Jan

11

How Will Social Games Make Money This Year?

Mark Stephens

The subject of monetisation is never far from the lips of social game developers. Back in the days when money was made from the original purchase price of the game it was relatively simple. Nowadays though, freemium games rule the roost, and the ever-developing trends of how to make a dollar are interesting to follow. As a social gamer, what can you expect this year from developers’ attempts to monetise their games?

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The Basic Models

We’ve covered the basic monetisation models of social gaming before. Generally developers make revenue from one or more of these four ways:

  • Charging a small app download fee upfront
  • Charging players to unlock levels or receive more gameplay options in freemium games
  • From in-game purchases such as power ups and extra tools to get higher scores
  • Advertising revenue

Spending Trends

With more games moving to a freemium model, it might be tempting for an outsider to think there’s not much money in it. But in 2013 the global mobile games market alone was worth over $13 billion!

The cost of buying apps, unlocking levels and purchasing in-app power-ups is usually very small, so volume is key and downloads numbers rule. Developers need a lot of game players to be successful if that is their sole means of making money. However, if you crack it then the rewards can be huge with reports in October saying that Candy Crush makes $650,000 a day for its developer King. Nice work if you can get it!

Most developers can only dream of making a fraction of that from a game. But then most developers don’t get 100 million players. It really is a numbers game – and the same applies to advertising revenue: the games that attract the most players will charge more to advertisers.

Meanwhile app-marketing company Playnomics report that people who spend money on social and mobile games spend the majority on a game on the first day of playing it. This is very different to a PC-based game player, who tends to get to know a game better before spending anything.

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This could be for a number of reasons:

  • The rapidly addictive nature of many social and mobile games
  • The current trend for immediate gratification from games
  • Social games are simpler to learn and play than traditional, harder core, PC-based or console-type games
  • Social games are often more “pushier” than traditional games
  • Social games often have simpler payment processes, encouraging gamers to reach for their credit cards

Analysing when your audience likes to spend money is important for developers. For instance the developer Onebip noted this in a recent Guardian article:

‘Using internal datasets we have found that most online game purchases are made towards the end of the week, with a respective day-by-day increase being recorded on Thursday (14%), Friday (15%) and Saturday (17%). Furthermore, with the greatest volume of purchases also being made between 4pm and 7pm (a 7% spike on morning activity) it is clear that gamers are more willing and likely to spend money during their downtime as the day draws to a close. Understanding these trends, in addition to the external triggers most likely to encourage in-app purchases, is essential.’

Such detailed analytics is critical for developers to make the most out of monetisation opportunities.

Trends in Advertising

Making money from ads in social games is not easy, and it’s an area where even the big boys have failed. The main problem is that ads are generally seen as intrusive and, unless they are well chosen, well-timed, and highly relevant, players run for the nearest exit door!

But that is changing. The mobile and social gaming ad platform Mediabrix proudly stated recently that it has found the key to monetising games: placing relevant ads at the ‘breakthrough moment’ of games, like when you have just conquered a tough level or when you are badly stuck and need a power-up. These are the emotional moments when players are open to ads that can help them or celebrate a success.

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Mediabrix claims that its strategy of timing the ads better increases the average rates that advertisers will pay to display their ads in media and games (the so-called CPMs) by up to 180 times. This means that developers require much lower numbers of people clicking to make the same amount of revenue from the advertiser.

MediaBrix CEO Ari Brandt said:

“What we discovered after running hundreds and hundreds of ads campaigns was that by leveraging existing game mechanics, brands can come in helping users, rewarding users….They’re not interrupting them; they’re not an annoyance — they’re helping them. Ultimately, that’s the goal of the brand: to be remembered as a friend or a hero.”

It will be interesting to see if this strategy crosses the ‘nuisance’ divide that separates game players from ads. The signs are pretty good so far and, if this is the future, it’s good news for developers who can create advertising revenue streams while maintaining player loyalty.

MediaBrix currently delivers over 500 million ‘breakthrough moment’ ads to over 200 million people each month, so it’s already fairly large scale. This is an area in which we can expect to see further development this year.

BitCoin and Gaming?

Another probable development this year is the emergence of Bitcoin, the digital currency, into the world of social gaming.

It is already being used widely on many networks and many would like to see it used in gaming more. According to Eric Benz, VP Global Business Development for ZipZap “Bitcoin is the perfect fit for social gaming”.

He goes on to explain that, with transactions in and out being instantaneous and low transaction fees allowing the micro-transactions that most social games require, it would seem to be a perfect match; and it will be interesting to see what the future holds there.

Indeed, just as I was writing this post Zynga announced that the company was going to trial Bitcoin for several of their games, including Farmville 2, Chefville and Castleville.

To wrap things up: if the game is good enough, provides a decent free taster of all its attractions, and strikes the right balance between stick-ability and challenge, then word gets around quickly and download numbers jump; then monetisation follows – through one or more of the methods outlined above.

The challenge then becomes to process payments in a simple and seamless way that makes it easy for the player to spend money in a game; and to work with advertising in a smart way that actually enhances the gaming experience for the player.

But without the quality game to start with, you don’t get the numbers, and it’s then exceedingly tough to cover costs of development.