i don’t often peer into my crystal ball to predict trends, for fear of looking like a complete nerd. Remember that time i said Jesus was coming at 4PM on a Tuesday, and we all hung out at that bus stop for, like, five hours, until Pete got the munchies and did a Taco Bell run, and the rest of us went to help him carry the drinks and we totally missed Jesus cuz my prediction was off by half a day? i’m more careful now.
Jesus: sorry he missed us. (Way to go, Pete)
But i’ve been to Casual Connect, and i have seen the future of online gaming, and it’s microtransactions. Go ahead and close the browser now, if you like. You haven’t seen what i’ve seen, man. i was there. And although many of you are probably skeptical about a system that’ll have you paying twenty-five cents to a preteen for a badly-drawn sword jpeg, i’m here to posit that there’s a side of this you may not have considered. And if you’re a casual downloadable portal owner, i’ll tell you why you should be shaking in your hitherto cash-stuffed boots.
A Quick Primer
First, some terms and definitions.
- Flash game A video game created with a tool called Adobe Flash. These games are playable in the browser using the ubiquitous Flash Player plugin, the second-to-latest iteration of which has a >90% install base.
- Casual game A piece of interactive entertainment marketed outside the “core” video game demographic. Casual games typically have smaller development budgets, and break up the gameplay experience into more easily digestible chunks, setting them apart from more demanding “enthusiast” game titles
- Casual downloadable game These titles can be created with any tool, but are typically written in the C++ language by “real” programmers. File sizes are usually much larger than Flash game file sizes, and the games are often not playable in the browser. “Casual downloadable” can also describe the monetization method for these games.
- Portal A website that hosts games from a number of different developers. Some portals deal exclusively in casual downloadable games, while others solely have collections of Flash games. One of the most successful portals (at present) is Big Fish Games, which hosts both.
- Demo A handicapped version of a game for the purpose of convincing the player to purchase the full version. Demos can be time-limited (play for up to an hour free), or feature-limited (play with only Character X, or play only the first five levels). Demos can either exist within the larger game file, or they can be entirely separate files.
- Try and Buy (or Try-Before-You-Buy) A monetization model where the player samples the demo version of a game, and is enticed to pay a one-time fee to purchase the full version. Demos or trial versions can be downloadable, but more and more, developers are creating Flash demos that can be played in the browser.
- Subscription A monetization model where the player pays a regular (often monthly) fee for the privilege of playing the game, or to have access to features that free players cannot experience
- Free-to-play A game model where a significant selection of gameplay – even the entire game – does not cost the player any money. Some Free-to-play games are ad-supported, while others use subscriptions and microtransactions to fund further development. Still others are completely free to play with no strings attached for the player.
- Microtransactions A monetization model where the player buys incremental upgrades to the game experience that can cost as low as pennies, or even fractions of pennies.
Give it a year and we’ll be splitting atoms.
Thanks But No Thanks
Before i went to Casual Connect 09, i had it in for Flash microtransactions. i had heard the announcement that Mochi Media was in closed beta on a microtransaction system for Flash games, and i just rolled my eyes, imagining the horrendous state of affairs that would erupt when the army of basement-dwelling Flash teens, fat from their $1000 sponsorship deals on games like Set Your Grandma on Fire and Zombie Asskicker 4: the Killening, started charging five and ten cents a pop for in-game items like “cartoonish weapon of implausible proportions” and “extra health”. No thanks.
And i knew that the microtransaction press was going to be packed with success stories about how Joe Coder made fifty million dollars in two weeks selling special in-game hats for his game, Ninja Kittens. But as soon as i give it a try, i’ll net thirty cents in a year’s worth of schlepping. No thanks.
And i knew that associating games with one-cent transactions would eventually drive down the value of absolutely everything, to the point where a developer charging five cents instead of one cent for a virtual crocheted tank cozy would be tarred and feathered by the broke-ass (but entitled) players rallying around these games. No thanks.
Roughly translated from the original Spanish, this sign reads “I do not wish to comply, Joseph.”
But let me put a more optimistic spin on things. Let’s take a look at where we are now, and where we could be very, very soon.
The Story So Far
Right now, i very much doubt i can make money on my original Flash games. i took an admittedly mediocre game from our library and ran it through the ad injection model in the Pulitzer prize-winning series Pimp My Game (which did not actually win a Pulitzer prize, so i’m thinking of withdrawing that press release). The game’s made about $90 in a year.
So i looked across the fence where the grass is clearly greener, and i saw the casual downloadable market. These people were charging actual, real-live dollars for their games. The developers were getting a share of actual cash money that numbered in the more-than-90’s, and i wanted a piece. But i recognized that the development times were longer, the budgets were bigger, and the risk was greater. That’s when we started work on Kahoots™, our fun crime-themed puzzle game.
Kahoots is a further (longer, riskier, more expensive) step in our quest to establish a baseline for development. i’ve been hunting this mythical baseline for two years now: it’s the average amount of money that i can make from an online game. Establishing a baseline will enable us to work within a reasonable budget, and then, hopefully, we can turn a reasonable profit.
i wasn’t one to leave my free-to-play Flash roots buried, so we got cracking on Interrupting Cow Trivia a few months ago. ICT is yet another experiment in game monetization. The development costs are still large, but the model is different. ICT will show an ad to the player before he jumps into a game room. The free player can answer X questions before being booted back out to the lobby, where he’ll have to watch another ad to re-join. Free players will also be limited to certain trivia content packs, which will be unlocked in regular rotation. For example, the Music Trivia pack will be free to play on Mondays and Saturdays. (That’s a little trick i borrowed from Three Rings of Puzzle Pirates fame. Thanks, OOO!)
Paid Interruping Cow Trivia players won’t see any ads, and they can play from any trivia pack any day of the week. They’ll also have advance access to new trivia packs. As we build more features into the game, we’ll cook up further carrots-on-sticks to incent free players. So be sure to give the game a shot while it’s in alpha and completely free!
PLEASE Make Money from my Efforts! PLEEEEEASE!!!
Going into the Casual Connect conference, i knew i needed a way to charge people money to play Interrupting Cow Trivia, and to purchase Kahoots on our own site. i knew that this was a good idea, because we would get a larger cut of the profits than if we sent Kahoots to a casual downloadable portal. i haven’t partnered with one of these guys yet, but rumour has it that the split is around 65/35 in favour of the portal. This is somewhat upsetting. The portals haven’t spent a single dime on the development of Kahoots™, and offering a completed, quality game for sale on their site is a zero risk proposition, yet somehow i still have do do a song and dance for them to convince them the game is great, all for the privilege of giving them the lion’s share of the proceeds.
But they have the lion’s share of the traffic, right? Big Fish Games is essentially Wal Mart, and if you don’t sell there, you don’t sell anywhere. (Or so i thought – more on that in a bit.) One big problem these days is that a few months ago, Amazon got into the casual games business and started charging $9.99 for its wares, down from the status quo of $20. This sparked a price war that saw Big Fish reduce its prices to $7.99, with a $2.99 price point for their special toolbar promotion.
Who gave that f*cking fish a paintbrush?? He’ll ruin us all!
So who knows where prices will end up? My prediction is that they’ll sink down to the App Store dumps, where everything will be at 99 cents, and a number of casual downloadable devs will go bankrupt because they’ll be a month from releasing their latest big-budget opus. That, or they won’t be able to adjust quickly enough to the Flash way of doing things, where we can bang out a complete game in under a week (see our game Bloat., and fear us.)
The Transaction Faction
So knowing i’d need to charge people on my site, i started meeting with the droves of online transaction companies at the show. These are the companies who have already done the legwork to enable credit card, debit card, pay-by-phone, SMS, cheque, money order, secret password, cost-per-action and wooden nickel transactions to your visitors seemlessly, in exchange for a cut and a few cents on the dollar. The VISA bill says “You were charged $x by Untold Entertainment for Kahoots”. Nice.
But i quickly learned that it would be very difficult, as a small developer, to have a relationship with these guys. GlobalCollect, for example, charges a monthly user fee of around $700. Plimus charges a big set-up fee, and takes a sizable chunk of the proceeds based on the volume of cash you move through their system. The price comes down according to volume. They asked me how many sales i intended to make. i shrugged and said “Dunno. Million … ish.” i have no idea. i’ve never done it before. If Kahoots sells five copies, i’ll be pleased with putting smiles on the faces of five people. (while my homeless family shivers in a makeshift cave made from egg crates and refrigerator boxes in a forgotten alleyway somewhere in Toronto)
It was whispered to me at the conference that if i had engineering chops, i could get an authorize.net account with an SSL certificate and roll my own payment solution. i don’t have engineering chops, unfortunately. And anyway, it’s the kind of thing where i’d like to see how it works out before i sit down and figure out exactly what to build to save myself some money.
And all the while, i saw companies like HeyZap, MochiMedia and GamerSafe, all offering Flash-integrated online wallets for virtual cash, glad-handing the conference delegates and preaching the gospel of Flash game microtransactions. (i’m not actually sure GamerSafe was there phyiscally, but they were there in spirit)
And that’s when i had a brainwave.
This is gonna be good.
“Micro” is a Possibility, Not a Requirement
A microtransaction system is great because it allows for tiny transactions. The player is more likely to spend tiny amounts of money, but tiny amounts of money add up to significant amounts of money. If you’ve ever bought more than seven vials of heroin in a single afternoon to drown out the pain of your failed existence, you’ll know how those singular transactions start to really add up. And then developers can pull all kinds of nonsense like in Tencent QQ in Korea, where they went hog-wild pioneering this stuff. In Korea’s Cyworld, you can dress up your room, or buy things to send to your friend, but those things – those VIRTUAL ITEMS – expire. You give your friend some wallpaper that has a two-week time limit on it. Insane.
But here’s (finally) my point: a microtransaction system enables you to charge tiny amounts of money, but it doesn’t require you to. There’s no reason why i can’t decide on, say, a $7.99 price point for Kahoots (as Big Fish Games would), and then charge that to my players as a one-time fee at the end of the demo. Correct me if i’m wrong, providers, but i can do that – right?
And if i can do THAT, let’s look at how a Flash system stacks up against the casual downloadable market:
Casual Downloadable Games
- (Potentially) large exe download
- Play on desktop
- Trial type is limited (for example, i believe Big Fish forces your game into a 1-hour trial. What if that’s not the best trial type for my game?)
- Deal must be negotiated separately with individual portals/publishers via dog-and-pony show convincing them the game will sell well
- (Potentially) much smaller download, with opportunity for progressive download (files are pulled into the game as needed, and can be loaded in the background while player does other stuff)
- Play in the browser with a plugin that >90% of people are running
- Trial type is whatever the heck i want it to be
- No deals to negotiate – just use a service like Flash Game Distribution to fire that sucker out the Internet cannon
And i’d love to have someone chip in some data on this, but my hunch is that the amount of traffic going to the oodles of Flash game portals trumps the traffic going to the casual downloadable portals. i could be wrong there. Who’s got numbers for daddy?
Fear the Coming Flood, Fish
So if you’re Big Fish Games right now, you oughta see this coming. And if you didn’t, you do now. And you might re-consider your current strategy of offering $400 to Flash developers for unlimited licenses of their games.
But … if you’re Big Fish, you also offer a distinct advantage over the oodles of portals (say that with a strange British accent and it almost rhymes). The whole reason why Big Fish Games built up that audience in the first place is that it built a brand. Building a brand was one of the cornerstone take-aways at the Casual Connect conference. Big Fish Games built a great site with an excellent customer experience. They were consistent, like McDonald’s. They defined their target hockey mom demographic, and tailored the Big Fish experience to that type of customer. They only stocked games that they knew would sell well to that customer. And then, they raked in mountains of dough and jumped in them like piles of fall leaves, giggling wildly.
Steam did the same thing. They built from an established brand, so the going was a little easier from a customer loyalty point-of-view. But they try to stock games that appeal to their audience, first-person shooter fans. Everything on Steam is dark and gritty and shooty, and they’re doing very well. Lately, some colleagues and i have thought that Steam would be very well-served to create a parallel girly portal on their service, plastered with pink unicorns and fairies and vaginas and stuff.
Man, that site is sooooo girly
So if you’re still reading this, and you haven’t already picked an under-served audience and drawn up a sitemap for your new Flash game portal, you need to get on that pronto. GamerSafe is already pledging a 10% cut of microtransaction proceeds to portals, and MochiMedia has hinted that they’ll do something similar. And if enough Flash devs figure out that in addition to nickel-and-diming people for hats n’ guns, you can also sell your games for a one-off price just like the big boys do on casual downloadable portals, there could be a lot of cash floating around the Internatz by this time next year.
i’d just like to grab a little of that cash to tuck away for a rainy day. The rest, i’ll shred up and use to wallpaper my private jet like a supersonic piñata. ¡Olé!