[casual_games] Different Payment Models

Wed Oct 11 11:22:02 EDT 2006

Once upon a time (20 years ago) games for PC were developed by small teams
(sometimes of just one) and didn't cost much to make. (Of course, the
revenues weren't so high then either). Nowadays, you can't make 'core' game
for less than a few million. 

If my reading on the casual games scene is right, it started out a bit the
same way - small teams, inexpensive products. As the market has grown,
production values have increased, and now costs are starting to blow out,
making it harder for the smaller guys to complete or get established.

My question is, are the customers demanding the 'bigger better' products
(with the higher price tags) or is it the industry that's pushing costs up
because that's what we think it will take to compete, and because that's
what we've always done? 

Thanks

Paul Turbett
Benevolent Interactive
www.benevolent-online.com 

-----Original Message-----
From: James Gwertzman [mailto:james at popcap.com] 
Sent: Wednesday, 11 October 2006 12:25 PM
To: IGDA Casual Games SIG Mailing List
Subject: RE: [casual_games] Different Payment Models

1) Assuming that these numbers are accurate, the $350MM is end-user gross
revenue, not net revenue. Assume 60% (or more) goes to the distribution
channel, leaving 40% or $140M for publishers. 35% of $140M = $49M to split
among the top 5 games, or $10M each from portal sales. That might be a tad
high, but not an order of magnitude high.

2) $200K for a AAA casual game these days is low. It's not enough to just
look at the dev cost for an individual game (which frankly is higher than
that) but you also have to look at all the prototyping and games that get
cancelled along the way. You're going to see some games from us later this
year that have been in development for close to two years and cost well
north of $200K.

---------------------------
James Gwertzman
Director of Business Development
PopCap Games, Inc.
+1-206-256-4210

-----Original Message-----
From: casual_games-bounces at igda.org [mailto:casual_games-bounces at igda.org]
On Behalf Of Adam Johnston
Sent: Tuesday, October 10, 2006 8:55 PM
To: 'IGDA Casual Games SIG Mailing List'
Subject: RE: [casual_games] Different Payment Models

Oh come on.  35% for top 5 games gives 7% of $350MM/year to each of them.
That's $50MM each per year. If we guess that the top games cost $200,000 to
produce, then after giving $2MM to Oprah and only 40% on development they
still have at least $20MM each to spend.  That's 100 games per year.  Where
are they?  What game did PopCap produce this year?  We're in October
already. Did Tailismania cost $20MM?  If PopCap have more than 1 in the top
5 then did Talismania cost $40MM?

Adam

-----Mensaje original-----
De: casual_games-bounces at igda.org [mailto:casual_games-bounces at igda.org]
En
nombre de Juan Gril
Enviado el: Lunes, 09 de Octubre de 2006 01:14 p.m.
Para: IGDA Casual Games SIG Mailing List
Asunto: Re: [casual_games] Different Payment Models

I'll step forward, as I wrote the presentation that you are mentioning. The
data is taken from the DFC Intelligence and CGA Casual Games Study.

The report's breakdown was:
Top 5 Games		35%
Top 10 Games		60%
Top 20 Games		75%

Cheers,

Juan

On 10/9/06, Christopher Natsuume <natsuume at boomzap.com> wrote:
>
>
>
>
> First of all - thanks for the great information, James.
>
> As always, you bring some great data to the discussion.
>
>
>
> "But don't use type mythical "80% of the sales coming form 20-30 
> games" as proof that the industry is broken."
>
>
>
> As for my figures, I was recalling a lecture from this year's 
> Causality talk by Pat Wiley and others: "One Billion Dollars"
>
> You can see that slide presentation here:
> http://www.casuality.org/seattle/html/index.htm - the figure I was 
> recalling was on slide 3. "75% of those 350MM are made from the top 20

> games" - I rounded it to 80% and added 10 games (not on purpose, I 
> just incorrectly remembered it that way J).
>
>
>
> But the general gist is still pretty much the same. A 42% distribution

> of income on 20 out of 300+ games a year is one thing. A 75% 
> distribution - that's another. To be fair - they don't have the data 
> you have to back up that assert, so it very well may be incorrect, but

> I would guess it may be that other portals are not seeing as broadly 
> distributed income as on Reflexive. I believe some of the Big Fish 
> people are on this mailing list - maybe they can share where they got
that
data?
>
>
>
> As for your further assessments of % of TV shows/movies/breakfast 
> cereals, I see your point, and I agree that there will always be
winners
and losers.
> But my issue is that movies, breakfast cereal, and TV shows that don't
"hit"
> still make some revenue (they aren't giving away free cereal or 
> advertising space or movie seats) - whereas under a play-then-pay 
> model, a lot of the "filler" product sees essentially no meaningful 
> revenue at all, even though they may be experiencing thousands of 
> downloads.
>
>
>
> That is the part of the model that I see as broken. Not that all games

> should be big winners, but that the losers should have some sort of 
> sliding scale of loss, so that they might recoup a small part of their

> investment and try again. There has always been a market in "direct to

> video" movies, generic breakfast cereals, or late-night-filler cable 
> TV - even B-list budget video games - and they don't make a TON of 
> money, but there is a revenue model that says they CAN make money, if 
> handled correctly. I am wondering how we can create such a model in 
> our industry. Maybe we can't - but I'd like to have the discussion, at
least.
>
>
>
> I am curious what other issues you had with my ideas - as I think your

> deep experience with Reflexive may put you in a much better place to 
> see some of this much more clearly than me. I am sure you have a great

> deal of insight to share on this issue.
>
>
>
> Cheers,
>
> Cn
>
>
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>
>
>
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