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

Wed Oct 11 12:36:01 EDT 2006

Agreed. Also bear in mind that sales on Popcap.com are not reflecting
the majority of the sales in the industry, as most titles are sold on
general portals, not the publisher's site. So if the net sell of a
portal is about 40% of the gross price after deducing publisher's
royalty and cogs, and assuming conversion rates on generic portals are
far lower than on a publisher's site (which they are), the actual value
per 10K users is closer to a $1 than to $20...

________________________________

From: casual_games-bounces at igda.org
[mailto:casual_games-bounces at igda.org] On Behalf Of James Gwertzman
Sent: Wednesday, October 11, 2006 12:26 PM
To: IGDA Casual Games SIG Mailing List
Subject: RE: [casual_games] Re: can't bite my tongue any longer...

We see 10% of our web game sessions on average result in a download. So
for every 1000 times someone plays a web game, 100 of them download the
game, and 1-2 of those people buy the game. Depending on who in the
value chain you represent (portal operator, aggregator, publisher,
developer) that represents anywhere from $2-20 of revenue per thousand
web-game plays. But these are AVERAGE numbers.

I think the key takeaway from all this discussion that we can all agree
on is that there are lots of different audience segments, and they each
want something different which means they each get monetized
differently.

Some people only ever want to play web games online, and they can be
monetized with ads and potentially some of the "pay for play" or
subscription ideas being discussed earlier. If you look at their revenue
for thousand game-plays, by definition it's $0.

Other people WANT to download and own the game and have the full
immersive experience. A large % of our customers are what I call "casual
obsessives" who play our games for 5-10 hours (or more) a week - these
people want to own the game, want it on their PC, and don't want to
suffer through any ads to get right to the game. If you look at the
$/web-game play for this particular segment, it's much higher. I'd say
this audience is the core of our current web portal business today.

Still others care most about having a rich community experience, and
they can be successfully monetized through a combination of subscription
revenue, ads, even micro-transactions.

Still others love games but want to play them on a handheld device or
console.

------

James Gwertzman

Director of Business Development

PopCap Games, Inc.

+1-206-256-4210

________________________________

From: casual_games-bounces at igda.org
[mailto:casual_games-bounces at igda.org] On Behalf Of Olmert, Shaul
Sent: Wednesday, October 11, 2006 8:45 AM
To: IGDA Casual Games SIG Mailing List
Subject: RE: [casual_games] Re: can't bite my tongue any longer...

How can you defend that any casual games web site makes $20 per 1,000
users? Which part of the calculation below is not reasonable in your
point of view? I argue that $20 per 1000 unique users is about 25 times
the real price (which I estimated at $0.8).

________________________________

From: casual_games-bounces at igda.org
[mailto:casual_games-bounces at igda.org] On Behalf Of Tim Turner
Sent: Wednesday, October 11, 2006 11:27 AM
To: 'IGDA Casual Games SIG Mailing List'
Subject: RE: [casual_games] Re: can't bite my tongue any longer...

It is certainly startling to see numbers like $20 per 10,000 users but
after a moments pause I find myself wondering how these numbers compare
to traditional media sales-to-eyeball numbers.  I imagine our big six
casual portals are akin to the prime-time line-up at a major network on
TV.  How many people watch Survivor?  How much does it cost to run an ad
for XYZ product?  And how many of the people who watched that commercial
actually buy that product?  I would be shocked if the signal to noise
ratio for TV isn't far worse than ours.

I guess my point is that while $20 per 10,000 *sounds* terrible I think
we could use more context before we hyper-focus on improving that
particular aspect of our business.

________________________________

From: casual_games-bounces at igda.org
[mailto:casual_games-bounces at igda.org] On Behalf Of Olmert, Shaul
Sent: Wednesday, October 11, 2006 6:30 AM
To: IGDA Casual Games SIG Mailing List
Subject: RE: [casual_games] Re: can't bite my tongue any longer...

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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