Archive for July, 2009
Lights and tunnels
July 26th, 2009
Grandma’s life is finally resembling something others call "normal." She has completed cardiac therapy, which is another way of saying Medicare won’t pay for it anymore. They gave her a certificate reminiscent of the "Pleasure to have in class" awards teachers give to elementary school students which we threatened to hang on the refrigerator. "You hang that shit up there and I swear to god
Go to Source
Bunni Beta and Casual Connect
July 21st, 2009
You should play Bunni here
Two small announcements:
- Bunni: How we first met is now in public beta. There’s still a bunch of work left to do. Right now we are stabilizing so that we can turn on the more interesting monetization and distribution features without creating an angry mob.
- I will be at Casual Connect in Seattle on Tuesday and Wednesday. I’ll be attending talks, but if you want to meet up, drop me a note at danc@lostgarden.com.
Some Bunni beta stats
- Players have created 380,000 bunnies so far during the beta.
- This was primarily the work of one person, Andre Spierings over a period of 6 months.
- The game, in its beta state, scores 4.1 out of 5 on Kongregate. This puts it in the top 0.6% of Flash games.
- Bunni uses an extended set of the Small World Prototyping graphics that are available on Lostgarden for free.
If you find any bugs, report them on the BunniBunni.com forums.
take care
Danc.
Flash Love Letter (2009) Part 1
July 10th, 2009
Flash Love Letter (2009) Part 1
Chapter 1: Introduction
Hello Flash game developer,
Over the past couple months, I’ve spent a bit of time looking at Flash gaming on web portals like Kongregate and Newgrounds. There are over 14,000 games spread across 30,000 portals with hundreds of new games coming out every month. The output alone is amazing.
Let me cut to the chase. I think that you, Flash game developers, are some of the most talented and inspirational people working today in game development. Your passion for building games burns so incredibly brightly. Your ability to quickly make and distribute games is second to none. You hold immense potential to transform the future of games.
Let me tally your blessings:
- Cheap and effective distribution: Your platform reaches over 350 million players, more than all home consoles combined. A poor college student can release a half decent game and within a month, a million people will play it. Such reach is unheard of on almost any other platform.
- Robust technology: Graphics, animation, sound, video, physics and networking technology is freely available and works surprisingly well. You are building on one of the most accessible and robust multimedia platforms that has ever existed in the history of the world. Where other teams waste man months just getting a black triangle showing on the screen, you can have a working game up and running in hours.
- World class creative tools: Flash is fed by an art pipeline familiar to millions of artists that has been polished and tested over the past decade.
- Thousands of developers making stuff just for you: With a few simple API calls, you have the entire power of the web at your finger tips. Want to send emails, suck in friend lists from Facebook, access payment systems, or let people buy underpants emblazoned with your logo? It is all there waiting for you to piggyback atop.
- Immense creative opportunities: Flash is uniquely positioned to create social games, mobile games, location-based games, games that suck in databases, games that use video, games that use real-time audio, games that connect millions. The number of radical new game genres is primed to explode like no other time since the 80′s. And you have all the tools necessary to drive the wave of game play innovation forward.
- Freedom: You can make whatever you want. Unlike developers of other platforms, there is minimal interference from traditional gate keepers such as big company politics, retailers or publishers. The Man doesn’t own you, at least not yet.
Such riches! Your platform of choice contains almost everything you need to radically transform gaming as we know it.
The mystery
So…where are the great world changing Flash games? They appear to be missing.
What we’ll cover
Flash games are currently the ghetto of the game development industry. Compared to the number of players it serves, the Flash game ecosystem makes little money, launches few careers, and sustains few developer owned businesses. Despite the vast potential of the ecosystem, Flash games contribute surprisingly little to the advancement of game design as an art or a craft.
In order to understand why this promising game platform is such a surprising dissapointment, we’ll look at Flash games from three perspectives:
- Chapter 2 – Making money: How do Flash developers currently make money.
- Chapter 3 – Generating value: How Flash developers currently create ‘valuable’ game for their players?
- Chapter 4 – Reaching customers: How developers currently reach their players.
- Chapter 5 – Premium Flash games as a service: A mental model for understanding the new world of web gaming.
For each step, I’ll cover alternative techniques that give you, the game developer, make even better games.
Chapter 2 – Making Money
Money makes the world go round. It pays salaries and gives developers the time and space to create creative products. Yet, Flash game developers don’t seem to be making much cash.
Flash gaming’s Achilles heel
I took a look at the Flash ecosystem to see if I could spot the fatal flaw.
The red flows are where people pay out money and the green items are places where people earn money. Here are the common money sources for the developer:
- Direct: The game developer sells ads from a generic ad service on their personal website or portal.
- Game specific ad service: An ad service such as Mochi collects Flash ads that are typically placed in front of a game during loading.
- Site licenses: A portal pays a developer a fixed fee for a customized site locked version they hope will increase player retention.
- Sponsorship: A company pays a developer a fixed fee in order to direct customers from other portal to their portal in the hopes of capture those customer’s lifetime ad revenue.
There is one obvious fact: the entire flash ecosystem is driven by low quality advertising. Piddling amounts of ad money flows into the developer’s pocket through a variety of obfuscated middlemen.
Ads are a really crappy revenue source
For a recent game my friend Andre released, 2 million unique users yields around $650 from MochiAds. This yields an Average Revenue Per User (ARPU) of only $0.000325 per user. Even when you back in the money that sponsors will pay, I still only get an ARPU of $0.0028 per user. In comparison, a MMO like Puzzle Pirates makes about $0.21 per user that reaches the landing page (and $4.20 per user that registers)
What this tells me is that other business models involving selling games on the Internet are several orders of magnitude more effective at making money from an equivalent number of customers. When your means of making money is 1/100th as efficient as money making techniques used by other developers, maybe you’ve found one big reason why developers starve when they make Flash games.
The effect of 1/100th as much money
Due to the low quality revenue streams, even great games make beer money, not rent money. A good game will make $1000 and a great game might earn $5000-7000. A rule of thumb is that you need to release 10 good Flash games a year to convince your girlfriend’s father you are not a bum.
10 games a year may not seems like such a big deal to some, but there is a hidden one-two punch that knocks most developers into bankruptcy
- Most Flash game developers have little financial cushion and live paycheck to paycheck.
- Flash game revenue is highly bursty due to a reliance on landing sponsorships upon release of their latest game.
It is common for a developer to release several games in a row and get sponsorships or licenses for each one. But the inevitable randomness of game development results a month or two delay on your next project. It only takes missing one or two of those 10 games to force a professional Flash developer into ever waiting arms of endless soul sucking contract jobs. It is surprisingly hard to change the world when you are stuck re-skinning the latest Mountain Dew advergame.
Only cockroaches survive without money.
It doesn’t matter much raw talent you possess. With the right support, you could be the next Miyamoto. Sorry, not important. All that really matters is that you possess what I call the ‘cockroach gene’. Can you churn out ‘good enough games’ and survive if your games repeatedly fail to make money?
The following are survival strategies employed by successful Flash developers:
- Be a full time student: This is the dominant category of Flash developers.
- Live in a socialist country: I’m looking at you, Scandinavians.
- Have (rich) family that will support you: I’ve met folks that do this but it is uncommon.
- Starve for your art: The Jason Rohrers of the world are also rather rare.
If any of these fit, congratulations. You are in the small percentage of developers that have the financial support necessary to be a Flash game developer. Everyone else, thousands upon thousands of talented developers, fall in a category called ‘churn’. They can’t even survive on ramen and passion. So they move on to richer markets or leave game development behind forever.
Such a loss. Such an incredible waste. I’d guess we are losing 95% of our best Flash games because the people with the talent to make great games find the Flash market financially untenable.
Solution: Players as a revenue source
Ads are a good secondary source of revenue, but surely there are richer sources of revenue? There is an obvious one, used for decades by all other game industries…why not ask the players for money?
Here’s the theory behind asking for money for a game.
- Players have access to lots of games. Most of which are free. This is the reality of the market.
- However, at a certain point, they start playing your game.
- If you’ve created a great game, some players will fall in love. They will be in the thrall of your reward system and your in game value structures. At this point, they don’t care that there are other games. They don’t care that they are playing on a portal. All they care about is your game. Games create value through play.
- When a player is in love, money is no object. If you ask the player for cash in exchange for more value, they will often agree. It is a good exchange in their eyes: They give you a small bit of change and in return, they get proven, addictive experience that they love.
Ask for the money
When game developers ask for money, they are usually pleasantly surprised. Their customers give them money; in some cases, substantial amounts. I witnessed this early in my career making shareware games at Epic in the 90s and I’m seeing the same basic principles are in play with high end Flash games. Fantastic Contraption, for example, pulled in low 6 figures after only a few months on the market. That’s about 100x better than a typical flash game and in-line with many shareware or downloadable titles.
Here are the four steps you need to follow in order to successfully ask for money from your players:
- Offer: Offer premium content
- Tell: Tell players about what they get if they pay you.
- Repeat: Repeat the first two steps until it clicks with the player.
- Accept payment: Get the money in your bank account.
Step 1 – Offer
Offer the player something valuable. Take a careful look at what players find valuable about your game and try dividing it up into two buckets: Introductory content and Premium content. Give away gameplay in the Introductory bucket, but sell the content in the Premium bucket. Many Flash developers insist on giving away everything for free. Stop devaluing your work and start creating a premium offer. Below are some ways of creating premium buckets.
| Time gates |
Players can play for some period of time and then they are locked out until until they pay. For example, players could play for 45 minutes – 1 hour (effective free trial times in the casual space) and then pay to play longer. |
| Content gate | Players play an initial teaser portion of the game for free and then pay to unlock access to additional content. For example, players could pay to unlock all the levels in a game. This is how many shareware titles worked. |
| Aesthetic items |
Players purchase non-gameplay additions that increase their identity or status. For example, players could pay to give their character a cool outfit that they can show off to their friends. |
| Abilities |
Sell unique abilities that let players experience the game in a new way. For example, players could purchase new jumping boots that let them fly through levels in a way that let’s them re-experience the game all over again. |
| Bundles |
Virtual items can be bundled together to create additional value. For example, if people love buying food for their virtual pet, let them buy a 10 pack of food for a 30% discount. |
| Consumables |
Some abilities can expire after a period of time or after a number of uses. For example, you could buy a potion that increases your strength, but you can drink from it 3 times. Also known as “item rentals.” |
| Subscriptions |
If certain abilities or bonus are a valuable long term, consider charging a reoccurring fee. For example, you could offer extra storage for advanced players, but charge a monthly fee. |
| Stackable subscriptions |
If certain abilities are additive(such as an experience or currencies multiplier), let players buy multiples of the same thing. |
| Rare items |
Limit the number of items available so that players feel special when they purchase it. |
| Time limited items |
Offer some items for short periods of time so that players feels that they lucked out finding the product in time. |
| Sale items |
Set a standard pricing system for items and then offer some items for sale. This works great with time limited offers. Again, players love to get deals. |
| Gifts | Players seek to maintain social bonds by gifting other players with items or abilities. |
| Accelerators | Many games have a ‘grind’ that artificially lengthens the game. Players with little time are willing to purchase items that let them reduce or eliminate the time consuming activities in the game. |
| Physical goods | T-shirts and other branded items |
Examples of premium content bucketing techniques
There is no need to limit yourself to any single one revenue stream. There are lots of different types of players and each player values something differently. Some players may be willing to buy a t-shirt. Others may want 5 stackable subscriptions. Others may just want a pretty new character with a panda head. When you restrict your game to a single revenue source, you miss out on gaining money from all the different types of customers that would have paid you if you had just given them the right offer.
When you design your game, pick three or four revenue streams and build them into your game. Here are some categories of users that you may want keep covered.
- People who don’t want to pay: Advertising is a good option to keep around. A few hundred bucks is still money in the bank.
- People who are interested in more of the same: Once you’ve established the value of your game, some players want more. Give them more levels, more puzzles, more enemies in exchange for cash.
- People who are interested in status or identity improvements: Some people see games as means of expression and identity. Give them items that let them express themselves or customize their experience.
- People who have limited time: Some people live busy lives and want to consume your game when they desire and how they desire. Cheat codes, experience multipliers and other systems that bypass the typical progression all help satisfying this customer need.
Step 2 – Ask
Tell the player what they are going to receive in return for their money. If people don’t understand the promise of what they are buying, they won’t pay.
- Ensure the user sees the offer: Screenshots, feature lists, and evocative language should be placed clearly in front of the user. You want convey to the player the value, both practical and emotional that they will experience if they were to gain access to the premium content.
- Tie your offer of premium value to an explicit request for money. We live in a capitalist society so people understand the concept of buying something. Don’t ask for a donation. Don’t ask players to “give you what they feel like giving.” People will think you are a charity case and in my experience your revenues will drop by 90% or more. Give the offer a specific price, be it $10 or 200 gold in your favorite virtual currency.
- Time the appearance of the offer. You can ask for money when players are caught up in the emotional moment of play. Which is more valuable to the player? A Pirates of the Caribbean T-shirt at the mall or a Pirates of the Caribbean T-shirt right after you walk off the Disney ride and are flush with excitement? Both your odds of buy the shirt and your pleasure in owning the shirt are greater when you buy it after the ride. Use game design to make players fall in love and in their moment of game playing passion, they will be willing to spend money.
Step 3 – Repeat
Repeat telling and asking several times until the value of your offer sinks in. Players need to see the offer multiple times before they’ll commit to making a purchase. One technique that works well is to put the offer in the natural flow of playing the game.
- Prominently place the offer in high traffic areas of the game such as entry, save, in game store and exit screens.
- Email the user periodically to let them know about specials or sales. By asking them to read an email, you are costing them time, so make sure that what you offer is valuable and delightful or else you’ll end up with angry customers.
You can risk annoying the user if you do this too much, but in my experience coaching indie and Flash game developers, they err on the side of being hiding their offers. I’ve seen offer screen buried in option menus, guaranteeing that less than 1% of users will ever see them. I’ve seen offers that appear only if you click a tiny button. Users see it once and then never see it again. Don’t be embarrassed. As long as your offer is clear, professional and doesn’t attempt to trick or overwhelm the user, most players will see your purchase button as just another useful, functional part of the UI.
Step 4 – Get the money into your bank account
Use a payment service to process their order. The good news is that there are dozens of 3rd party payment systems on the market. The bad news is that they all have subtle differences that have a huge effect on both your short term and long term revenue.
The many layers of payment middlemen, each taking their cut.
(Margins are approximate and will vary depending on the service)
Some things to consider:
- Margin: How much does the payment service take? The payment company is providing you with a service and deserves to be paid. However, you’ll find that some companies take 10% and others take upwards of 75%. Companies pitch various bundled services such as storage or fraud protection as justification for their increased fees. Some companies will also share some of the margin with portals in return for them carrying the games. Shop around and be honest with the trade off you are making. Remember you’d need to get 5 times as much traffic to makes the same amount of money if you pick a service with a 50% margin vs a 10% margin.
- Processing fees: Most Flash payment systems are simply a repackaging of non-Flash payment services with a pretty UI and a bigger margin tacked on top. The existing payment services already takes a chunk of the user’s money in the form of ‘processing fees’ Ask if the advertised payment company margin is inclusive or additional to the existing ‘processing fees’. A 30% margin seems reasonable, until you realize that it is on top of an existing 50% margin for a mobile provider. I like to ask “If the customer pays $10 on their credit card or phone, how much cash ends up in my bank account?”
- White box or branded?: Some services like Super Rewards can be reskinned so that they are transparent to the end user. Until the player enters into the actual payment portion of the process, they feel like the stores and such are part of the game. Services like Noboba and MochiCoins are heavily branded with the payment company’s logo. Their goal is to get the customer to invest their trust in them, the payment provider. The downside is that customers don’t invest as much trust in you, the game developer.
- Customer registration?: In order to track customers and their purchases, you’ll want a secure login system. Some payment services let you build your own. Others require you to use theirs so that they can control the primary relationship with the customer. Often these services will not release customer lists to the developer. This becomes a problem long term if you release multiple games and want to run cross promotions.
- Storage support: Once players purchase an item or feature, they’ll want to have access to their stuff when they sign back in. This means your game will need online storage and a server back end. Some payment services offer this as part of the package, which is great for the common situation where the developer doesn’t know much about back end programming.
- Lock-in: Do you have the ability to easily switch to another payment service? In general, the more comprehensive solutions with customer make it more difficult to switch. With some comprehensive services, capturing customers is more valuable than your money. You only provide cash for a single game, but a customer can be sold and resold dozens of times to dozens of games. Run far, far away from such companies since their best business interests are not aligned with your best interests.
We are in the early stages of the Flash payment market. Often new game developers will unthinkingly jump on the first service that they happen across. In this low information environment, payment services can charge unreasonably high margins and very few developers will complain. Many will be excited to give away 50% of their money because they weren’t earning any money previously.
A payment provider should be a reliable commodity service, not a major business partner. Over time, I predict we’ll see more transparency and competition which should drive down prices. The ideal payment service is one with low margins, low switching costs, no branding and APIs that let you cheaply and easily tie into generic, developer controlled login and storage services. This will come about as a competitive market works its magic, but until then the opportunists are out in full force and Flash developers will pay a premium for their ignorance. By asking, comparing, and publicly publishing information about margins, developers can encourage payment providers to compete openly and honestly.
The good new is that some generic payment systems are cheap to hook up to your Flash game and allow for experimentation. On one project, we used SuperRewards and reskinned their front end to it fit nicely into our game. They charge 20% margin on all purchases, but we can now transparently swap in primary payment provider for credit cards, mobile etc. By mixing and matching we can build a payment front end that makes us more money. We own our own virtual currency and we own our customer data.
This was accomplished with one programmer in 2 weeks of work and can be reused across multiple games. Such a path isn’t for everyone, especially if you lack web programming skills. However, with a little elbow grease, you can tap existing, proven, generic payment services to roll your own with very little downside.
Execution matters
Most Flash game developers are ignoring all of these steps. A few are doing a couple steps poorly, failing and then running about screaming that you can’t make money off charging for premium content. Instead of jumping to ill formed conclusions, try executing with vigor some of the basic business lessons learned in the past 2000 years of capitalism. Just going through the motions isn’t enough.
Here’s an example of a good idea poorly executed. Dan Hoelck is the very talented developer behind the polished Flash game Drunken Masters, a game that attempts to charge for premium content. He created a content gate, displayed his offer to the player and integrated a payment service. Unfortunately, the resulting sales process is torpedoed by multiple fatal flaws. As a result his conversion rates are miserable: 0.01% of users purchase his offer. You’d hope to see numbers closer to 0.1 – 1%.
- The call to action isn’t clear. The offer is labled ‘cheats’ (not a positive connotation) and then crams lots of little detail in a tiny font at the bottom of the screen. I’m looking for a big ‘buy now’ button and some pretty pictures telling me all the lovely things I’ll get. This is nowhere to be seen.
- The value of the offer is questionable. He gives 90+% of the game away for free, and lets you purchase a few miscellaneous features that most people don’t need. A good rule of thumb when using a content gate is that your premium content should be seen as twice as valuable as the demo experience.
- Making purchasing difficult: In order to purchase, you need to manually type in a URL, find the right link to click on and then purchase. Is this necessary? Every step of the pipeline, you are going to lose large numbers of users. As much of the purchase flow should be within the game as possible.
- Charging too little. Dan charges $1.50 for his game and this is likely too little. Beware your natural tendency to undercharge. People who love your game are surprisingly price insensitive. For example, in the microtransaction-based MMO Domain of Heroes, prices range from “$0.99 to $349.99 and about 80% of the revenue comes from purchases at the $19.99 pricepoint.” With a little price experimentation I suspect Dan could have increased his price to $5 or $10 and increased his overall revenues substancially.
It is okay to fail. The basic system Dan made took him ~40 hours to implement and it is obvious he has learned a lot of lessons from the experiment. Building an effective sales pipeline is just as much a craft as making a great game. As a game developer you need to approach the task as a new skill to master that you likely aren’t going to get right the first time. Put in the basics, measure your results and apply what you’ve learned to your next project.
But people will hate me if I charge money!
Some developers I’ve talked with worry that they’ll alienate others by charging directly for their game. Here are some common concerns:
- Bad reputation: Many Flash game developers are not in it for the money, but to be part of the indie community. The threat of a poor reputation can be frightening. The truth is that modest, self effacing developers that find financial success are worshiped like heroes. Just ask Colin of Fantastic Contraption how he was received at GDC. If you are worried about your reputation, stop starving yourself into hipness. Instead create great games and be generous to others. A good reputation follows naturally.
- Players complaining: So what if you end up being hated by a few kids that feel entitled to free stuff? It isn’t the end of the world. Usually the money and thanks from delighted customers more than make up for a few sour grapes tossed about on dark and skanky corners of the Internet.
- Bad rankings: It is true that players will occasionally mark down paid games out of ignorance and spite. Luckily there is a solution. If you offer real value to customers in love with your game, your fan’s rapturous applause will drown out whiners. Players, in aggregate, tend to forgive great games, even if they need to pay for them.
- Sponsors: Sponsors don’t want the game they serve competing directly with their primary source of revenue, ads. If you can promote that your premium game results in better player engagement and repeat plays, most portals will happily take their cuts of the resulting ad revenue and leave you to monetize your customers. A smaller number will worry that your premium content will pollute their ‘free’ label. An even smaller number will be greedy and ask for a cut of your hard earned customer revenue. In the short term, you can ignore demanding portals. The market is highly fragmented (30,000 portals!) and no portal owns more than 5% of the players. At this point in the market, developers have the ability to walk away from the greedy minority. Suggest reasonable terms where portal keep their existing ad revenue and you keep all in game revenue. If they balk, leave the bastards to rot.
If you make a great game played for hours on end by millions of people, you deserve to be paid. Stop worrying about how people ‘might’ react. Ask a fair price for the value that you provide.
Quick monetization check list
- Are you asking users for money?
- Are you telling users what they’ll get if they pay you?
- Have you hooked up a payment system before you launch your game?
- Are you tapping multiple revenue streams that appeal to different types of users?
- Are you basing your design decisions on the behavior of people who make you money?
- Are you appropriately filtering the feedback of people who do not make you money?
Take care
Danc.
Danc.
PS: Time for a short break! I’ll follow up with the next few chapters in a couple of days.
References
- http://www.gamasutra.com/view/feature/3924/wheres_the_cash_for_flash.php?page=1
- http://www.gamasutra.com/blogs/GregMcClanahan/20090325/985/Nitpicking_Flash_Game_Summit.php
- http://www.gamepoetry.com/blog/2009/02/27/interview-with-kongregate-about-sponsorships/
- Puzzle Pirates Metrics: http://www.slideshare.net/capncleaver/metrics-for-a-brave-new-whirled?type=presentation
- Andy Moore interview on Fantastic Contraption: http://freelanceflashgames.com/news/2009/05/18/interview-with-andy-moore-manager-of-fantastic-contraption/
- http://evolutionlive.blogspot.com/2009/06/ten-ways-to-monetize-your-flash-game.html
- http://virtual-economy.org/blog/arpus_in_social_networks_and_s
- Ways of monetizing Flash games: http://www.heyzap.com/developers/guide
- http://www.flashgamesponsorship.com/advice/advice-from-industry-players/selling-premium-content-the-drunken-masters-experiment.html
The Postnational Sodalities of Second Life: An Iconographic Approach
July 2nd, 2009
Jonathan Kinkley, who has just completed his Masters Thesis in Art History at University of
Illinois at Chicago, ask if we could share his research. We're always happy to link to new work on virtual worlds.
The full paper is available here:
http://www.scribd.com/doc/15860034/PostnationalSodalitiesSecondLifeJKinkley
His thesis analyzes the visual culture of Second Life and explores the complex spaces that online social networks create. Jonathan explains:
In Second Life's Caledon, we get a glimpse what an online social formation looks like. It is a society based entirely on shared interests – a themed community built of a patchwork quilt of Victorian-era iconography. Elsewhere in SL, artists like Cao Fei (SL avatar China Tracy) are fascinated with this idea of creating a sense of place out of virtual space. Her RMB city isn't about China, it's about China-ness – an amalgam of all the icons, stereotypes, and archetypes past and present of China. This paper is about the types of spaces in SL and how and why they are created out of the iconography of visual culture.
China to ban RMT, maybe.
July 1st, 2009
Thanks to Andy Schwarz for tipping us to this article in Information Week reporting on a Chinese government press release supposedly banning the sale of virtual stuff for real money. In the backchannel, Julian Dibbell reminded us that Korea did the same thing a couple of years back to no effect. No effect because it is hard to do without redesigning the virtual economy, and also because the law's intent was not actually to ban RMT. As we all know, some laws regulating a practice are not really intended to stop it – whatever the preamble might say – but to control it merely.
So: What is China up to?