
“Currently, we use the Windows Azure service through data centers in North America. We are planning to use the cloud to distribute the system by continent. As SQL Azure supports database host detachment by region, as it is logically possible to detach the database and middleware on Windows Azure from the local data center and operate them when we enter other country’s markets. In this way, we plan to provide the best service quality to all our customers around the world,” he finished.
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Microsoft Case Study: Nexon