[casual_games] Better Casual Game Business Models

Olmert, Shaul Shaulmert at nick.com
Wed Oct 25 13:11:49 EDT 2006

Speaking from our experience in the kids' games space, I'd say that I
doubt it if indeed such a large percentage of casual games purchases are
being made for kids. Kids are not typically big fans of Mahjong and
match-3 puzzles and so I dare to assume that most people buy these games
for themselves.
nevertheless, the "kids without credit cards" audience is a great
market. Kids love games (yes, games are not entirely owned by older
female audience...) and when you offer them kids' targeted content, they
find a way to get their parent to buy it, just like they do with toys,
apparel and every other consumer product.  The fact is that casual game
portals don't offer a meaningful portfolio of kids' titles. however in
our experience whenever we released kids' titles for the casual games
market such as SpongeBob diner Dash, it had a great pickup with both
kids and their parents.


From: casual_games-bounces at igda.org
[mailto:casual_games-bounces at igda.org] On Behalf Of Joe Pantuso
Sent: Wednesday, October 25, 2006 10:55 AM
To: IGDA Casual Games SIG Mailing List
Subject: Re: [casual_games] Better Casual Game Business Models

There are several interesting items in here and nothing I'd argue with.
One that begs discussion though is "We found that when we sell a game to
a woman 35+, 50% of the time she's buying it for the kids not herself.
".  The stats on women as a larger than 50% of the casual user base, and
the age skew to older than 30, is taken as gospel in much of the casual
games discussion.  Certainly it gets stated in articles about the space
often enough.  Is this a badly gathered stat that has been replicated
without being fact checked?   
If so this would mean 'kids without credit cards' actually the largest
percentage group of casual players, followed by 'under-25 slackers
stealing time at work' (derived from a Pogo.com sponsored study).

On 10/25/06, Alex St. John <stjohnalex at yahoo.com> wrote: 

	Interesting thread.  I thought I'd chime in, since we've been
working on the monetization problem a long time.  We built our own DRM
solution for casual games way back in 2001 and have been iterating it
ever since.   Because we originally developed it just to support games
from our own Studio we chose a Content limited DRM model instead of the
time limited model the rest of the market went with.  This proved very
educational when we took downloadable games we had been selling with
content limited DRM and released them to major portals that were using
time limited DRM.    What we found was that a hit game that was content
limited would sell very strongly within our channel over a period of
many years, often with a slow steady escalation in audience.  The same
game posted on a major gaming portal with time limited DRM would
experience a huge spike in sales that rapidly collapsed. 
	The difference in behavior is the result of time limited DRM
killing a games viral audience momentum before it can gain traction.  A
hot game falls rapidly off   the top 10 list as the time based DRM on
the game drives off it's free players.  We all like to talk about our
audience being 70% women 35 and up, but this really isn't the case.  The
audience is very broad, and a large majority of it is kids without
credit cards.  We found that when we sell a game to a woman 35+, 50% of
the time she's buying it for the kids not herself.  I think it's very
interesting to look at the sources of popcap.com's traffic on
www.alexa.com <http://www.alexa.com/> .  What you see is a lot of moms
looking online for content to keep the kids entertained.  A small
fraction of the kids and teenagers who don't have a means of buying
games online are successful in persuading a parent to do it for them,
the rest are S.O.L. and must content themselves with hunting for free
play.  The problem is that this audience is also the word-of-mouth group
that generates buzz for a game. When they are thrown out of a game they
like because they can't or won't purchase, the buzz stops.   
	There is an important and interesting caveat to this
observation.  Content based DRM works best for content based games; that
is games that unlock new "art" or "levels" in exchange for purchase.
Games based on simple repetitive play such as puzzle games perform well
with time based DRM because there is little or no "content" other than
the basic game to unlock.  Games that depend on repetition addiction to
drive a conversion must cut off the player to make a conversion before
the players, "addiction" to the game play is satisfied.   
	For content based games with content limited DRM we find that
the games have extremely long shelf lives and develop growing audiences
over time, even after the game has dropped off the front page and out of
marketing efforts.   Out of 300 games in our channel and 30 from all of
the top developers that ship on OEM machines, FATE from our studios is
consistently the #1 best seller when presented equally besides the best
casual games from other leading developers.   Polar Bowler which is also
content limited has ranged between #1- and #4 for over 4 years.  
	Content limited DRM also has another important benefit.  Once a
game has developed a standing audience it becomes an appealing franchise
for advertisers to target.   When a game throws out its audience, it
throws out the opportunity to monetize all of the free play.  Portals
are first and foremost in the business of selling $.50-$5.00 CPM ad
units in huge volumes; actually selling downloadable games is a tiny and
irrelevant side business to all of them.   It doesn't matter to a portal
if their DRM solution is antiquated, wastes content, is inefficient at
converting a sale or is easily subverted.  It's the free play that makes
their core advertising business, the sales are tertiary.   Portals also
have little ability to target premium advertising dollars at specific
titles and audiences.  It's easier for them to sell a low yield $1/cpm
ad unit than it is to sell a $25/cpm video ad targeting a specific game
or family of games.   If they could give premium downloadable games away
without trying to sell they would!  The problem is that developers want
$$ for their games, so the portals share revenue from the business they
don't care about and try hard to keep the ad $$.    
	We've done a lot of work at WildTangent on how to fix what's
obviously a broken business model for the game developers and concluded
that a model based on selling game sessions vs selling whole games may
yield a vast improvement in revenue generation potential and advertising
yield.   I'll talk about it more if folks are curious but in the
interest of brevity I suggest that folks take a look at Penguins and
BlasterBall3 on Wildgames.com <http://wildgames.com/> .  Both of these
games from WildTangent Studios had major advertising sponsors that had
funded the games before they completed production.  They are wrapped in
session based DRM and have major advertisers sponsoring the gameplay for
consumers for free.   Since a session of these games is priced at around
$1 to the consumer, the advertiser buys the free play from us wholesale
at a discount and gives the play away... especially to all those kids
who don't have credit cards.   I'm sure it won't take anybody long to
calculate the CPM value of this kind of advertising, but a session of
premium game play is worth a hell of a lot more than a $1/cpm run or
site banner ad.  *Note that there is zero advertising to consumers who
buy the game, or pay for the sessions themselves.  Gameplay is never
interrupted with advertising as Microsoft and Real propose.  Consumers
simply choose a payment mechanism for the single session of play they
are about to consume and play uninterrupted.   
	Personally I think the "big idea" in casual gaming is the idea
that consumers, given the opportunity, will glady CHOOSE offers from
advertisers over paying for sessions of game play.  I think consumers
will reject getting advertising in the games they purchase with their
own money and they will reject having their games forcibly interrupted
for advertising messages.     
	-Alex St. John

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