Pre-paid is a huge market for gaming and it’s only getting bigger. With the number of online supported products, game cards are going to be an increasingly important retail face for the industry. Other possibilities in the future might include consoles activated with a code you get on your receipt. It’s a brave new world at retail, and we discuss the possibilities with Dave Etling, vice president of development for InComm.

[a]list: Give me an overview of InComm’s business.

Dave Etling: InComm is a privately held company founded in 1992 by Brooks Smith, who is the sole proprietor. He invested his life savings. Today, we’re involved with 20 markets and last year we did $10 billion in distribution. We do pre-paid cards and the tech to activate those and other products at retail. If you want to sell things of that sort to Walmart, we’d be the company to do all the manufacturing and handle the relationship with the retailer, regardless of whether it’s Verzion, Microsoft or some other company.

There’s lots of ideas that we’re working on right now that present exciting opportunities in the future: let’s say you want to buy Quickbooks. Unless it is scanned and unlocked electronically, it cannot be installed without that authentication. So to the extent it falls off the back of a truck, it can’t be installed on a person’s computer if they just purchase it over eBay. This has advantages for shrink protection; it’s the same thing as activating a gift card.

We’ve converted products that are full packaged products, like clam shells, to activated cards and customers can grab them and take them to the counter. It’s just taking the notion of a gift card and extending it to different partners.

We’re also doing it with TV manufacturers, where there’s a code you have to enter on your receipt when you get home and it activates it. So you can see what we’re doing with benefit denial and shrink technology.

[a]list: When you put it like that, it’s easy to see how this could mushroom in an entrepreneurial sense.

Dave Etling: That’s been the spirit of the company, to provide a value. We took the idea of pre-paid cards and creating something similar for using the Visa network. Then we built on it and found new partners and continue to add more product channels; we continue expand. Retailers are very open to trying this stuff since there’s a benefit for them.

[a]list: How do you reach out to companies to be part of your pre-paid cards?

Dave Etling: A myriad of different ways. We attend a lot of trade shows and we get referrals; we’re always finding new opportunities to expand our business. I run the digital area so much of what I talk about is digital content in one way or another. We get a lot of recommendations from other businesses, and other people will call us with ideas. So some traditional ways and others are referral.

I’ve been with the company for nine years. One of the most fascinating things about the company is that we were doing better with pre-paid wireless – it just kept snowballing, so it’s been a tremendous ride, and it’s a great problem to have to have more business than we can handle, just because of the number of ways it’s grown.

There’s a number of companies we’ve worked with just doing the account management stuff. Because we’re looking to expand and grow our business, we come upt with creative cross-product ideas all the time, and sometimes we’ll expand our business that way.

We also have a yearly partner alliance in January-February and have direct discussions for new promotions and we’ve had great success in moving the needle more than a traditional trade show because it is focused on our business.

[a]list: Do you think the pre-paid card business is ready to expand in the U.S.?

Dave Etling: I have no reason to believe it won’t. The technology and the use will evolve. Will it always be a physical card I dunno. There’s something to be said for something that people can touch and feel and retail will be a place for people to buy these types of products. You can’t solve that for someone who wants to pay cash – we’re very bullish around both digital content and bringing them into physical retail. There’s always going to be some type of need for a program like that. I don’t think the answer is a solution from a wireless carrier; retail, in some capacity, is still going to be required.

[a]list: Talk to me about the significance of pre-paid cards and creating awareness.

Dave Etling: If you look at our financial serves division… Vanilla Visa is our number one pre-paid card. We’ve not done any traditional marketing for it, no TV ads at all, but by virtue of it being displayed, there’s been a significant round of traction, considering we’ve done no external PR.

There are certain products that can increase attach rates to things. You’ve got your Xbox points cards, you have people looking for Xbox 360 consoles and they’ll buy the cards because they’re there. When you get into the free-to-play MMO space, you probably don’t have someone looking at the card and going “Johnny likes Nexon” – it’s either him [buying it] or he told his parents. It’s driven by the publisher advertising online; there might be an upshot for a specific item at each particular retail, like you can get a different free pet every month and the only way to do that is going to each of the retailers [carrying the cards], so in scenarios like that it’s about the consumer understanding what’s messaged on the brand.

[a]list: How is the pre-paid card business different in different parts of the world?

Dave Etling: The U.S. is the most mature market as it comes to the “gift card” for digital content beyond wireless. In Canada, the distribution there is massive in all the major retailers. The UK and Europe is behind and they’re getting caught up on the whole “gift card mall”, but it’s not nearly as big as in the U.S. In Japan, it’s pervasive but there’s not as much at retail. They’ve been printing things on receipts, and there’s potential there, but the economics are different.

We just launched in Australia and New Zealand and that’s somewhere between Canada and the UK in development. In Europe some products have flown off the shelves, like in Italy we can’t keep things in retail. Europe seems to be evolving and there’s just a lot of challenges for localization and that causes it to be a slower start compared to the U.S. and Canada.

We’re also launching into new markets like Korea and Brazil soon and perhaps other countries in the near future. By the end of next year, we’ll be in 28 countries.

[a]list: We wonder if some day a lot of game purchases won’t be this way. Anyway, thanks Dave.

_ _

Have you purchased pre-paid cards for online games? Do you see this as an area that will explode? Join the conversation on Facebook!