Are you trying to make flash games for a living, but having a hard time making ends meet? Have you made an engaging & fun game, then spent months polishing and tweaking it to perfection before releasing it onto the world? Maybe you got it right and it’s a hit – it’s been played and enjoyed by literally millions of people! Well time to sit back and watch the pennies roll in, my friend, because that’s all you’re going to be getting. This may sound alarming, but it’s what most flash game developers have experienced using what I call the ‘Ad Model’ of monetisation.
All this could be yours!
The Ad Model
Over the last few years Flash gaming has enjoyed a massive rise in both the quality and quantity of games on the market. What caused this? The online ad market boomed. It suddenly became (marginally) profitable to build a flash game, throw in some easily-included ads and set it free on the internet. A few well-documented hits made a relatively large amount of money, yet were often made by a single developer working in his spare time over the course of a few months (as previously flash simply couldn’t fund an actual team of developers), and this caused a ‘gold rush’ effect of developers piling into the flash games space. Over time the ad model for flash games has matured into a market where developers can make money from various sources:
- In-Game Ads: in-game ads such as MochiAds, usually shown once while the game is loading
- Around-Game Ads: site ads like Google AdSense shown around the flash game either on the developer’s own site, or on a site like Kongregate or Newgrounds which offers revenue share to developers
- Sponsorship: this is where a portal pays the developer to ‘tag’ their game with the portal’s branding (and usually a ‘more games’ link), effectively paying for traffic delivered to the portal as the game is distributed around the internet. FlashGameLicense was set up to help developers find sponsors for their games, and it has proven to be very effective.
- Licensing: this is where a portal or site pays a developer for a one-off license to use their game; generally they pay a fixed fee to be able to use the game without the sponsor logo, in-game ads, links to the developer’s site, etc on their own site; multiple licenses can be sold alongside a sponsorship
Generally speaking you can, and should, use all these options at once as Ada Chen advised in a talk she gave at Casual Connect in 2008. This model is working for some developers, the ones who can efficiently make engaging, short flash games and keep churning them out, but it’s really only been a success for very few. Most flash game developers are still relying on other sources than ad-funded games to keep going full-time (for example, making games on contract for third parties).
Not Enough To Go Around
The problem with the ad model is that all the money is coming from one limited pool: advertising. You might find that sponsorship and licensing get you significantly more than in-game ads, but the money from those things comes from that same pool. Portals buy traffic from you (via sponsorship/licensing) with the money they earn from .. advertising! The amount of money in the advertising pool is limited, plus needs to be shared out amongst a whole load of middlemen before it trickles through to developers. No one has explained this better than Dan Cook in his recent Flash Love Letter, Part 1:
Image by Dan Cook, used with permission
A Better Model
Luckily there’s a better way to fund game development than scrounging for ad-pennies. It’s been proven in almost every form of consumer entertainment ever made, from theatre to music to cinema and yes, even games: ask the consumer of the entertainment to pay you for providing it. That’s it. Asking the players to fund game development takes away the dilution effect of trying to get ads to pay everyone’s cut, and directly rewards the developer regardless of the size of their ‘aggregated traffic-power’. It works for all those other kinds of entertainment, and it certainly works for the rest of the gaming industry.
And it can work for flash games too. Several developers have been successfully charging players for full versions of their free flash games, by integrating a payment processor such as PayPal. This method (often called a “demo”, write that down) is so proven that almost no console or PC game doesn’t use it. Others have tried splitting out the purchase into smaller bundles using a microtransaction/virtual currency provider, and are charging for decorative things like a fancy hat or small upgrades like level packs and new weapons instead of selling the whole game in one go. In fact recently launched providers such as MochiCoins, GamerSafe and Heyzap have made it easier than ever for flash developers to take payments from players. One advantage of the idea of using virtual items, temporary powerups, or other small purchases is that you aren’t putting a cap on how much your biggest fans are able to spend on your game. Generally speaking selling virtual items works best in a persistant-world / MMO style of game, where you can put all kinds of social and economic effects into play to really leverage the idea – just look at this breakdown.
Regardless of how you are charging players, or what they are paying for, the fact that you are charging at all means you are using what I call the ‘Premium Flash Game’ revenue model.
Premium Games Need To Be Frickin’ Sweet
One downside to charging money upfront is that you need to make players fall in love with your game before they will pull out the credit card, and that means spending a lot more time polishing the gameplay and expanding the content before release. The quality level of today’s (and yesterday’s!) flash games is definitely high enough to convince players to pay – developers just need to focus on expanding the experience; make “long form games” instead of focusing on quick, throw-away games. Again no one’s explained this better than Dan Cook, so make sure to read his Flash Love Letter, Part 2 – you can do it right now if you like, we’ll pause this part of the internet until you come back.
And Now For Some Examples
Lets have a look at some real-world examples of revenue made by flash developers using the Ad Model, and compare them to ones using the Premium Model. I’m going to use ‘Gross eCPM’, a term I just made up, as the baseline stat to compare these ad-based apples versus premium oranges. If you aren’t familiar with it, eCPM is an advertiser’s term and stands for effective cost-per-mille – or how much an advertiser has to pay out per 1,000 impressions of their ad on average. As the payee, you can think of it as how much revenue you made per thousand plays of your ad-enabled game. What I call Gross eCPM is calculated by taking the total amount of plays of a game, and dividing it by the total revenue made from them (whether it be from ads, sponsorship, microtransactions or full game purchases). This handily lets us compare two very different ways of monetising with a single comparative number.
First up let’s look at the numbers for some flash games using the traditional Ad Model to generate revenue:
Desktop Tower Defense (play)
One of the original ‘break out hits’ of modern free flash games, created by a single developer, and supported by ads inside & around the game.
Total Plays: 15 million in the first few months
Gross Revenue: ~$12,000 in that same time frame
Gross eCPM: ~$0.80
[source]
Mytheria (play)
A fairly typical successful flash game, though not a massive hit in terms of plays
Total Plays: 3.7 million plays to date
Gross Revenue: ~$8,200 to date
Gross eCPM: ~$2.22
[source: email interview]
Armor Wars (play)
Another game by the same developer as Mytheria (Diffusion Games), released afterwards to stronger interest from sponsors
Total Plays: 2.2 million plays to date
Gross Revenue: ~$9,300 to date
Gross eCPM: ~$4.23
[source: email interview]
Chronotron (play)
Another game created by a single developer, and supported largely by revenue share on ads on Kongregate.
Total Plays: 7 million at time of this article
Gross Revenue: ~$15,000 in that same time frame
Gross eCPM: ~$2.14
[source]
Now let’s have a look at some games using the Premium Model by selling full games:
Fantastic Contraption (play)
A free-to-play flash game, hosted on it’s own site plus some portals, with a premium unlock for $10 that let you make your own levels and play other people’s custom levels. Included solution-sharing via unique URL that helped it spread virally.
Total Plays: “over 3.5M unique users in the first 3 or so months”
Gross Revenue: “for every unique site visitor, he converts 0.5% to a paid version [at $10]” = ~$175,000
Gross eCPM: ~$50.00
[source]
Now Boarding (play)
A free-to-play flash game hosted on various portals that had an upsell to a downloadable for-sale version (at ~$15)
Total Plays: 4.2M – 6.2M plays (some portals made it impossible to track this, hence the range) over the last year
Gross Revenue: 10,500 sales so far x $15 = ~$155,000
Gross eCPM: ~$25.00-36.90, depending on above
[source: phone interview]
And some games using the Premium Model by using microtransactions:
Twin Shot (play)
A free-to-play flash game by Nitrome with various virtual currency unlocks, including a level pack and cheats
Total Plays: “over 10 million plays”
Gross Revenue: unspecified (but calculations from the eCPM they gave says it would be about $25,000 at the time of the Q&A)
Gross eCPM: ~$2.50 but up to around $5.00 in english speaking territories (based on 60% developer cut of Mochi Coins revenue alone)
[source]
SAS: Zombie Assault 2 (play)
A free-to-play flash game by Ninja Kiwi with various virtual currency unlocks
Total Plays: “about 5.7M plays and 700k plays from the expansion pack” = 6.4M plays
Gross Revenue: ~$22,400
Gross eCPM: ~$3.50 but up to over $11.00 in english speaking territories (based on 60% developer cut of Mochi Coin revenue alone)
[source]
Minions On Ice (play)
A free-to-play multiplayer flash game by the Casual Collective where you could pay to get bonuses and access to extra vehicles quicker than normal
Total Plays: n/a
Gross Revenue: n/a
Gross eCPM: an ARPU of $0.40 was mentioned by the developer, which means $0.40 revenue per unique player. My Gross eCPM counts total plays rather than unique plays, but if we ignore that we would get a Gross eCPM of $400; if we had the ‘total plays’ number this would be lower – but not all that much lower.
[source]
That’s a massive, orders-of-magnitude difference between the revenue rate for ad-funded flash games and premium flash games. And once you start charging the players instead of hoping for ad money, the sky’s the limit. Puzzle Pirates, a casual MMO run by Three Rings revealed last year that they make make an ARPU of ~$1.50 per player, per month – which would give a comparative Gross eCPM of ~$1,500. Yep.
Set Phasers To Premium
I hope this has convinced you, the flash game developer, to seriously consider moving away from the Ad Model and moving into Premium Flash Games. It’s the future – embrace it.
PS- Many thanks to all the flash developers who have shared their revenue numbers with the rest of the industry. We too will be doing this as we work on our first game.
Sorry to only point this but THE FINAL VIDEO IS HILARIOUS! HE SHOULD MAKE A DUO WITH ALEXANDER SHEN!
You stated Desktop Tower Defense as having only made $12,000 and based on the WSJ article that was written back in 2007, you might be correct @ that time. Since we are now living in 2009, saying DTD has made 12k IMO is an understatement. My guess is the game has made 50k+ and this doesn’t include any of the sequels or other spin offs they’ve done.
IMHO I think Fantastic Contraption numbers are off as well. Collin sold FC to inXile and they now publish it and share the revenue with Him. I doubt inXile is freely going to discuss numbers or conversation rates for one of their games.
Since I’m comparing the revenue per thousand plays and not the total gross revenue, it doesn’t matter that the WSJ article is from 2007. The rate is correct for that time-frame. The other examples are a bit more recent though as a lot has changed since 2007!
Unless the game is dead, and will never get any more plays, it is meaningless to calculate an eCPM based on gross income, including sponsorships and licenses.
It’s pointless to even mention such an eCPM. If you calculate an eCPM this way, the result will depend on after how long a period you chose to calculate it. You can make it almost as high as you want, by using a very short period, just after launch. The longer the period you use, the lower it will be. So it has no meaning.
The Gross eCPM is related to total revenue AND total number of plays. As time goes on both go up, but the rate (Gross eCPM) tends to stay the same.
That is not correct, since you included sponsorships in the gross income, which you used to calculate the gross eCPM.
The gross eCPM will go down with time, until it hits the actual current daily revenue.
Initial payments, such as sponsorships, should not be included in any calculation of eCPM.
If for example the income for a game is as follows:
2,000 dollars sponsorship
10,000 plays per day
2.50 dollars ad revenue per day (assuming $.25 eCPM from ads/mtx).
The gross eCPM is after:
one day: $200
two days: $100
one week: $29
one month: $6.9
half year: $1.36
one year: $0.80
two years: $0.52
ten years: $0.30
going towards the $.25 daily eCPM.
Space makes some really good points. Mytheria is a great game that I really enjoyed a lot, but if we’re talking about strict numbers here, its eCPM is only high because I sponsored it for too much money with consideration for its distribution.
Personally I believe the game deserved far better distribution than it got, but it’s that lower-than-expected distribution number, paired with my own overestimation of its distribution potential as a sponsor, that led to its inflated eCPM listed here.
Yes, the ‘Gross eCPM’ idea is totally unsuitable if your total plays number is too low. I think for flash games if you only consider it when you have total plays over say 1 million you avoid a lot of the problem.
I’d agree that Mytheria (and Armor Wars even more so) has an inflated Gross eCPM due to lower than expected plays, but that’s OK. This isn’t an exercise in ranking games by ‘Gross eCPM’, it’s an attempt to get some measure of relative earning power of the two different monetization approaches.
Even at one million, the value is still way off. For my example, a million plays are hit after a hundred days. As you see, even after a year, the value is not good. I only really see one way to do it, and that’s to subtract initial payments such as sponsorships.
If the eCPM isn’t correct, it’s no good at comparing their earning power.
Also, you just can’t compare values based on unique players with values based on total plays. I know you said “if we had the ‘total plays’ number this would be lower – but not all that much lower.”, but I think it will be a lot, really a lot, lower, since else it would have to mean that each unique player only played the game about once.
Boy, that picture of all those pennies looks really enticing…
Nice article. eCPM (and more useful ARPU) are notoriously difficult to compare across companies. Colm made a great attempt and the numbers are solid as long as you understand the assumptions that he made. Sponsorship in particular can easily account for 90% of your income for an ad-based game.
The main take away that I get from this is that asking people to pay for your game is a good thing.
The other interesting point is that your design for *how* you integrate payments has a giant impact on how much money you make. Taking a standard flash game and adding simple purchasable upgrades does better than ads, but does worse than if you build your game around either microtransaction purchase loops (longer games) or content gates (shorter games).
take care
Danc.
“Sponsorship in particular can easily account for 90% of your income for an ad-based game.”
In which case a eCPM calculation is completely useless!
The hole point of this article is to compare the earning power, as he calls it, of games that only use ads, and games that sell items.
To do this, you must not include other kind of income in the calculations, such as up front payments, like sponsorships, since it makes the values incomparable.
Don’t forget that sponsorship is ultimately ad-funded, it’s just paid to you upfront. Portals are essentially paying for traffic from your game, and earning it back with ads.
That’s irrelevant. This article is about what the developer makes, and the sponsorships included in these calculations are paid up front, regardless of how much the sponsor ends up making from it. The sponsorship amount is only based on how much a sponsor _thinks_ he can earn from it.
‘We mooooOonetized it!’ The video link along makes this post epic!
Our game Spore Cubes, one of the “grand daddies” of Flash games was offered in CD-ROM format back in 2001. We sold 800 copies at $6.99 each. After costs, we had a profit of over $4100.00. It’s nothing fantastic, but still a nice chunk of pocket money.