Last week I spoke at the Casual Connect conference about the emerging monetization opportunities in Flash games. For those of you who remember my talk last year on existing monetization opportunities, this talk is much more focused on the new ones that are just emerging. I’ve embedded the slides below, but wanted to post a quick high-level write-up on what I talked about as well as my slides.

The chart data is preliminary analysis from the Flash Games Market Survey – if you haven’t already, please take a minute to complete the survey (we’ll be sharing all of that back to the community).

Today’s Flash Games Market Relies on Ads

Question: How do you make money from Flash games?
Source: 2009 Flash Games Market Survey (preliminary data)

The Flash games ecosystem today is powered primarily by advertising. On a high level, there are three ways in which advertisers are getting money into developer’s pockets.

• Ads in Game: Advertisers are buying ads through networks like Mochi Ads, which shows the ads in the game as the user is playing it. Developers receive a share of the ad revenue generated each time a user views or clicks on an ad seen in their game, regardless of where it’s played.
• Ads on Site: Advertisers are buying display ads through ad networks like Google, which are then shown on the site when the game is being played. In this scenario, the site owners try to drive and keep as many players on their site as possible so they can make ad income. These site owners often acquire traffic for their site through Sponsorship of developer games so that gamers click back to their site when games are played on other sites. To keep users on their site, site owners commonly do Licensing deals for game versions free of other sponsorships to remove links that siphon gamers out to other sites.
• Custom Development: Advertisers commission branded “advergames” from the developer, so their assets and brand are integrated directly into the game. For examples of this, check out the Three Melons as an example of advergames

An Emerging Trend Toward Direct User Monetization

Many developers are looking toward new revenue models beyond just advertising. While ads are great, it doesn’t fully capture the opportunity of addicted users who love your content and come back repeatedly. The developers who build hit games that capture this following have traditionally taken advantage of their fan base by creating their own game portal to play these games, a community to keep users coming back, and sequels and episodic content to get them to play again and again.

Question: What gaming platforms do you develop on? Answer choices for each platform include (“Yes, I currently develop on this platform”, “No, and do not plan to in next year”, “No, but plan to in next year”)
Source: 2009 Flash Games Market Survey (preliminary data)

Increasingly, Flash game developers are interested in platforms like iPhone which enable them to directly transact with consumers. iPhone ports are gaining in popularity, particularly because the simpler graphics and game mechanics from Flash games translate well into mobile. In addition to this, many Flash game developers are finding that their addictive well-distributed Flash games are helping them market their iPhone games and get them up the app store charts.

Developer Barriers to Adoption for Micro-transactions

Along with mobile, micro-transactions are a natural extension of the desire to monetize users directly. Allowing users to purchase and transact is not a new idea. Casual game developers from the downloadable space have already created a $2 billion industry from selling their games directly to consumers. There have been a several barriers that have stood in the way. Here at Mochi Media, we launched Mochi Coins last week to help create solutions to address those issues.

• Small transaction sizes – Developers offering small transaction sizes often lose out after taking out transaction fees. For reference, see Dan Hoelck’s transactions experiment.

Mochi Coins Solution: Universal player log-in and wallet across games, so users fund once with a larger amount of money and can spend across the entire network of games.

• Monetizing international gamers – Integrating with one or two transaction providers is not particularly difficult, but integration across multiple payment methods to make transactions possible for players in international markets is difficult and time-consuming.

Mochi Coins Solution: We do the work of integrating and optimizing your results with international payment providers. This includes looking at in-store retail cards, mobile payments and other payment providers.

• Game state persistence and maintaining servers – Building servers and the back-end in order to store user information and save the game state is complicated and requires a lot of developer resources.

Mochi Coins Solution: We provide user storage to save game state.

• Aligning site publisher incentives – Once micro-transactions are in place, developers need to work hard in order to distribute games across other sites.

Mochi Coins Solution: We plan to launch an affiliate program to reward publishers for transactions which take place on their site.

• Updating distributed versions with new upgrades – One of the key success factors for successfully adding micro-transactions to a game is the ability to make updates, test changes, and optimize user conversion in their games. Flash games have long been short of this functionality.

Mochi Coins Solution: Using our Mochi Live Updates system paired with the analytics built into Mochi Coins, we allow developers to dynamically make changes and test varying price points in their games.

SAS Zombie Assault 2, a Micro-transactions Case Study

SAS Zombie Assault 2 is one of the 14 premium Flash games which we launched on June 15th. In essence, it’s a zombie shooter where you barricade and defend yourself against encroaching waves of soulless, brain-eating zombies. The full game is playable without making any purchases or transactions. The player can upgrade their rank, earn new skills and win new weapons as they advance in the game.



Ninja Kiwi does have a clever upsell in their item shop when you’re checking your rank and earned weapons, by introducing a new Premium tab which sells various upgrades and items. This makes the ability to transact very discoverable in the game, without being an obnoxious upsell.

Since their launch in mid-June, the early results have been very positive. SAS Zombie Assault 2 was originally launched on Ninja Kiwi’s own website, and in that period of time they were earning $7-10 revenue per thousand (RPM) game plays. After they launched the game to distribution, they continued to hold a rate of $5 RPM. Filtering out international traffic, their US RPM balloons to the low teens. Another encouraging sign is that enabling micro-transactions in their game has done little to offset their distribution, with daily game impressions rivaling many of the stats from their hit Bloons series. They’ve logged over 40,000 transactions (as of 2 weeks ago, the number has increased beyond this point).

Their single game has far exceeded their initial expectations. Ninja Kiwi has 47 games in their catalog generating ad revenues from Mochi Ads. This single, well-designed game has been earning more for them on a daily basis than all the ad revenue generated from their catalog. I’d encourage you to think of micro-transactions as a great supplement to ad-supported game play; ads can monetize the 90% of consumers who aren’t willing to transact, but for that 10% that are micro-transactions enables developers to offer them a deeper interaction with the game.

Parting Thoughts

The casual games marketplace is changing all the time. For the developers out there, I’ll leave you with a quick sum-up of my parting thoughts:

• Use multiple monetization methods, and focus on un-capped, recurring revenues. Micro-transactions, ads, building your own website — all of these things are additive ways for you to make money and become a successful game developer. The one thing I would urge you to do is think about how you can make all the games in your portfolio which continues to generate you revenue each month, instead of taking a one-time deal.
• If you build a hit game, take advantage of your fan base. Build sequels, upgrades, and extensions of that content.
• Non-Flash developers, pay attention to Flash games. Games are crossing platforms and Flash is a great opportunity to drive deeper distribution.
• As games shift to direct user monetization, take note that creating high-quality, engaging games is really starting to matter more and more. Direct user monetization is providing greater revenue opportunities for developers, and quality and fun factor are important to convince them to buy.

Lastly, don’t forget to hustle! So much change is afoot in this exciting industry, so seize opportunities as they emerge. Whew, thanks for reading all the way down this article. As we continue to gather more data and measure the progress of Mochi Coins, I’ll continue to post with updates, changes and relevant stats. I look forward to hearing your thoughts in the comments.