Mr. Shen and I went to PAX this past weekend, and we would like share our thoughts on the event.

Mr. Shen’s Take

I went to PAX Prime this weekend and have to admit that I had a wonderful time, not that I was planning otherwise.  The show floor was filled mainly with games from big publishers, such as the Microsofts, Nintendos and Sonys of the world, but also included a good number of smaller publisher/developers and another handful (that’s three hands!) of traditional table top companies.  I’d have to say the most fun I had on the digital front was playing with the Kinect, the motion sensing device for the 360 due to launch this fall.  While I don’t foresee it replacing my controller anytime soon, it was definitely a fun experience and one I know I will enjoy with friends.  I’m extremely excited for Flying Frog’s new board game based on their Last Night on Earth game, but utilizes martians and carnival folk.  I also picked up some current release board games and a few retro pieces of video game hardware (Game & Watch, anyone?).

While there didn’t seem like a right fit for Flash games at this type of conference, I can’t say that this will always be the case.  As these games become more sophisticated and destinations become more centralized, I can only imagine the top folks making a splash at these consumer facing conventions in the near future and I look forward to that time.

Colin’s Take

I also had a great time at PAX!  This was my first time, so I wasn’t really sure what to expect.  I was surprised with how much of the show really does revolve around playing/trying new games. The focus of the show seemed to be: the expo floor first (where all the demos are), playing table top games second, and a distant third were the sessions that they had sprinkled throughout each day.

My favorite part of the show were the nostalgic games from my youth that have been brought back to life: Mortal Kombat and NBA Jam!  I used to love those games in the arcades, and now I can play some pretty nicely improved/modernized versions.  The graphics for NBA Jam in particular look pretty amazing, and the 4-player version on the Wii is insane.

Other standouts for me were The Gig, Xbox Kinect, and the Disney game that’s coming soon (they even had animators there drawing sketches for Pax-goers!).

We also caught a really interesting session on community where a panel of community managers talked about the trials & tribulations of managing, moderating, and “serving” their communities, to which we could relate.  There was also some insightful information as the panel focused more on audience participation by asking what community members want out of their community and how they want to be communicated with.  Good stuff all around, and a great first PAX for me!

You can view a few more PAX photos on Mochi’s Flickr Account.

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Mochi Media President and COO Josh Larson gave a presentation at Casual Connect in Seattle in July 2010 on some of Mochi’s findings and best practices when implementing a virtual currency and how best to utilize in games.

Check out the video!

Slideshow Only

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The Mochi Media team had a great time in Seattle, and we hope those that were able to make it out enjoyed the conference as much as we did!  There was a lot going on this year, including great session topics, lots of action on the floor, parties in museums and aquariums, and even a sumo wrestling match.  I thought I would put together a quick recap of Casual Connect from my perspective to make some sense of all the madness!

Thoughts and Observations:

• There is a ton of interest in mobile (no surprise there) from the industry in general, particularly with Android and iPhone.  Everyone is trying to figure out their “play” in this ever-expanding and increasingly competitive space. Don’t forget we are running “Made for Mobile” Android contest, more details here!
• There was quite a buzzzz going on over the Mochi Game Developer Fund. We had a lot of 1 on 1 conversations with devs about their current and future projects.
• Virtual currencies as a way to monetize was a pretty hot topic, with sessions drawing large audiences. Mochi gave a presentation on this (see picture below), offering up some pretty nice data for those in attendance on some of our lessons learned in micro-transactions with MochiCoins.
• Here is a comment from Josh Larson (President and COO here at Mochi; Casual Connect veteran) on the progression and continued importance of the conference: ”Casual Connect used to be about the casual downloadables business, and you can see how it’s shifted to online, social and mobile.”
• We continue to see interest from publishers, both large and small, seeking casual flash games content for their users.  We are working hard to bring some of these great household names into the Mochi Publisher Network…stay tuned!

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GORDON
I’ve been creating flash games and using mochi services for 3 years. The variable nature of an indie flash game business revenue stream dictates that I would be unable to attend Casual Connect this year – free tickets would be much appreciated!

CADIN BATRACK
Hey-o!
I make games over at The Pencil Farm.
I’ve got some good stuff planned for MochiCoins and MochiSocial in my next game.
I’d love to come down and finally meet some of the Mochis face-to-face.

BRAD YOUNG
Would love to get a pass! I have been debating if I was going to attend… The pass would push me over the edge : )
I mainly run casual game affiliate sites but also offer free flash games from mochi as a supplement to those sites.

GARRET
Hi,
I’m just getting going with my indie casual games career. I spend a lot of time reading theory and actively searching out mp3s of speakers from events like these, and it would be amazing to go live. I feel like I haven’t done a very good job networking, and this would be a great opportunity to get some experience doing that. Free tickets to this event would be perfect. Plus, I already live in Seattle! :)

Congratulations, and see you guys at Casual Connect!

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Meet with Mochi

Mochi Media will be in Seattle for Casual Connect next month! We always have a blast at this event and are looking forward to it again. If you’re going to be there, please stop by our booth (we’ll on the 1st tier above the grand lobby) or send us a note (team [at] mochimedia.com) to set up a meeting!

Josh Larson from Mochi will also be speaking at the following session taking place on Thursday, July 22 at 11am:

Creating Successful Games: Lessons in Virtual Currency
This presentation covers winning strategies, game-play mechanics and tips for developers to successfully integrate virtual goods into their games based on analysis and observations from Mochi Media’s network of over 100 micro-transactions enabled games. With growing interest in this area, many developers are beginning to directly interact with their gamers through virtual goods. However, successful implementation of virtual goods requires careful balancing and consideration of gameplay mechanics and strategies. What is working in other games and how can you avoid the pitfalls that others have encountered? Josh Larson will present the lessons learned for developers from other’s experiences.

Want to go? Free tickets!

We have a handful of extra tickets to attend Casual Connect next month. If you’re interested in getting a FREE ticket to attend Casual Connect, please comment below with who you are and why you want to go. (Note: this only includes your ticket, not any travel costs.)

See you soon!

UPDATE: Winners have been announced

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MochiGames mobile features a growing list of over 30 games and be available upon the release of Google’s next version of Android (”FroYo”).

“The Flash game development community continually pushes the boundaries of what is possible with Flash,” said Ricky Liversidge, vice president, Product Marketing, Flash Platform at Adobe. “With the beta completion of Adobe Flash Player 10.1, sites like MochiGames are expanding the countless opportunities for developers to engage with consumers through mobile.”

Hope you get a chance to check out the video. Let us know what you think!

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Meet The Finalists

The Winners

Category: Best Flash Game Port

• Canabalt onto iPhone by Semi Secret Software: Flash version – iPhone version

Category: Best Indie Game

• The Company of Myself by 2DArray

Category: Best Game Art

• Machinarium by Amanita Design

Category: Best Multiplayer Game

• Zilch by Gaby Vanhegan

Category: Best Strategy Game

• Shadez 2: Battle For Earth by Sean Cooper

Category: Best Puzzle Game

• Rustyard by Nitrome

Category: Best Social Game

• Bejeweled Blitz by Popcap

Category: Best Shooter Game

• Captain Forever by Farbs

Category: Most Creative Game

• Time Fcuk by Edmund McMillen

Category: Best Kongregate Kreds Game

• Sacred Seasons by Emerald City Games

Category: People’s Choice Award

• Cube Colossus by Lucidrine

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Robertson Auditorium Presentations

• Opening Keynote – Jameson Hsu, CEO, Mochi Media
• Panel: 4 keys to a successful social game
• Panel: Money in Flash: Next Gen Monetization Games
• Adobe Tools and Services for Flash Games
• The Mochis Award Show
• Panel: Monetizing Your Game Outside of Sponsorship
• Panel: Everything About Sponsorship & Licensing
• The ups and downs of getting a premium flash game to success

Fisher Room Presentations

• Canabalt: Behind the Skyline
• From Bedroom to Medium Sized Office… The Nitrome Story
• PushButton Engine 101
• Flash Games Invade the 3rd Dimension! Papervision3D
• haXe for Flash Game Developers
• Boxhead (unreleased) Deconstruction

Photos

Hop on over to Flickr or watch the slide slow below.

Coverage

• 3D engine in 10 lines* – Seb Lee-Delisle’s 3D Particle code from FGS preso
• Monetizing Your Game Outside of Sponsorship – Great panel transcript and recap by Adrian Crook of FreeToPlay.Biz
• Haxe for Flash Development – GameDev.net
• Adobe Tools and Services for Flash Games – GameDev.net
• Pushbutton Engine 101 – Ben Garney – GameDev.net
• Panel – 4 Keys to a Successful Social Game that All Game Developers Should Know – GameDev.net
• Addicting News: Flash Gaming Summit (The First Three Hours) – AddictingGames.com blog
• Flash Gaming Summit 2010 – Untold Entertainment
• Flash Gaming Summit Report #1: The Longest Day – 8bitrocket
• Top Flash games honored at The Mochis 2010 – Gamezebo
• The 7 Elements Of Social Game Success – Social Times
• Flash Indie Game Interweb Mash-up: March 9, 2010: Flash Gaming Summit Edition – 8bitrocket
• So, How Was The Flash Gaming Summit? – ActiveDen
• Flash Gaming Summit: Retrospect – Jmtb02

Until next year, follow @fgsummit on Twitter and also subscribe for updates to the mailing list (right side-bar) on the Flash Gaming Summit website.

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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

The guys making the big bucks here are the ones aggregating lots of games and leveraging massive visitor traffic (like the big games portals), or else delivering a solution used by all developers and getting an aggregated margin that way (like the ad companies). Individual developers simply cannot get the high levels of traffic necessary for ad-funded solutions to bring in the (serious) cash.

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.

© Colm Larkin for MochiLand, 2009. | Permalink | 16 comments

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