Updated: KingsIsle adds new pricing model for teen-focused online game Wizard101

Teens don’t carry a lot of credit cards with them. That’s why KingsIsle Entertainment is expected to announce on Monday an alternative payment system for its Wizard101 online game based on micro-transactions.

The fantasy wizard massively multiplayer online (MMO) role-playing game launched in early September with a $9.95 a month subscription fee, or $6.95 a month per family member. But the target market of teens and adults asked for alternatives and the company responded.

One section of the game will be free to play. If players want to unlock more zones, or regions of the game, they can pay a dollar to do so. Players can purchase an in-game currency dubbed “Crowns” to unlock the zones or buy additional items in the game. Most games offer one or the other, but KingsIsle is betting that its flexible payment options will help it snare more users. The company says its growth has been dramatic, particularly among families that play together. It figured it could grow even faster with the alternative models.

“We looked at our feedback and found that half the people liked subscriptions and another group wanted micro-transactions,” said Elie Akilian, chief executive of KingsIsle, based in Plano, Texas, with offices in Austin.

The game is a spell-casting and card-trading style fantasy game where new players enroll as apprentices in the Ravenwood School of Magical Arts. (Yes, it does sound a lot like Hogwarts school in the Harry Potter novels). It’s divided into four different worlds, including a central Wizard City, an Egyptian-themed region, an Asian region, and a setting in 18th-century London.

Akilian said that the teen niche hasn’t been well served by the game industry. Games such as “World of Warcraft” have plenty of blood and mature themes where adult players can rampage as freely as they see fit. Then there are the more tightly controlled online game worlds such as Disney’s Club Penguin for the youngest kids.

Club Penguin has a combination of free and subscription play, while World of Warcraft has done just fine getting 11 million paying subscribers to pony up $14.99 a month (or slightly less based on three-month or six-month purchases). But it has resisted the free-to-play model, which has been adopted by many Asian MMO companies and is just starting to take off in the U.S. Game companies such as Outspark, Wicked Entertainment, and even Sony (with Free Realms) are trying out various MMOs where they make money on virtual goods transactions. Jagex’s Runescape, a free fantasy MMO with subscription options, is similar but its themes encompass a much larger slice of fantasy play, compared to wizard-focused Wizard101.

Wizard101 is rated for everyone 10 and older. Akilian founded the company in 2005 with game veterans Tom Hall, Todd Coleman and Dave Nichols. Hall was a  cofounder at id Software and Ion Storm, while Coleman worked on the MMO “Shadowbane” and Nichols worked at Midway Games.

They teamed up with someone that every game developer wants: a rich benefactor. Akilian founded a network monitory firm, Inet Technologies, in 1989. He built the company to more than 500 employees (700 at the peak in 2000) and sold it to Tektronics in 2004 for $500 million. He used the proceeds of that to self fund KingsIsle, giving it the financial freedom to spend years making its games. The company has 90 employees and is working on another major project in addition to Wizard101, Akilian said. (update: KingsIsle confirmed it laid off 13 developers on Friday, with more cuts at an outsourcing firm that provides testing. The company said it continues to focus on Wizard101 and its second secret project).

Akilian said that the company has not yet launched other ways to make money. It could potentially launch in-game ads, but for now it has decided not to do so. It also hasn’t allowed players to convert their in-game currency into real dollars or enable a market where players can widely sell their goods to each other.

Akilian estimates there are 300 hours of play time in the four worlds now. The company will be expanding that over time. Players can currently cast 170 different spells against monsters in the game. At some point, players will be able to fight each other in regions of the game. (Player versus player combat is limited right now).

Akilian said the company might consider outside funding at some point down the road but it doesn’t need it now.