[casual_games] Re: can't bite my tongue any longer...

[Olmert, Shaul]

Sounds like everyone is in agreement that the current business model
allows only very limited monetization, since the lion share (~98%) of
the users who downloaded don't pay. Furthermore, I agree with Jim's
observation that the real measure we should look at is not the
conversion rate from download to buy, but the conversion from site
visitor to buyer or in other words: the value per user. Assuming that in
a typical casual games site only 1 in 100 users downloads a game, and
then only 1 or 2 of those who downloaded buys, the result is
approximately $20 per 10,000 users. Out of these $20 there are COGS and
royalties which leaves a typical portal with a value of $8 per 10,00
users, or a $0.8 CPM Breaking it down to CPM values is important so we
can match it against CPM rates that advertisers pay. As the online
advertising market is blooming these days, consider the priorities of a
portal like MSN or Yahoo in promoting web games vs. downloadables. Every
time they promote a downloadable they settle for a value of $0.8 per
1000 users while if they promoted a web game instead they would generate
at the very least $15 per 1000 users. Even more so, with advertising
they can expose every user to several ads per session and by that
significantly increase their value. Now days ad inventory is easily sold
out on many sites and so downloadables are not a priority. Several
portals have announced that they will be offering downloadable games for
free with an ad supported model.
 
While obviously the advertising blooming will have its ups and downs,
and in other times the differences between the value from ad sales and
downloads may be decreased, it's still alarming to see how poor is the
monetization on the PC downloadable games. So publishers/portals tackle
it by sharing ad revenues, selling their own content on their own web
site, taking successful games to retail, etc., but by and large there is
a fundamental problem in relaying on a business model that generates
such poor return. 


________________________________

From: casual_games-bounces at igda.org
[mailto:casual_games-bounces at igda.org] On Behalf Of Jim Greer
Sent: Wednesday, October 11, 2006 7:29 AM
To: casual_games at igda.org
Subject: [casual_games] Re: can't bite my tongue any longer...


James - 

Thanks for the numbers - it sounds like you've established that for the
Popcap.com <BLOCKED::http://Popcap.com>  audience the current model
maximizes your profit. What we're betting is there are other audiences
and other models out there - and it sounds like you agree with that,
too. 



	We see the same low conversion rates that everyone else does on
the PC (2% conversion rates are typical, which means 98% are not
playing) 
	


Yup. Since you're being so generous with the numbers, here's one I'd
love to hear. What percentage of people playing a web game on your site
initiate the download? 10%? To be clear - if you get 1000 people playing
the web version of Bookworm, is it 100 of them who start the download,
and 2 of those 100 that go on to purchase it? If so, then I really think
charging for premium content in the web version, at a lower price, might
make sense. If not for your audience, then for the younger one we're
targeting. 



	Here in the states, young people primarily play consoles and
handhelds.
	


There's a site called MySpace you ought to check out... I think they
have some young people there. Seriously, young people spend plenty of
time on the web, socializing, playing online games, etc. If they don't
respond to the current downloadable market, then it's time for some
experimentation. 

Jim Greer
jim at kongregate.com <BLOCKED::mailto:jim at kongregate.com> 
Company: http://kongregate.com <BLOCKED::http://kongregate.com> 
Blog: http://jimonwebgames.com <BLOCKED::http://jimonwebgames.com>  

home: 159 Dolores #4, SF CA 94103
work: 430 Fillmore Suite A, SF CA 94117 
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