Free-to-play MMOGs are becoming increasingly common these days. By building revenues around sales of digital goods, developers can avoid making users pay for monthly subscriptions. If users become hooked on the free version, they are more likely to purchase virtual goods and services to monetize their experience.

But it’s hard to measure how successful this revenue model is based on how the industry culls data. Typical revenue reports deal primarily with average revenue per paying user (ARPPU). Rarely do these reports look at non-paying users, or average revenue per user (ARPU).

In a recent article in Gamasutra,  Paul Hyman talked with industry leaders such as Daniel James of Three Rings Design, Raph Koster of Metaplace, and Jeremy Liew of Lightspeed Venture Partners to hear their perspectives on this model. While all three brought some interesting insights, James’s take was based on specific numbers he shared.

According to James, his firm’s Puzzle Pirates game brings in roughly $50 a month per paying user. This equates to about $230,000 per month in microtransaction revenue. A subscription version of this game, by comparison, pulls in $70,000 per month. James estimates that about 10 percent of his user base has ever paid the company for their experience.

“The pivot number,” says James, “is not the $50 ARPPU, but the $1-2 ARPU [average revenue per user that Puzzle Pirates generates].” He says an ARPU of $3 would be considered great, while $0.20 would be cause for concern.

More costs are built into operating subscription-based games versus free-to-play. Free-to-play games are generally easier to manage than mainstream MMOs like Everquest or World of Warcraft.

Raph Koster of Metaplace pointed out that companies utilizing this model also don’t have to deal with the costs of box sales, distribution, or significant marketing. Free-to-play games spread through word-of-mouth and, more recently, the social graphs of various social networks. Since they are free, non-gamers are more likely try them as well.

Jeremy Liew of Lightspeed says free-to-play titles represent an opportunity for younger, smaller companies. According Liew, a lot of larger companies (EA for example) become locked into their everyday routines. Though traditional methods have been successful for them, it “can sometimes blind them to the things they need to do to become successful.”

Free-to-play games that monetize through virtual goods and are distributed across social platforms are increasingly common today, and we expect to see more in the coming years. So long as the creators can create an interesting, dynamic world, they will reach that $1-2 ARPU mark.

Read the full article here.

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Because MySpace only reports game installs and not monthly active users, it can be difficult to clearly see what is going on within the platform. Nevertheless, we do what we can with the information available to see how the different apps are doing. While we don’t usually see major changes within the top 25 titles, there is always something of merit to take away from these numbers.

In the past month we have seen some interesting drops in install numbers, as well as some curious gains, and we even saw the appearance of a new game from the folks over at Playdom.

The highlights:

• As per usual, Zynga and Playdom completely dominate the top games or game-like apps for MySpace. 20 out of the possible 25 belong to one of these two developers, with an even 50/50 split between the two.
• Mobsters still beats out Mafia Wars for the #1 spot despite the larger number of Mafia installs this month over last month (approximately 60,000 more than Mobsters).
• Poker Palace continues to do significantly better on MySpace than on Facebook (so far), with the #12 spot and over 3 million total users.
• Beyond Mobsters, Sorority Life continues to be the most popular of the Playdom RPG’ish games at #13, pulling in 213,736 more users than last month for a total of 2,659,417.
• Gang Wars had a negative monthly change of almost 7,000 while Dragon Wars gained 15,000. However, the monthly users for gang warfare still beats out the fantasy RPG by roughly 50,000 people.
• Lastly, the Playdom title Bloodlines makes an appearance at #24 with 1,334,059 installs. The newcomer beats out Zynga’s military RPG Special Forces at 1,330,808 and knocks other Zynga game, Pirates – Rule the Carribean!, off the list.

Ever since Playdom revealed itself, it has continued to strengthen its position on the MySpace Platform. However, Playdom is still struggling to gain a beachhead on Facebook, while Zynga has five of the top 25 games on Facebook.  It will be interesting to see how the company, who is hiring rapidly, focuses its efforts in the coming months.

Mobile payment company Zong announced yesterday that it has partnered with Outspark to bring its payment service to Outspark games. Outspark, an online multiplayer game publisher whose titles include Fiesta, Wind Slayer, and Project Powder , will now be able to provide its nearly 5 million users with a new means of purchasing the company’s virtual currency, SparkCash, with their mobile phones through Zong’s mobile billing service.

The partnership makes sense, as Outspark’s global audience is more challenging to monetize through traditional payment methods. Zong can process payments across 100+ carriers in 17 countries (the last of which was the US in 2008), largely through direct mobile carrier relationships. We expect to see increasing partnerships between publishers like Outspark and mobile payment companies in the year ahead.

“The partnership allows us to introduce the mobile billing concept to a large, growing and global audience of Outspark members,” says David Marcus, Founder and CEO of Zong.

It now appears that the RPGs that have become so popular on Facebook and MySpace are starting to make their way on to Twitter in full force.

It all began with Spymaster, which has Twitter users running about as international spies, and was shortly followed by organized crime title, 140 Mafia. However, now comes a third: SNODS.

SNODS, developed by itch, inc., actually feels like it is the most sophisticated of the three Twitter RPG apps. Like the others, it is hosted from an independent website and tied into players’ Twitter accounts, but the game play is more deeply integrated into the essence of the service.

The way the game works is as such: Players are agents with only one goal in mind – kidnap other users. SNODS’ users can kidnap any Twitter user at any time regardless as to whether or not they play the game (creating highly effective viral distribution). For each captive a player holds, they earn revenue per hour, and the more followers a captive user has, the more dollars they are worth. Here’s the deal though: Only one person can keep each user.

This is perhaps where the key element of the game comes most into play. Players must try to capture, recapture, and steal from each other in order to become stronger. However, one cannot merely do these things at will. Since the game goes directly through Twitter, active users will know when you attempt such tasks, and if they are fast enough, can steal those captives right back. This active element of the game, due to its connection to Twitter, is quite possibly the most time killing feature in any of these web-based social games.

Obviously, SNODS is more tightly knit with Twitter, and in addition to the direct involvement of non-players, users can Tweet a number of various actions they undertake in game. Moreover, they can actually control the game directly from Twitter.

SNODS also lets players give commands through Twitter. As an example, if a player that wants to attack another player, they can type #snods attack @username and it’s done. No need to use the website itself if you don’t want to. However, followers may complain of more spam in their stream if players do this a lot.

This is all merely just the tip of the iceberg though in terms of game play. The game includes a number of other strategic options for holding captives. Players can upgrade holding facilities, hire more guards, and complete missions and daily quizzes for greater prestige in their squad.

Though it isn’t perfect, SNODS is the best Twitter RPG to come out yet. The kidnapping element alone is fantastic (just imagine how many people are trying to capture Ashton Kutcher, for example), and makes excellent use of the Twitter graph. Best of all, however, the game has some reasonable strategy involved. Even if game commands could be a little easier to remember, this is merely picking nits. Overall, the game feels pretty solid.

We look forward to kidnapping you soon!

Each month, it seems like there are a few surprises in store on the Facebook gaming charts. Back at the start of June, we saw a number of new titles appear within the Top 25. One in particular, Farm Town, debuted at #4 with nearly 8 million monthly active users. It just goes to show that even today, with Facebook’s viral channel allocation limits in place, new games can still become popular once word starts to spread.

Of course, distribution has always been an issue for new companies with no marketing budget, but Farm Town shows that things can still grow without a lot of initial spend. This month, Zynga is hot on the heels of Farm Town with its own new farming release, FarmVille.

The highlights from this month’s Top 25 Facebook Games:

• FarmVille, the newest farming game from Zynga, is debuting all the way at #8 with just over 5 million users. Zynga has been heavily promoting FarmVille inside its other games, and goes to show just how strong its cross promotional muscle really is.
• In another surprise, MindJolt Games moved from #6 to #4 with a gain of over 4 million active users this month. It surpassed YoVille (who now holds #6) as well as newcomer Farm Town (who got bumped to #5).
• As expected (and predicted) the Sim-like Restaurant City continues its steady rise in the rankings. With a gain of over 1.6 million MAY, the latest Playfish title tallies in at 5,861,728. Will it overtake Pet Society in the future? The gap is closing.
• PopCap‘s Bejeweled Blitz jumped from #13 up to #11 despite its simplicity and Metrogames‘ Biotronic increased drastically in standing, moving from #21 to #15. The game now has 3,398,277 monthly actives.
• Metrogames’ other title, Waka-Waka, jumped three places with a gain of over 1 million to 3,109,541 players in the last month.
• Chain Rxn, on the other hand, seems like it is going to be a fad – it faded drastrically from #11 to #21.
• Two new titles make their debut as a new game from TheBroth, Inc. Barn Buddy appears at #18 with almost 3.2 million MAU, and Pillow Fight, by Shikha, shows up at #23 with about 2.6 million.

For the second month in a row, new games have appeared on the Top 25 charts. While the latter, Pillow Fight, seems like it could be short lived, it goes to show that new developers can be successful on the Facebook Platform. Out of all the latest numbers, we think the most interesting to watch will most likely be Bejeweled Blitz, Biotronic, and Restaurant City. Much more coming soon.

This year, E3 played host to a number of major announcements, many of which married mainstream games with social platforms, such as Facebook Connect coming to the Nintendo DSi.

Microsoft’s announcements were especially interesting. The company launched Project Natal, a camera-based motion system with both face and voice recognition. It also relaunched the New Xbox Experience, which could make the gaming system entirely more social.

Project Natal is perhaps the most impressive piece of console hardware we have seen in a long time. Unlike the Wii, its motion capabilities require no controller. However, Natal isn’t just about games. While it can bring Wii-like gaming to the Xbox, there is so much more to it.

Natal can work on Xbox Live, which Microsoft has tried hard to turn into a more authentic social community. While it hasn’t worked out as well as Microsoft had hoped, Project Natal brings PC-style interaction to the television.

Microsoft’s presentation displayed the use of facial and voice recognition. The people performing the demonstration simply said the name of the person they wished to speak with, and they were immediately connected to their video feed via Xbox Live. They could also share virtual clothing to try on. In the demo, the avatar (whose face looked similar to the user) could wear the goods — a dress in this case. Based on her movement, she could turn around and move.

Object scanning allows for even more sharing. Natal will (hopefully) enable users to scan real items and use them in the games. In the demo, they used a skateboard.

It all seems far-fetched, right? Microsoft says it isn’t.

In a recent interview with Gamasutra, Shane Kim, Microsoft’s corporate VP of strategy and business development for its interactive entertainment decision, said that while much of the above may be conceptual at the moment, a lot will be very real. “[It’s] a completely plausible scenario,” he says, referring to the trying on of clothing and similar activities.

Referencing the Milo demo, in which a person naturally interacts with and commands an avatar, Kim says the technology is very real and not just a concept, noting that “the power is actually in the software.” The Milo concept is very social. This character appeared frighteningly interactive as an avatar. It recognized users and their voices, and reacted accordingly. It was easily something out of science-fiction. Such a technology would take avatar systems used by social developers to an unfathomable level.

With all these new technologies, Microsoft is hoping to attract more than its usual core gamers. Kim hopes the New Xbox experience will give people the desire of having a Facebook experience on their television (a more likely scenario with the company’s announcement of a Facebook Connect integration). Beyond Natal, there are a few different ways this could go.

One element is the ability to watch movies and television. Currently working with SkyTV, Microsoft delivers live TV to the UK through Xbox Live. It’s a feature that may come to the US in the future.

Second, there is the adoption of free-to-play games. Testing the microtransaction waters, games like Joy Ride have appeared on the 360. In some cases, these games work on ad-supported models, but the use of virtual goods as a revenue source is becoming more common.

According to Kim, the possibility of similar, PC-oriented companies developing for the Xbox market is emerging. He believes that the access to the television could add significant social experience, but it will be up to the developers to determine if “that is worth the economic trade-off” since the Xbox isn’t a completely open system like the PC.

Regardless of whether Xbox Live breaks into these markets with free-to-play games, the New Xbox Experience will, this time, truly be new. Project Natal alone is going to change the face of gaming with some phenomenal technology, creating innumerable social possibilities.  While Kim says Natal won’t be around for 2009, it wouldn’t be surprising to see in within the next two years. The free-to-play games will likely start appearing much sooner.

[images via Gamasutra]

eRepublik — a hybrid title that is part strategy game, part MMO and part social network — currently claims around 126,000 regular players (and 350,000 registered accounts), coming from 200 countries and growing steadily. Players visited more than 3.7 million times in May.

Earlier this month, the game’s developer, eRepublik Labs, finalized a $2.77 million round of funding, led by Paris-based AGF Private Equity. The company previously received $1 million from AGF and several angel investors.

Guillaume Lautour, a partner at AGF, will be joining the company’s board. The company says it plans to invest a good portion of the financing into the eRepublik title. It also hopes to grow the company beyond its current level of 30 employees in order to add new games to the company’s portfolio.

Here’s how eRepublik works: Players log in and join a country. Employing social means, they grow that country by making economic choices, such as starting businesses. To become more powerful, counties may also declare war on one another. Since there aren’t any NPCs in this world, the elements of game play rest solely in the hands of the users — known as “citizens” —that run it. The entire game is rendered in 2D, enabling it appeal to many demographics.

While the specific details of eRepublik’s future plans remain unclear, the social strategy game itself has been repeatedly updated based on user input. While that may be slowing down the development cycle, the company hopes that involving users along the way will yield a much better game more quickly than it otherwise could.