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

[Tim Turner]

You need to reread this more carefully (scroll down).  I took the numbers
directly from your previous post.

 

Furthermore, I've posed a theoretical question where the exact numbers
aren't even really relevant.

 

Thanks,

T

 

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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).

 

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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.

 

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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. 

 

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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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