Traditional Game Monetisation
Game developers earn revenue in one of two ways: advertising or in-game purchases. The latter may include extra weaponry to defeat zombies or new tools to crack levels of the latest fruit matching game, depending on what you’re playing.
The freemium models of the most popular games on social networks and the app stores generally provide a good taster for free and then charge for a more complete gaming experience – access to all levels, new features, more tools to get a higher score etc.
Advertising has so far played a relatively small, but increasingly important role, in gaming. As marketing dollars move from more traditional media to online media, social games represent a very attractive proposition to advertisers – not only to large established industry leaders, but for any company whose target market plays social games. Rates are far more manageable than the sky high rates of TV and radio advertising, which are beyond the means of all but the largest, most cash-rich businesses.
How’s it All Going?
Recent reports suggest that the world’s most popular social game, Candy Crush, generates around $850,000 per day, or $310 million per year! But the revenue generated is not from ads. It’s free to download and many of its users will never pay a cent. However, extra lives and bonuses to help clear levels cost you. In-game purchases cost about 99 cents and you do the maths: $850,000 is a LOT of 99 cent purchases each day! But it’s still a small fraction of the total Candy Crush game-playing audience of 50 million plus players per day.
In-game advertising presently accounts for between 10% and 30% of revenues for most social games, according to Appnext, the monetisation network. While these may not sound like huge figures, they are growing – between the first quarter of 2011 and the second quarter of 2012, Zynga’s ad revenue increased from 9% to 12% of its total.
Social gaming is a multi-billion dollar industry, so in fact these numbers are being watched more and more closely by developers as they design their games. Appnext of course has a vested interest in all this, providing a platform for in-game advertising.
Do In-Game Ads Work?
As a game player you may have a nagging feeling that in-game ads are just too annoying to ever work; but, as an independent developer, you may be looking for ways to get payback for all those hours spent slaving away on your game, only to see it get disappointing in-game purchase numbers; so you will probably be prepared to consider in-game ads as a way to create revenue. The fact remains that only one or two per cent of players will spend real money for most freemium type game, so all avenues should remain open.
However, traditional ads won’t work. They need to be smarter to work on a social gaming audience. If they are obtrusive, irrelevant, overly blatant or distract players from why they are there, they will not work and will drive players away.
Tal Perry, VP of Appnext says this:
“It’s a myth that ads don’t work in social games ….you just have to do them right. We believe that ads can become a major source of revenue.”
Ads need to appear at natural breaks in games, like at the end of a session or level, or when a player may need to buy something. There must be no trickery – users must know exactly what they’re getting by clicking.
The more targeted and less disruptive to the game play itself the ads are, the more successful they will be, and the technology is available to do that now. There are really no excuses for overly-aggressive or irrelevant ads in games anymore, if you use the right network. These advances can certainly add a new revenue stream for developers who may have previously dismissed advertising.