How Casual Games Can Become Money Machines?

34 Comments

On the heels of ECD Systems CEO Jack Hart’s article exploring the methods of growing revenue for casual games, IGA Worldwide said it has signed an in-game advertising deal with casual games publisher Merscom. Chapel Hill, N.C.-based Merscom makes downloadable titles for the PC, as well as Nintendo DS games — the kinds of games that might experience pressure to grow ever more polished (much like the giant console games did) as competitors try to one-up each other with better graphics and better sound design, thus necessitating higher budgets and schemes like in-game advertising.

How casual games will deal with advertising content is still up in the air. In-game advertising has worked beautifully for some titles, but of course it’s all about context — seeing Best Buy (BBY) signs in the world of GTA III makes sense; seeing them in World of Warcraft, not so much.

There is a reluctance to repeat the mistakes of others. At Casual Connect conference in Amsterdam earlier this year, Microsoft (MSFT) Casual Games’ studio manager Chris Early cautioned against going crazy with in-game ads. “If we get to the point of getting like commercial television on cable channels where ads are so intrusive of the experience,” he said, “then people won’t play anymore.”

Very true. And right now the market for so-called “casual games” is bifurcated. We have, essentially, two groups, with some blending in between: On the one hand we’ve got pay-to-download games, usually installed to a PC, although Xbox Live Arcade games install to your console. The bulk of revenue in this camp comes from purchased downloads, and its consumers have demonstrated more sensitivity to in-game advertising. There’s also the sliver of retailed games — again, same in-game ad sensitivity problem. In the second camp are all those free web games on Pogo.com, Kongregate, and other sites that rely mostly on good old-fashioned page views to sell advertising. There is some room here for in-game advertising, but implementation is tricky. Each game, often designed by an independent developer, would likely have to have ads customized to fits with its theme.

And then there are micro-transactions, honed to perfection primarily by casual MMOs like MapleStory and Habbo Hotel, although some titles on Xbox Live Arcade are experimenting with pay-to-download additional content as well. Is there any reason that micro-transactions can’t edge their way into both downloadable games and to free web-based games? The fact that I actually spent a real U.S. dollar on Facebook to send someone a gift — and I am a rational person! — seems to suggest that there is a future for eking out a little bit of money, bit by bit, from casual gamers, especially on sites like Kongregate where it could be tied to the social networking aspect. (“Buy your customized leaderboard for $1.00, feature it on your blog” or “$1.00 to challenge a friend head-to-head” — anything that adds persistence to the network.)

Hm, these are thoughts to bring up with the people who are currently in the trenches of casual game development and publishing. How far have they gotten in making revenue models as innovative as some of their titles?

34 Comments

Kim Pallister

Jenna has a good point.

I’d say the casual industry is in some ways way ahead of the ‘hard core’ (big budget) game space in terms of innovating on business models.

Many are dabbling in microtransactions, but there are already thriving businesses in purchased games, ad-supported, pay-per-play, subscription, membership/discount clubs, skill gaming (pay to compete, potentially make money), just to name the most common ones.

In addition, some sites/services let you drift from one model to another. Pay for download to make ads go away, etc.

One factor is that certain biz models were tied to certain platforms (download = purchase, ads = online), but those are legacy tech reasons and people are working past the issues.

Jenna K.

I think that so far the Casual Games Industry has done a great job making games available to all types of users/buyers.
If you don’t like ads, BUY the game outright and play-away. For those that want a free game, you will have to accept some type of advertising. I saw that on BigFish Games they let you choose your “game sponsor”. which is a nice concept…if you have to see ads.
I have adverting as much as the next guy, but games are not free to develop and publish. As users demand better games, the development costs go up…

FreakyZoid

seeing Best Buy (BBY) signs in the world of GTA III makes sense

It really doesn’t – GTA isn’t set in the real world.

Adverts in sports games (FIFA, Madden, Tiger Woods, etc) make sense.

Daniel Rae

As long as ads are subtle and don’t ‘intrude’ too much, they are OK in my opinion. The best example of non-intrusive advertising is in sports sims, such as Pro Evolution Soccer, where the advertising boards around the stadium ad to the realism of the football (soccer) sim.

Allison

Anarchy Online has been online for at least 7 years now, and the billboards within the main cities has ever-varying ads playing constantly. Sure it can get annoying, but if you PAY for the full version, the in-game ads can be turned off. Only the “froobs” are affected. If I’m paying for a game, I do not want to be advertised to!

Paul Kalupniek

What is really important to point out, and this goes for any advertising, not just in-game, is that it should NOT be intrusive. What has destroyed advertising on the TV is the disruptiveness of it all. People ignore, tune out, get a sandwich when ads come on. People don’t dislike relevant advertising, plain and simple. Being louder and more obnoxious isn’t the key, being relevant is, no matter what medium.
I think that I dislike the idea of in-game ads on a basic level only because I have a gut feeling that it will use the same shotgun approach that tv ads do.
With games there is the opportunity to really customize what the “potential customer” is seeing. Demographic information can already be included.

Arun

Well I don’t see what the big deal is. The gaming industry has to find ways to generate revenue. I say it’s great that they’ll be able to make more money and invest it back into making better games. As long as the advertising doesn’t get in the way of my gameplay, I can and will ignore it. If it’s a nuisance, I’ll stop playing it…

MLS

Forthcoming titles are having context specific and updateable advertising built in. I know of at least two AAA+ titles from Activision on PS3 and 360 that will feature this new form.

Because the latest generation boxes are connected to the internet it’s realatively simple to update content. Thus there will be billboards and ‘screens’ in these games which might be advertising cell phones one week and underpants the next. Or maybe even skateboards and guitars…

Steve

When I play a computer game I want to be totally immersed in it. If I have adverts this will spoil the experience straight away. No to advertising in games!

thingslikerobots

MMPORG’s for convalescents….there’s an untapped market….that’s a freebie so if you are currently lacking a business plan, or your current plan sucks…feel free to run with that one….

thingslikerobots

Has anyone considered the monetization strategy of building things of value, that enrich people’s lives and are well worth paying for? I’ve been paying for things my whole life, I am accustomed to this system and the basic rules of commerce, much as I am comfortable with the concept of gravity.

I spend most of my professional day online in some way, shape or fashion, so my viewpoint on various forms of electronic advertising and admittedly skewed, and I am not offering up my opinion as being “typical” of a general consumer.

With this said, I really don’t even see ads anymore unless they somehow block or impede my progress. My brain has evolved somehow over the past 8-10 years and I am able to simply filter them out, in all their various formats and delivery mechanisms, as if they exist in a spectrum that my eyes could once perceive, but no longer can.

I’m just curious how long will this industry buy into the concept of advertising as the only viable monetization structure for online services, tools and properties.

Build me something I can use and I will happily pay for it.

Schmidt Haus

So what’s going to happen to suspension of belief? “Once upon a time, a long, long time ago in a galaxy far, far away…PizzaShack could still deliver in 30 minutes”????

I play games to escape the mundane, not to generate new “contact channels and opportunities”!

Doug Roberts

So if advertisers get their way, you can say goodbye to your fantasy worlds and your alien planets etc. Every game will be set in a shopping centre(mall) in order to maximise the advertising opportunity… sigh

doug m

i work in the games industry and i consider myself a hardcore gamer, yet with all the sequels of sequels coming out from the big publishers, i find no creativity in these new next gen games. when it comes down to indie games or casual games, they usually break some mold and try something new, giving me a new experience i would never get from the big boys in the industry

stu campbell

worst idea ever. the two worst classes of people in my opinion are lawers and salesmen.

as a long time online games ( 12+ yrs and counting), and successful in real life, the very last thing I want to see is an ad placed in the game that i play to get away from the bullshit of real life.

you can kiss my gaming dollers goodbye if I ever see an online ad in any game i play.

and thats the general opinion of everyone i play with as well.

Jonathan Greechan

Check out what the guys at PlayFirst (www.playfirst.com) have done with ‘Diner Dash: Hometown Heroes’. This downloadable casual game has online connectivity that allows you to purchase upgrades and personalization to your character, diner (environment) – as well as game enhancements like new levels. It also has multiplayer capabilities which can potentially bring in a lot more revenue opportunities as well. I’m not sure how it’s performing but I think this is a glimpse into the future of downloadable casual content.

On the web game side, micro-transactions, online games with community (aka social networking) and multiplayer are definitely the future. Right now most of the big portals are looking to introduce systems that tie a catalogue of free web games into a cohesive community like Pogo.

And while I understand the cautious approach to introducing advertising into casual games, the opportunities there are endless. First off, you have a demographic with purchasing power (women 35+) who presumably are less adverse to advertising than, say, a 17 yr old playing Halo. After all, the web casual games are free. Then you also have a two-way medium with tons of interactivity. The time to market for integrated sponsorships and such is small as well (since these are smaller games).

IMO, web-based play and advertising is going to be the main focus in the industry for the foreseeable future because (1) it is the most obvious way for portals to stick to their main business model (not taking players off their site when they download a game), and (2) it is the quickest way to combat the issue of 99% of downloads not converting to a purchase (rough industry average).

Larry

There are tons of free games on the internet. Though for majority playing games are just to kill some time, games are addicting and some will eventually buy them if they have to.

Doug Chalmers

“seeing Best Buy (BBY) signs in the world of GTA III makes sense”

Sorry? You’ve obviously never seen a GTA game, or really thought about what you’re saying. If there was a sign for Best Buy in GTA it would be “Worst Buy”. Every single sign in the GTA worlds are satirical, advertising in GTA would be against everything the series stands for! I realise you’re just grasping for an example but you should be picking FIFA or another sport title, where they already have adverts built in.

e.g. Would Best Buy be happy if you could walk into one of their shops in a GTA game and kill all their customers and employees? No, I don’t think so. Fine for so-called casual games and second life and all that girly crap but GTA will never NEED nor WANT adverts.

Tyron

I think its quite funny. Playing Battlefield 2142 in September and I could see Lloyds TSB Student Account billboards. Shooting people and this board appears. Just because I see it doesnt mean I’ll go straight to Lloyds and get an account. It makes me laugh, thats about it.

Erik Schwartz

One of our first experiments with ads in Yahoo! Games was with P&G (this was in early 1998).

We tried various levels of integration, from really low key to fairly deeply integrated. The most intrusive was Pringles in checkers. The checkers pieces were replaced by the little pringles guy (in two colors) and whenever you jumped someone there was a crunching sound.

The audience didn’t seem to mind. The problem was there was no real metric for the advertiser to test the efficacy of the ads. It’s really just a branding play, there is no easily demonstrable ROI. Click through was essentially zero.

Blasted Adverts

I never watch live television anymore. I Sky+ it and then watch it back when its finished recordrding just so I can forward the adverts. If adverts become as pervasive in casual games as they are on TV I will stop playing them!

Meremortal

One of the main reasons why I have totally given up on TV and Radio is because of advertising. I hate very few things, but I REALLY HATE advertising, advertisment is a true parasite on society . As a consequence I play online games instead. If ads make it into the online world, the first thing I will be looking for is a way to block them (permanently). If you make them impossible to block, I WILL drop the game and find another.

Guys and Girls this is your only chance to stop these parasites from destroying the online landscape. Review your revenue strategies and drop the bond with the systemic liars.

Oh and if any advertisers are reading this, you advertise your product on the online world and I will make a point of NOT buying it.

Anonymous

I always prefer Casual game and believe major ratio of world love playing game but out of that 90% of people don’t have time to play long game and hence will never invest directly in buying or paid download Game. I love playing PacMan from my college day and still play whenever I get time..the base line is for majority online game are easy way for entertainment during small break in hectic life..

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