ads


In the interest of playing devil’s advocate, I thought I’d throw out 10 reasons why free to play might be slower to succeed in the Western world as it has been in Asia.

While I don’t necessarily believe all of these will inhibit F2P’s growth, one of the slides in my GDC presentation this year is to do with the challenges F2P faces – so this should help fulfill that requirement.

1. Virtual Property “Ownership”

The term ‘virtual’ may not have a strict legal interpretation, but if anything it means that the thing being described is NOT whatever comes after the word ‘virtual.

– Ginsu Yoong, Second Life’s legal counsel, Linden v Bragg

Despite virtual property’s ill-defined legal status, developers have had no qualms about starting byzantine in-game economies driven by the exchange of real money for virtual land, clothing, furniture and much more.

Some developers, like GoPets CEO Eric Bethke, have attempted to get out in front of the virtual property legal issue by defining their own “Avatar Bill of Rights.” But most of us have not been as proactive and instead seem content to leave it up to the courts to decide how to define and deal with our users’ virtual property.

As precedents regarding virtual ownership are set, the growth of some F2P products may be curtailed as the legal burden of dispensing virtual property increases.

2. Slow Broadband
On the issue of net speed, there remains a huge disparity between North America’s broadband ISPs and Korea’s military-grade internet provision.

The net effect is that free to play games like Maple Story can take 1-3 hours or more to download in North America, while Korea’s 45mbps network cuts the same download to a paltry 10 minutes or less.

It’s fair to say that we won’t soon be getting such high download speeds – but the North American market might have already found a way around the issue. With the launch of streaming game services like InstantAction and the proliferation of Flash as a full-blown development platform, downloading entire game clients become less and less the norm.

3. Poor Advertising Strategies
Some products in the F2P sector have come to rely heavily on advertiser support in order to keep their offerings free for the majority of players.

A recent OMMA article that claims advertisers are taking the wrong approach when handling virtual worlds. And as the populations of virtual worlds appear to be prematurely plateauing, advertisers may be starting to sweat.

But there is hope if advertisers change their strategies to suit the unique challenges virtual worlds present. As Worlds In Motion put it:

…themed events, branded avatar clothing, and representative personality appearances are finding success and opportunity in worlds like There, Habbo and vSide.

4. MMO Overload
From Maple Story to Silkroad Online, there is no shortage of MMOs in the free to play space. In the same vein, there is an abundance of virtual worlds such as Second Life or Kaneva. It seems as though the vast majority of new free to play game since 2005 have been virtual worlds or MMOs.

Perhaps it’s the very reason that these games have proliferated in the free to play market; MMOs and virtual worlds are inherently more inclusive than an FPS. Still, it would be a shame to see the free to play space flounder due to constant reiteration of the same genres and themes, turning away players seeking a different experience.

Of course, games like Kwari are looking to change that, but it’s too early to tell just how well they will catch on.

5. Rising Development Costs
With more prominent developers announcing plans to take advantage of the free to play model, the days of games fueled by ramen noodles and nights in the basement could, once again, be history. EA’s upcoming Battlefield Heroes is the latest big budget free to play game, signaling that the big publishers aren’t content to sit back and let Far East imports eat their lunch.

If the consumer makes the jump from 2D to more advanced 3D graphics, it could mean the end of the visually rudimentary worlds and Flash-based free to play games as market leaders, making way for the mainstream big budget games.

6. Second Life Slowdown
Second Life is the Apple Newton of virtual worlds. It was here first, but isn’t the best representation of the potential of virtual worlds. However, it still occupies a place in investors’ minds – akin to a coal mine canary, warning of impending danger.

And while investors took note as Second Life soared to the top, they’re noticing its decline as well (active user hours were down 5% in November). There is concern among some that Second Life’s time might be up, and that’s not a good sign for potential investors in the free to play space.

7. Watered Down AdverWorlds
With their lower barrier to entry and great potential to spin money, an slew of less innovative products are beginning to hit the market. Hardest to ignore are adverworlds like Build-A-Bear, Rush Zone, BeBratz, BarbieGirls and their ilk – marketing spend thinly disguised as entertainment.

The consumer’s willingness to pay money for virtual items in a world where their avatar is little more than a target for advertising will be tested by products like these.

8. Unsanctioned Secondary Markets
Then there’s the issue of gold farming. With websites like IGE operating independently of game developers and establishing secondary markets for game currency and items, it’s not just traditional MMOs that are being subjected to this kind of treatment anymore.

What’s worse, while gold farming might fuddle with World of Warcraft’s player-driven economy, some developers believe a secondary market allows players to skip the middleman altogether – a potentially fatal issue for free to play games who survive on item-based revenue streams.

The recent launch of publisher-sanctioned Live Gamer is a step in the right direction for devs and pubs looking to reclaim lost revenue.

9. Limited Payment Methods

We have hanging on our wall a user who sent a $5 bill in a $15 fedEx package.

– Craig Sherman, Gaia Online

While other territories enjoy a plethora of tailored-to-the-consumer payment methods, North America has embraced relatively few.

SMS would surely be nearly as popular a payment method here as it is in Europe if our carrier surcharges weren’t in the range of 50% a transaction. Landlines – an expensive but very secure payment option in China – might also be popular with some services.

GoPets has 90 different payment systems worldwide, catering excellently to foreign payment preferences. Nonetheless, consumers still have trouble getting money into their favorite North American games.

10. Kids Only Games
The current offering of free to play games caters nearly exclusively to the under-25 set. An NPD study released last year showed that while 91% of online gaming among kids aged 2-17 is free to play, by the time those kids graduated high school, the boys had moved to sixty-dollar console games and the girls dropped out of gaming entirely.

In the core gaming arena, Nintendo has found a way to appeal to young and old alike. Free to play’s appeal among adults relies on the proliferation of products that do a Nintendo-quality job of bridging the age gap or target older demographics only.

add to del.icio.us :: Add to Blinkslist :: add to furl :: Digg it :: add to ma.gnolia :: Stumble It! :: add to simpy :: seed the vine :: :: :: TailRank

Advertisements

B-Side reprinted this article on 5 Alternative Revenue Streams for the Music Industry. (I’d link to the original article, but B-Side “cited” the source without a link, so I can only link to their repost.)

In any case, the article outlines 5 revenue models for the faltering music industry. They are:

  1. Free (ad or sponsor supported)
  2. Pay What You Want (donations)
  3. Pay By Popularity (price increasing with popularity)
  4. Subscription (Rhapsody style music services)
  5. Music Tax (ISPs add tax to offset industry losses = bad idea)

The article puts forth these revenue models after asserting that “iTunes isn’t the answer,” but I’d say that it’s a darn good start. iTunes was at least partially responsible for weening me off music pirating entirely (kids and declining music savvy also deserve credit). And while some of us in the game industry like to snicker at “old media” such as music and its antiquated business practices, the game industry is behind the music business in at least one way:

The iTunes model hasn’t been applied to games yet.

We’re still out there trying to get people to buy the whole album, rather than just the tracks they want. Services like Steam and episodic games like Sam and Max are great steps forward for the industry, but neither one allows consumers to instantly purchase and enjoy only the portions of the game they desire, like iTunes did for music.

One way to stop people loading up their Nintendo DS’s Revolution R4 card with 100 pirated games from BitTorrent is to give them all those games “for free” and charge a capped micro license based on which games they play and for how long.

For instance, if I play 10 minutes of Pokemon, 2 hours of Touch Darts and 50 hours of Puzzle Quest*, I would then be billed something like 10 cents, $1.20 and $20 (or whatever the cap for PQ would be). Couple that with electronic distribution’s removal of COGS and you’re right back to the same profit margins you already enjoy (on titles that cap out), with the added benefit of monetizing lesser played titles that would otherwise have been pirated.

While this may be new for traditional AAA games, casual games already have a fledgling version of this model courtesy of Double Trump’s Micro License scheme. Their PlayOn Arcade site has the details, for those interested in creating an iTunes-esque service for big budget, retail games.

* These are actual figures. I finished Puzzle Quest. 🙂

add to del.icio.us :: Add to Blinkslist :: add to furl :: Digg it :: add to ma.gnolia :: Stumble It! :: add to simpy :: seed the vine :: :: :: TailRank

Game developers the world over continue to explore the free to play model, whether it’s a large-scale MMO or an ad-supported casual game. But one of the more interesting free to play experiments of late comes from Facebook application developer David Gentzel, a 24 year old originally from Roanoke, VA. Mr. Gentzel now calls San Francisco home where he is a developer at SocialMedia, marketing guru Seth Goldstein‘s rapidly growing “Social Advertising Network.”

David’s free to play experiment is the incredibly popular Food Fight application.food-fight1.gif

When the game first launched on Facebook, Food Fight players could sign up to receive a daily allowance of virtual cash that could be spent at the Food Fight cafeteria to purchase one of dozens of available food items. Players would then virtually “throw” said item at one of their Facebook friends. If the recipient had the food fight application, a small image of the item would appear on their page.

But recently, Food Fight’s the resourcing model changed, which is when it became interesting from the perspective of free to play revenue models.

As of mid-September of this year, a player’s lunch money account isn’t cleared at the end of every day – it’s persistent – like a real bank account. Additionally, the daily stipend given to each player was removed, replaced by a model where players earn virtual cash by answering short marketing surveys about a wide range of products. Each multiple choice question takes just a couple seconds to fill out with a reward of one dollar of lunch money per question answered. Interestingly, players earn a higher payout when they answer the same question the same way down the road, an attempt to value accurate answers more highly than one-offs.

food-fight1.jpg

Marketers pay for player responses to their surveys, creating a nifty free to play revenue stream and making Food Fight the definitive social networking application for SocialMedia. Seth Goldstein is understandably thrilled about the “craplet” (his words), saying in a recent Business 2.0 article:

People really like to throw piles of poop… So you price the poop high and people have to answer a bunch of questions to pay for it. That’s the future of Internet advertising: throwing shit at people. Literally.

That is it. No scoring, no winners, and no end. Nonetheless, a very successful idea.

How successful?

It takes a bit of conjecture to figure out, but here’s our back-of-the-napkin revenue estimate:

  • There are 36,257 active daily Food Fight users (among 2M registered FF players)
  • Assuming each daily user answered just two surveys (reality is likely higher, as the lowest priced item is $2 – requiring two surveys to be completed)
  • Assuming each survey response cost a marketer 25 cents (reality is likely lower, but Facebook polls already charge clients 25 cents/response)
  • This would result in $18,128 of revenue per day
  • Or ~$6.6M of annual revenue for SocialMedia, from one app

That is no small potatoes for an application that likely cost less than $100k to develop.

Since Food Fight introduced surveys, food prices have increased significantly as the game gets balanced. Prices for food items range from $2 to $11 virtual lunch money dollars. For instance, at $10 lobster is significantly more expensive than most items with only Bubble Tea having a higher price tag.

Consider the following price comparison from June 25th of this year till October 26th, a four month time period.

  • Haggis = $1.75 / $3.40 (194% increase)
  • Orange = $.50 / $2.30 (460%)
  • Banana = $.50 /$3.25 (650%)
  • Sucker = $.25 / $2.30 (920%)
  • Shrimp cocktail = $1.75 / $3.40 (194%)

So according to these numbers Food Fight items have increased in value by an average of 484%. However, in less than a minute a player can answer enough survey questions to buy even the most expensive item – keeping the game easy and fast to play, while deriving more and more potential revenue from the same virtual items.

Going Forward
Given the fad-ish, viral-flocking nature of social networking apps, it will be interesting to see if Food Fight can maintain and grow their numbers long enough to start capitalizing on this potential revenue stream. In the meantime, SocialMedia is using Food Fight as a beta test for their social advertising network as a whole (and a host of similar apps) – electing not to charge for most, if not all, of the marketing surveys they host. (F2P.biz’s request to SocialMedia for clarification on the “revenue stream, on or off?” point was not answered before this article was published).

Regardless of when SocialMedia turns on the money tap, it’s clear they’re onto a high-ROI free to play revenue model that traditional game developers could do well to emulate.

add to del.icio.us :: Add to Blinkslist :: add to furl :: Digg it :: add to ma.gnolia :: Stumble It! :: add to simpy :: seed the vine :: :: :: TailRank

NCSoft the MMO giant has credits that include the massively popular Lineage, Lineage II, Guild Wars, City of Villains/Heroes and the upcoming Tabula Rasa. But Dungeon Runners, one of only two free-to-play games from NCsoft, is unlike most of their other products. DR is based on a tiered subscription model, where users can play for free, or opt to pay a monthly subscription ($4.95) to access upper level content.

Free To Play spent an hour with Dallas Snell, NCsoft’s Director of Business Development, discussing Dungeon Runners, the free to play model and the future of NCsoft. Dallas has been a prominent figure in the games industry since 1983 having to contributed to over 20 titles during his time at Origin and EA. After a short sabbatical from gaming, Dallas returned to the industry in his current role based in Austin, Texas.

The earliest version of Dungeon Runners began as a different project entirely back in 2001, before being put on the back burner, where it remained until 2002 when it was dusted off to be a game titled Exarch. That too was eventually put to rest until Dungeon Runners was resurrected in its current incarnation about 18 months ago. Today the team consists of over a dozen internal employees with a heavy contingent of art outsourcing.

The decision to resurrect Dungeon Runners and make it a free to play game (versus a full retail MMO) came from NCsoft CEO Robert Garriott and Chris Chung, the former ArenaNet General Manager, who operated out of Korea at the time and therefore had early exposure to the free to play model. Chris is back in Austin now and looking to push NCSoft further into casual MMO development, replicating the success of Korean companies like Nexon.

There’s been speculation that NCsoft chose subscriptions as the primary revenue model in Dungeon Runners due to a belief that North American players preferred that model to microtransactions. However, that was not the rationale for the subscription decision. Instead, Dungeon Runners’ optional subscription fee was chosen simply because a microtransactional model wasn’t yet set up in the Dungeon Runners code base. To remedy that, the team is currently working on getting microtransactions running within Dungeon Runners before the game is launched in Korea.

Dallas made frequent mention of NCSoft’s embrace of “Web 2.0” development philosophies. In particular, NCsoft’s use of the free to play model, Dungeon Runners as a testing ground for future products and the company’s strong commitment to reducing barriers to entry for all NCsoft products were all offered as proof of the company’s Web 2.0-ness.

Dallas often referred to Dungeon Runners as an experiment, saying that although Dungeon Runners currently utilizes subscriptions, within a couple of months in-game advertising will become a part of DR. In fact, the ads are already in the world, but visible only to testers, NCsoft and Double Fusion (the in-game ad provider). F2P.biz was asked not to reveal how the ads will be implemented, but expect an announcement from NCsoft soon. If all goes well with the ad experiment, Dallas says NCSoft will consider the possibility of scrapping Dungeon Runners’ subscription fee all together.

On the other hand, by their own account NCSoft is seeing higher than normal conversion rates with their current subscription set up, so perhaps Dallas won’t be so quick to abandon it.

What are those great numbers?

Among active users (online within the last month), Dungeon Runners has a high free:paid ratio – i.e. there’s a larger proportion of paid to free users than among most f2p games. Dallas cites Runescape with a 5:1 ratio (free to paid, online at any given time), and says that DR is hitting 3:1, or after content updates, as high as 2:1.

Additionally, NCsoft expected a monetization rate of 1-3%, but their numbers are reportedly “significantly higher” [Dallas declined to give a specific number]. Dallas claimed not to know the cause of the higher monetization rate, but one contributing factor may be that the large majority of in-game activities or items are available only to paid users. Dallas acknowledged this and went on to say that the dev team is strongly considering raising the ceiling for free users as currently only 1-2 hours of free play will result in players hitting the ceiling with respect to what they can get for free.

Further to NCSoft’s recently announced plans to release free to play content on the Sony network, Dallas talked about his company’s goal of becoming “device agnostic” in order to break down the segregation of gamers between platforms. NCsoft plans to build their own cross-platform community service, with friends lists, inter-game messaging, and other features similar to Xbox Live. NCsoft also intends to release desktop, facebook and mobile widgets to extend gamers’ experience.

According to Dallas, NCSoft thinks of Dungeon Runners as a “MMO light” or a game that straddles the gap between casual and core gamers. In Dallas’ opinion, the success of products like Runescape makes it likely NCSoft will develop even more accessible games – perhaps even browser-based – to further minimize the barriers to entry.

With 40+ data probes plugged into Dungeon Runners, NCsoft approaches the product as a testing ground for ideas to be built into other games. The probes measure everything from time played, rewards frequency, item usage, leveling curves and dozens of other useful metrics. Outside of the game, account-level metrics are tracked in a publisher module that will allow NCsoft to track and analyze a single player’s activities across all their products.

In Dallas’ eyes, retail may soon become “extinct” with digitally delivered gaming ruling the day. He spoke candidly about the struggles facing music and film and how games are uniquely structured to develop their own delivery solutions. To that end, products like Guild Wars and Dungeon Runners are blazing trails for NCsoft.

Finally, as already mentioned, a recurring theme from Dallas was his commitment to lowering the barrier to entry in all NCsoft products. As evidenced by their free to play experiment, NCSoft strategy is to grow their customer base as widely as possible, then monetize the largest possible proportion. Most flatteringly, Dallas said his officemates all had printouts of F2P’s article, Top 10 Ways to Reduce Barriers to Entry, and were treating it as a white paper of sorts.

Thanks to Dallas Snell for his time and to Opal Lertutai, NCsoft PR, for setting us up.

add to del.icio.us :: Add to Blinkslist :: add to furl :: Digg it :: add to ma.gnolia :: Stumble It! :: add to simpy :: seed the vine :: :: :: TailRank

Just announced today, “Game Show” seems to be a free to play, ad-supported sports trivia game with daily streaming video content updates. But it’s more than just a game as the game features a live host and prizes for the winners. Game Show launches this fall.

EA SPORTS GameShow allows participants from around the country to compete head to head, answering a series of multiple choice questions related to the world of sports. The live game show host will facilitate each session, streamed over the Internet in real-time. Questions will be presented through a variety of media, including text, audio and video. Players will also be able to track their performance instantly, with prize incentives. The online sports trivia game will also feature customizable avatars and leader boards, with call outs to regional and national winners.

For more, check out the full press release or the last paragraph of this Peter Moore interview for more details.

add to del.icio.us :: Add to Blinkslist :: add to furl :: Digg it :: add to ma.gnolia :: Stumble It! :: add to simpy :: seed the vine :: :: :: TailRank

The following 10 revenue models allow some or all of their associated game or virtual world to be played for free. The ordering is quite unscientific and I’m sure I’ve missed something obvious or messed up a detail. I leave it to the internet to correct me.

1. Virtual Item Sales
A well familiar revenue model first established in Korea and now the dominant model in Asia. Nexon – makers of KartRider, MapleStory, Audition and more – are widely seen as the leaders in this area, doing $230M of gross revenue in 2005 (the most recent year for which they’ve released figures), with 85% of that revenue coming from virtual item sales.

Virtual item sales is the practice of allowing users to purchase functional, decorative, or functional & decorative in-game items for use in and out of gameplay. A virtual item system usually uses two currencies – an attention currency (users earn virtual money via in-game activities) and a real money-based currency (users buy virtual money using real money). Typically, 5-15% of users opt for the latter currency and the influx of real world money is what provides the virtual item sales revenue stream.

What’s so compelling about virtual item sales is the unlimited ARPU (average revenue per user). According to Daniel James, CEO of Three Rings, some hardcore Puzzle Pirates users have poured more than $10,000 apiece into the game via virtual item purchases. To reach that contribution level via a World of Warcraft-style $15/month subscription would take a user 55 years.

While extremely shaky sources peg the overall size of the virtual item sales market at $1.5-2B this year, without an NPD-esque measurement organization there’s no way to verify that number.

2. Subscription Tiers
Runescape, the Java MMO from Jagex, is one of the leaders in the tiered subscription space. A tiered subscription model allows users to play the core game for free, but those that desire access to elite weapons or other game content, must pay a small ($5/month) subscription fee. Over 1 million of Runescape‘s 6+ million users have opted into the tiered subscription program, grossing $60M annually for Jagex.

Dungeon Runners, an NCsoft free to play MMO, offers a similar $5/month subscription package that affords players access to the elite items, a bank and the ability to stack potions. It also gives subscribers server queue priority.

3. Advertising
Several different forms of game-related advertising revenue streams have popped up in recent years. Firms such as Massive, IGA and Double Fusion do big business in in-game advertising for clients such as EA, Activision, THQ and Microsoft. Game ad agencies typically serve up static ads (ads that ship with a product and never change) or dynamic (ads that are updated in real time via the net) within game products that are contextually appropriate for advertising (i.e. sports, racing, or contemporary shooters).

The size of this conventional in-game advertising market is currently pegged at $100-200M, according to well-placed industry sources. However, the number and quality of games with dynamic advertising enabled is escalating dramatically. So much so that Yankee Group predicts the in-game ad market will reach $732M by 2010.

But other, more emergent forms of in-game advertising have been at the forefront of enabling free to play. Examples include:

4. Real Estate or “Land Use Fees
Second Life is the biggest legitimate player utilizing this revenue model whereby virtual land is sold leased to individuals. Monthly lease fees range from $5 to $195, depending on the size of land in question. Users may also purchase their own island for a one time fee of $1,675 in addition to a monthly fee of $295.

Approximately 70% of Second Life’s revenue comes from land sales and maintenance fees. Of course the virtual land ownership revenue model doesn’t come without headache, as the Bragg vs Linden suit has proven.

Entropia Universe uses land auctions as a revenue stream, but a recent headline-making $100,000 land sale has been called into question as the successful bidder is an employee of Entropia‘s developer, MindArk.

5. Merchandise
In what’s become a phenomenon of Furby proportions, Webkinz plush toys and their associated Webkinz World have taken the pre-teen set by storm. Users purchase a $15 Webkinz plush toy at retail and enter a secret code to activate the associated virtual character in Webkinz World. Beyond the retail plush toy purchase, there are no additional fees for playing in Webkinz World.

Two million Webkinz toys have been sold since April 2005, with more than 1 million of those users registering their pet online. That’s more than US$20M in retail sales in just 24 months. Products such as Bratz/Be-Bratz are quickly jumping on this bandwagon.

Another successful merchandise-based revenue model is collectible card games, or CCGs. Neopets launched a CCG in 2003 and just this week MapleStory became the latest free to play game to go this route, announcing a partnership with Wizards of the Coast. Consumers purchase real-world MapleStory collectible cards that come with codes redeemable for exclusive in-game content in the MapleStory MMORPG.

6. Auctions & Player Trades
In June 2005, Sony set up Station Exchange on select Everquest II servers. Station Exchange facilitates player to player trade of in-game items – including the provision of an escrow service – in return for a 10% closing fee as well as listing fees ranging from $1 (items and coins) to $10 (characters).

While Station Exchange recorded only $274K in net revenue in its first year of limited release, it was enough for Sony Online President John Smedley to declare it the future of RMT. Read the SOE Station Exchange whitepaper for more.

Entropia Universe – a world in which virtual items actually decay with use and require real money to repair or replace – utilizes first party auctions as their primary revenue stream. This means that instead of merely facilitating player to player auctions and taking a cut (a la Station Exchange’s eBay model), Entropia auctions items directly to their players.

Entropia items sell for ludicrous sums, with rare weapons auctions closing at $26,000, land auctions for (allegedly) $100,000. The May 2007 auction of five in-game banking licenses brought in $404,000, total. Ironically, Entropia takes no fees for player-to-player auctions.

In the wake of this success, watch for third party virtual item auction houses such as Dan Kelly’s Sparter.com to offer developers and publishers a cut to ensure the (exclusive?) cooperation of their products.

7. Expansion Packs

The best known example of expansion packs as a primary revenue model is the Arenanet product, Guild Wars. Likened by Richard Garriott to a series of fantasy novels, Guild Wars relies not on monthly subscription fees for its revenue, but on the sale of successive expansion packs for $29.99.

The game’s creators argue that the thin-pipe origins of their technology allow their game to be run far more economically than competing titles, enabling this no-subscription free model.

Over 3 million people have purchased the previous three Guild Wars products (Guild Wars, Guild Wars: Factions and Guild Wars: Nightfall) with those numbers set to surge again with the release of Guild Wars: Eye of the North on August 31, 2007.

8. Event or Tournament Fees
Netamin’s free to play, ad-supported Ulimate Baseball Online uses event fees as an additional revenue stream. UBO‘s Pay to Play tournaments cost $5 per player to enter and offer cash prizes up to $4,500.

Shot Online, a free to play/virtual item sales golf MMO, also charges users to enter tournaments.

Third parties such as Valve’s Tournament.com and Groove Game’s Skillground.com are getting into the pay to play tournament scene as well. These sites charge charging entry fees for game tournaments for games such as Half-Life 2 and Counter-Strike.

9. TrialPay
At the recent Virtual Goods Summit and again at the Seattle Casual Games Conference, I bumped into representatives from TrialPay. TrialPay is a third party facility that allows customers to pay for products (i.e. games) by trying or buying from advertisers.

What this means is that when you go to pay for a casual game or purchase virtual currency, you can instead select from a demographically targeted list of special offers. Trying or buying one of these offers – from merchants such as Avis, Geico, Vonage, etc – allows you to get your game purchase for free, as the offer merchant has paid the game provider for acquiring a new customer on their behalf.

TrialPay claims that this allows game developers to earn more per user, as some offers pay game developers upwards of $50 per user (as opposed to the $20 a casual game might normally charge).

Someone from TrialPay can jump in and give me a more relevant example of their system’s use in the game space, but all I could find was a casual games company called Dreamquest Games.

10. Donations
Clocking in at last on the list is of alternate revenue streams is player donations. Raph Koster recently blogged about meeting up with the Kingdom of Loathing guys at ComicCon in San Diego. Raph reported that while KoL‘s revenue is “definitely indie,” their primary revenue stream of player donations is a sustainable one.

According to Wired, the donation revenue has allowed creator Zack Johnson to quit his day job and hire six employees to help improve and maintain the product.

That’s what Maid Marian founder Gene Endrody would call a “lifestyle business,” but I suspect most of us wouldn’t scoff at it or any of the above revenue models.

add to del.icio.us :: Add to Blinkslist :: add to furl :: Digg it :: add to ma.gnolia :: Stumble It! :: add to simpy :: seed the vine :: :: :: TailRank

I don’t know if Maid Marian‘s Sherwood Dungeon RPG is indeed the most successful Shockwave free to play MMO, but it’s done pretty well for Gene Endrody and his wife – the only two employees of the developer, Maid Marian.

More interesting though is that the lone source of revenue for all of Maid Marian’s games is Google Adwords PPC (Pay Per Click) ads.

Recently, I had the chance to sit down with Gene and discuss Maid Marian, Sherwood and his company’s other projects. He was kind enough to offer up some very interesting info for those of us who aspire to create a free to play game as a “lifestyle business,” as Gene calls it.

Here are the Top 10 things I learned over coffee with Gene at Caffe Artigiano.

1. Revenue
Sherwood Dungeon sees 1M unique users each month, generating 10M ad impressions via Google Adwords. Gene claims a 4-5% CTR (click through rate), where traditional banner ads see a paltry .3% CTR.

Out of respect for Gene’s privacy I won’t reveal everything, but based on what he told me I estimate Maid Marian is grossing approximately $700-$800K/year, with 50% of that number being reinvested into the business.

Pretty solid income for a husband-wife team with a homegrown, free to play product supported solely by ads.

2. Technology
Maid Marian utilizes Shockwave for all their games. And Gene says that while Shockwave has just 55% penetration among the general populace (and Shockwave installations are declining), his market – teens – sees about 80-85% Shockwave penetration.

So the higher Shockwave penetration among Gene’s target demographic makes it an excellent technology platform.

Note: As a point of comparison, Flash has 98% penetration and is coming on strong as a robust game development platform. Interestingly, Gamasutra and Next-Gen.Biz both ran articles this week on Flash game development.

3. Servers
Sherwood Dungeon needs just 6 servers: 2 web servers, 3 game servers and 1 test server. Crude load balancing is accomplished via a round-robin DNS splitting scheme that directs incoming users evenly among the servers.

Maid Marian’s servers are provided by Peer 1 – a hosting company with a Vancouver data center – at a cost of $200 each per month and provide 2000gb of monthly bandwidth. But Gene is quick to point out that equivalent servers can be had for as low as $80/month these days.

Because all the user data in Sherwood Dungeon is stored client-side, there are no database security concerns or associated db speed drag. Data encryption and some client-side checks attempt to curb cheating or too rapid character progression, but of course player cheating is possible with this scheme.

4. Demographics
Because Gene’s game is web-based, he uses Google Analytics for most of the coarse metrics on his user base (country of origin, platform, unique users, etc). Some interesting stats:

  • 15% of Sherwood’s traffic is from US (largest single territory)
  • 5% of Sherwood’s traffic is from Canada
  • Maidmarian.com is the 500th most visited site in Jamaica

Hungary and Poland also have disproportionately large representation in Sherwood Dungeon. The game outperforms in areas such as Eastern Europe that aren’t well served by traditional game distribution methods.

5. Usability
In the interest of making Sherwood Dungeon more accessible, Gene has chosen not to expose player levels to each other. This means Player A can’t see what level Player B is at. Gene believes that this encourages more experienced players to help out new players, supporting the casual nature of the game.

Additionally, player levels are not even considered in PvP (Player versus Player) mode. So even if an experienced player chose to pick on a new player, ganking is much more difficult.

Players can also change their character type or look at any time. Players are not locked into a character after making their initial selection.

6. Content
Most of Sherwood Dungeon is procedurally generated, which saves a ton on level data. Among the items procedurally generated:

  • Dungeons
  • Islands
  • Height maps
  • Trees
  • Ramps

Gene uses seeds to ensure the same result every time with his procedurally generated worlds.

7. Genres
Maid Marian features three types of games, theorizing that users who are temporarily tired of one type can jump to another for a while. These game types are:

8. Distribution
Rather than block third party sites from linking directly to his games like many casual game providers do (at least the ones that rely on revenue from ads on their sites), Gene chose to embrace them. As a result, web game aggregators such as Addicting Games have become great secondary sources of new players.

Maid Marian’s highest referrer is Arcade Town, accounting for 5% of Gene’s total traffic. But Gene ensures his Google Adwords are preserved even if the third party iframes his game. Using his logs, he’s able to identify sites that violate his affiliate policy by stripping out his ads.

However, the sites are free to bracket his game with their own ads, forming an ad-hoc revenue sharing program.

9. Client Size
I’m a big believer in tiny client sizes and Sherwood Dungeon is a clear winner here. Clocking in at just 2mb (compared to 4mb for the already tiny Runescape and Habbo), Sherwood’s puny downloadable client makes it the fastest loading free to play MMO I’ve ever experienced.

Couple that with deferred sign up (as I mentioned in my previous article), and you have a deadly fast way to get players into your game.

10. AI
In Sherwood Dungeon, the AI monsters utilize distribute processing to reduce server load. This means that the brain for the monster you and your friends are fighting resides on your PC, not the server.

When you log off mid-fight, the control of the monster’s brain is seamlessly handed off to another user’s PC. A monster might “lose his mind” momentarily if his AI can’t successfully land on another user’s PC, but it’s often tough to tell the difference between a monster that’s flailing with purpose and one that’s not.

A big thanks to Gene for his time. I had for more interesting points, but had to cut them down for this article.

Also thanks to Raph Koster, for directing a small subset of his traffic my way twice in the last couple weeks.

add to del.icio.us :: Add to Blinkslist :: add to furl :: Digg it :: add to ma.gnolia :: Stumble It! :: add to simpy :: seed the vine :: :: :: TailRank