Friday, September 21, 2007

How to achieve Casual Games Revenue Growth?

Gamasutra published an opinion piece today that talked around the same topic as the article yesterday, but with a different approach to making more money per user. This article focused on making more money per game with a nice slant to helping spread around more money to more developers.

The suggestions on possible areas for attack are:
1 - In-Game Ads
2 - Using social networks to directly connect with gamers
3 - Increasing the price of games
4 - Combining Approaches

I think 4 is always the winner, but am also a strong believer in doing something all the way or not at all. Combining approaches by partially doing each of the other options isn't likely to return the wanted results.

Some thoughts on each:
In-Game Ads
- This is certainly something that is becoming more popular as the early results reported back by Real and other companies shows that it can be quite a solid money maker. Reflexive is currently getting ready to launch one of our games on another portal in the ad-supported approach. We are excited to see the results.

A possible concern with in-game ads is changing the industry format. Instead of trying to convince the customer to purchase the game, games with in-game ads need to maximize advertiser dollars and please the advertiser. That shift to a different customer and approach is a little worrisome. Certainly there are some games, like Bejeweled that work well with breaks in the play in-between levels. For other games, like Virtual Villagers, the breaks may not be as natural and may feel forced. The focus on trying to get a customer to use an ad is also a a bit worrisome. To quote the article:
It wouldn’t be surprising if in-game ads soon become integral to the content of a game, offering clues, extra levels or other hidden rewards for the player who clicks through.

I worry that focusing on the advertiser as the customer, instead of the gamer as the customer could lead to a less enjoyable experience for the gamer. Certainly it is something that will need to be carefully watched and balanced as advertising becomes more prevalent in games. The current approach of making older games ad-based while keeping newer games ad-free I think is a good approach that maximizes revenue from both sides of the chain.

Social Networking/Helping Viral marketing along
In this article the social networking was tied back to a platform being sold by the author that helped to connect gamers and developers. The end-goal is to remove the middleman while maximizing sales. I think using communities to help sell games is definitely a good thing to do. Whenever you have someone who enjoys your game or business you should encourage them to be an evangelist. Your biggest fans can speak about you in persuasive ways that few others can and should be rewarded for their efforts to keep them going. It's certainly one of many methods that should be employed to increase the market-size for any business you do. It's worth stopping what you are doing right now and considering how you can easily help your fans talk about you. Can you give them a copy and paste signature for the forums they visit? Is there a widget they can plug into their CMS? Can they easily email friends about your product? (do they get something for having done so?)

Increasing the Price of Games
This is an interesting suggestion. From all the studies done, increasing prices does not seem to improve revenue. However, from your economics class you probably remember that there are different points on the sales and demand curve that produce different amounts of profit. Many of the subscription programs offered are set to maximize the access to markets who will pay varying amounts for a game. I don't know that raising the price is a good idea. However, I think offering a game at different prices is a great idea. Subscription programs are one way to do this, but it would also be interesting to offer Platinum versions of a game that have additional content. Unfortunately none of the portals are currently set-up to offer multiple versions of the same game, but with the practice succeeding on retail games it seems only a matter of time before something along the same lines is attempted in the casual sector.

Certainly some interesting thoughts and it is clear that many people are wrapping their head around the same problem, which is how to get more money out of their product. With an increasing number of casual games coming out, it is very possible (I'd say likely) that the games are increasing faster than the market is growing. That leaves us in a situation where newer games make less money than games 'used to make' even in a rapidly expanding marketplace. In such a situation, there are many approaches to try and maximize the money from any one title, and I am in total agreement with the author that a variety of methods should be tried.

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