[casual_games] Issues to think about in the casual game space

[James Gwertzman]

At PopCap Games, part of my job is to think about where the industry is
going and what sort of issues are coming up (or may come up) that affect
our business. In some cases these are issues that we can deal with by
ourselves, but in many cases they are issues that require cooperation
with other companies in the industry to solve.

 

The Casual Games Association (CGA) which put on the casual games
conference that is going on this week here in Amsterdam is one of
several forums for solving these sorts of issues, and yesterday morning
I had the opportunity to present at the conference a list of issues that
I think will affect our industry in the next year in the hopes of
encouraging companies to participate in these CGA "action groups" to
work together to resolve one or more of these issues.

 

Because not everyone on this alias could attend the conference, I
thought it might be interesting to circulate the list more broadly to
see what sort of discussion they generate. The original presentation was
a powerpoint, but I've copied & pasted the text into this mail to make
it easier to read. These are phrased as questions because I don't claim
to have answers; I just know these are questions that ultimately will
get answered.

 

1) How will advertising change casual games?

*         Everyone seems to agree we should put ads in games

-        Low conversion rates = lots of free game-play given away

-        Most web players never download trials

-        Advertising is ideal way to monetize free plays

*         Will sites refocus around ads instead of sales?

-        Portals often valued based on ad revenue & active users

-        Download games take users offline - they "go dark"

-        Keep them online, watching ads?

*         Ad revenue shares are becoming standard part of deals

-        What creative control will developers be asked to give up?

 

2) How valuable are brands in Casual Games?

*         Lots of types of brands:

-        Movie / TV brands (e.g., Law & Order, Family Feud)

-        Classic game brands (e.g., Scrabble, Monopoly)

-        Successful game brands (e.g., Bejeweled, Diner Dash)

-        Developer brands (e.g., iWin, GameHouse)

*         Which brands are important for casual games?

*         Better to license a successful brand or clone it?

*         Should developer / publisher brands be promoted?

-        Or invitation to lose customers to developer's web site?

 

3) Would MDF be a good thing in the market?

*         MDF = Market Development Funds

*         Promotion is key tool to drive traffic

-        "Free" promotion: top 10 lists

-        "Paid" promotion: house ads

*         MDF provide some transparency to promotions

*         Typically promotion paid for by tying MDF to % of revenue

-        Promotion is thus tied to success / popularity of game

*         Requires increased transparency in sales reporting

-        Revenue shares based on gross not net

-        Allows "apples-to-apples" site comparisons

*         But it's also one of the "evils" of traditional retail

*         Are we better off having 100% programmatic promotions?

 

4) Is the market ready for broader price points?

*         $19.95 often seems fixed in stone

*         Should we reconsider?

-        Is price elastic or inelastic?

*         Different platforms worth different prices?

-        Online: $19.95

-        Retail jewel case: $9.95

-        Xbox Live Arcade: $9.95

-        Mobile phone: $5.95

*         Isn't it really just all about ARPU (average revenue per
unit)?

-        Is anything that increases ARPU a good thing?

*         Volume pricing assumes all games are equal

-        Better off with a "points" system?

 

5) Is exclusivity worth fighting for?

*         How important is exclusivity?

-        Does it help or hurt sales?

-        Do customers shop around? Is there cannibalization?

-        Portals need to differentiate themselves

*         What types of exclusivity have the most impact?

-        Content exclusivity? (ie, special levels)

-        Launch exclusivity (ie, 4-week exclusive window)

 

6) Why isn't there more specialization?

*         Most companies ultimately specialize

*         Many of us trying to be all things to all people

-        Developers as retailers, retailers as publishers, etc

*         Source of most contractual friction

-        Portals worry about developers cannibalizing  sales

-        Developers worry about resellers developing clones

*         Would we generate more value by specializing?

-        Would non-competitive developers earn higher royalties?

-        Would non-developer portals get closer cooperation?

 

7) Are "clones" good for business?

*         Many great games inspired by other games

-        "We stand on shoulders of giants"

*         "Clones" typically do not attempt to innovate too much

-        Same game-play, different art/theme/music

-        Sometimes it's a fine line...

*         Are clones good for the market?

-        Giving customers more of what they want?

*         Or will a flood of look-alike games turn off customers?

-        Dilute the incentive to create original games?

 

8) How can community games go to market?

*         Games with "community" features could be very popular

-        But depend on having a large community to be successful

*         Portals are best way to promote casual games

-        But reluctant to risk "losing" customers to external
communities

*         Are communities valuable enough for us to solve this?

*         How can we solve it?

-        Pay "bounties" to portals from subscription revenue?

-        Limit interactions within the game?

-        Walled gardens?

 

9) Which industry standards are most needed?

*         In-game advertising standards

-        Interfaces for ad-serving technology

-        Standard advertising products that portals can sell

*         DRM interface standards

-        Limit "trial hopping"?

-        Support in-game upsell & in-game trailers

*         Sales data reporting standards

-        Standards for what information is shared

*         Community interface standards

-        Wiring up user databases...

*         Standard contract templates

-        Speed up contract negotiations?

*         Other?

 

10) Should we bundle software with games?

*         Free trials monetize poorly as well

-        $0.30 - $0.60 per player

*         Google will pay $1.80 per toolbar install

-        Other companies will pay even more

-        Toolbar is bundled along with game download

*         But will this turn off / scare users?

-        Risk of "spyware"

*         How should this revenue be shared?

 

---------------------------

James Gwertzman

Director of Business Development

PopCap Games, Inc.

+1-206-256-4210

 

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