Guest Post: How to be profitable with less than $20,000 in marketing per game

Editor’s note: The following article comes from Sridhar Muppidi, CEO of mobile social developer YesGnome, and offers advice to smaller developers on how their social/mobile titles can still be profitable even without massive marketing spends to drive them up the charts. YesGnome develops games for iOS and Android devices, specializing in city-builder, RPG and strategy titles. The company’s first success is the folklore-inspired city builder FairyTale City, and it recently developed Madagascar – Join the Circus. The studio’s titles are supported by the proprietary SocialKinesis back-end web service, allowing it to control the game experience dynamically in real time.

Even though we haven’t spent millions in marketing and our games haven’t hit the top charts more than briefly, YesGnome is still a profitable company.

One of our first games, FairyTale City, has hit the top charts only briefly, and has not been wildly popular, but we consider it a success for a simple reason: on a month to month basis, it makes significantly more money than we spend on it.

This does not mean that we are seeing dramatically high Lifetime value (LTV). In general, our games on iOS make around $1 on a 90-day average revenue per user. True, this is not even close to what some of the top mid-core developers are seeing, but when you do the math, these numbers still make us very profitable. This article is an attempt to demonstrate how to be a successful and profitable social games developer even with average revenue per daily active user in the range of $0.06 to $0.08. (more…)

The Xbox 360’s first free-to-play game Happy Wars hits XBLA

Developer Toylogic’s Happy Wars, which quietly hit Xbox 360’s digital store Xbox Live Arcade Oct. 12, is the home console’s first free-to-play game.

Happy Wars is multiplayer action game with a cartoon style in which two teams battle across variety of combat arenas. As many as 30 players can play the same match and choose from three character types — Warrior, Mage and Cleric, each with unique set of abilities.

As is the norm with many of the free-to-play games we cover here at Inside Social Games, Happy Wars monetizes by selling vanity items (outfits, skins and gear) and a special in-game currency (Happy Tickets) that can only be obtained by spending Microsoft Points, which cost real money.

At the moment it seems as if there is no way to spend real money to directly purchase items that will give users an advantage in the game, but players can spend Happy Tickets to enter raffles in order to have a chance at winning items with improved stats.

Inside Social Games usually doesn’t cover home console titles because those are traditionally closed platforms, but we will cover free-to-play games that employ the same monetization methods that are the standard on Facebook and other social, open platforms. With free-to-play games like DC Universe already up and running on Sony’s PlayStation 3 and more free-to-play titles like Ascend: New Gods coming to 360 in the future, we think releases like Happy Wars is part of an upcoming trend that is worth keeping an eye on.

You can look forward to our review of Happy Wars later in the week.

Parallel Kingdoms generating up to $0.50 a day per DAU, mostly on Android

Mobile developer PerBlue’s flagship location-based social game Parallel Kingdom is generating over $200,000 a month on mobile devices, even though it isn’t in the top 100 grossing games categories on either iOS or Android.

This figure comes to us from CEO Justin Beck’s GDC Online talk “Bootstrapping 101: How College Kids Built a Thriving Game Company in Under Three Years,” where he was detailed his company’s history since it was founded three years ago. The developer now grosses over $3 million a year. A good portion of this talk dealt with how the company’s early founders decided to stay in Madison, WI, due to the low cost of living and the pool of recruitable talent that comes out of the University of Wisconsin. Beck also explained how the company decided to raise its initial funding to launch Parallel Kingdom from family and friends, raising $72,000 in exchange for a small percentage of the company.  (more…)

MediaSpike seeks to make in-game product placement easier to implement

With social and mobile developers facing shrinking revenues and increasing user acquisition costs, MediaSpike is making it easier for studios to team up with advertisers in order to place branded content in their games.

MediaSpike is geared towards letting developers and advertisers work together to put product brands into social and mobile games with a minimal amount of fuss. The way the system works is developers can apply two-dimensional images with product advertisements to parts of their game. The company was founded by Blake Commagere, who’s had some extensive background in viral marketing.

Commagere’s background is in viral marketing, having consulted for several companies after leaving his position as a senior engineer at Plaxo. He also created a widget on MySpace (during its heyday) called Care Badges, which was used for non-profit fundraising and had approximately 50,000 users within a month of it going live. Due to the success of Care Badges, Commagere’s business was acquired by Sean Parker’s company that later became Causes, which Commagere then helped create a widget for.

After that, Commagere’s turned his attention to social gaming. In the early days of the Facebook games canvass, he created several “very light” games like Zombies and Vampires that he tells us pulled in upwards of 50 million users. It didn’t take long for him to realize virtual goods were the money maker for social games instead of banner ads, and advertisers were constantly approaching him about creating branded in-game content. These special branded virtual goods were unique because he would only receive complaints when a campaign ended and the goods were removed from a game. “It was the trifecta: advertisers loved it, users loved it and I loved it,” he tells us.

Commagere explains MediaSpike allows advertisers to use lightweight SDKs to target specific user groups while the company’s background servers do the lion’s share of the work. He provided us with a demonstration of how this works from an advertiser’s perspective, selecting the target audience’s demographics (which determines which partner game the content will appear in) and the length of the campaign. From there, the SDK lets a user select what type of item would sport a brand image, with arbitrary sizing being automatically supported; in this case we saw a Red Bull poster being placed in a demo game’s club setting, as well as players being given the option to order a Red Bull from the bar. The setup took less than a minute, the user had complete control over where advertisers could place it and the final result even supported click-throughs to an external site.

Commagere believes that even though the artwork is two-dimensional, there’s no limit to what kind of product placement can be utilized in a game and doesn’t see any reason why the content can’t be interacted with for gameplay. One example he provides is an special hamburger players can consume for extra health or other benefits.

MediaSpike’s platform is still in private beta and MediaSpike is still determining who the right first partners are for the program. “I have to be careful about what games receive what content,” Commagere notes. “I can’t put Red Bull into a Knights of the Round Table game.”

At the moment, MediaSpike is funded with the undisclosed amount of money raised in 2011 from investors like Raptor Captial and Venture51. The company is in a good position to succeed in the field of social and mobile game advertising right now since the platform is based around affordable use and easy implementation, no other group is dedicated to brand placement in games and — as Commagere tells us —  ”I’ve never seen an advertising solution that enhanced gameplay before.”

Developers who are interested in participating in MediaSpike’s private beta can go here for more info.

YoYo Games integrates monetization, analytics services into GameMaker: Studio

YoYo Games today announced that it has integrated a number of monetization and analytics services into its cross platform game development technology GameMaker: Studio.

AdColony, AdMob,  Google Analytics, Google Play Licensing, iAds, MoPub and SupersonicAds will be accessible in GameMaker: Studio through a free upgrade to version 1.1 of the popular tool. Due to be released in September, version 1.1. of GameMaker: Studio will give developers access these services directly from GameMaker: Studio, allowing users to incorporate ads and analytics, and export their games from a single dashboard.

YoYo Games first announced GameMaker: Studio back in May. The service’s drag-and-drop development environment allows developers to create games in a single code base and then export and run them natively on multiple formats like HTML5, Facebook, Android, Windows and OSX.

Additional services integrations are in the works and will be announced in the September update.

Facebook subscription payments come out of beta, now available for all app developers

Facebook today announced that subscription payments are now available to all developers with apps on the site.

The company originally announced the program in beta with Zynga, Playdom and Kixeye as partners in June. Now any developer can offer subscriptions for virtual goods, premium experiences or updated content within their apps for a monthly fee. See an example from Disney Playdom’s Gardens of Time below.

Developers can set different prices based on a user’s local currency and offer different levels of subscriptions. They can also offer free trial periods. This flexibility could help developers better monetize their apps. The model could also lead players to spend more in games and also makes Facebook a better option for developers of free-to-play browser-based massively multiplayer online role-playing games. It might also be a start to getting non-game developers to try the social network’s payment platform. For example, professional networking app BranchOut or news apps like Washington Post Social Reader might find uses for subscriptions. However, Facebook will take a 30 percent fee from these transactions.

Developers can combine subscriptions and in-app payments. For instance, a game might offer a monthly subscription for energy or supplies and sell vanity items through in-app purchases. Users can pay for subscriptions with a credit card or PayPal account, and they can cancel from their Facebook payment settings. Facebook recommends that developers provide a cancel option from within their apps as well.

Developers can learn more about implementing subscription payments here. Daily transaction data about subscriptions will be available for download through the payments reporting API introduced on Monday.

This post originally appeared on our sister site, Inside Facebook.

Betable launches real money games platform

Betable today revealed its real-money games platform, a private developer beta test and an undisclosed amount of seed funding.

Founder and CEO Christopher Griffin says social game developers’ biggest challenge with monetization lies with only a small percentage of players monetizing, meaning social titles usually require enormous player scale in order to be solvent. Creating a casino game or adding in gambling mechanics to a larger title, though, means developers could see much better monetization on social and mobile platforms. As we learned at April’s Global iGaming Summit and Expo in San Francisco, casino games on Facebook see higher engagement and average revenue per user than typical farm or simulation titles; online gambling sites see even greater revenues and conversion rates as high as approximately 70 to 80 percent.

Betable’s platform allows game developers to legally provide real-money gaming on titles on any platform or mobile device with a minimal amount of effort on the developer’s part.  A game using its system only displays the results of the real-money mechanics, without the developer having to deal with any of the backend gambling mechanics. After the front end of a game is completed, a developer would go into Betable’s engine, configure the gambling logic on their servers and the front end of the game will ping Betable’s servers. From here, Betable does all the work behind the scenes: it produces the results, moves the money around,  deals with fraud, security and support.

Betable’s servers sit in the United Kingdom. As such, the company’s real-money gaming falls under U.K. jurisdiction and the country’s laws allow them to operate anywhere in the world, with the exception of nations that explicitly forbid online gambling (like the United States, where gambling is only legal in limited form in Nevada and New Jersey). Although it’s expected that Unlawful Internet Gambling Enforcement Act of 2006 will be overturned and online gambling will be legalized in the country within the next few years, the lack of a definite date means the company is focused on international audiences.

Signing up for Betable takes about an hour from start to finish, as opposed to the multiple years of legal issues with international gambling laws and millions of dollars in licensing fees it would take for a developer operating independently. An analogy for gambling law is that it’s like drinking ages, which vary from country to country: While a 19-year-old wouldn’t be old enough to drink in the United States, they can do so in France because they’re old enough under that country’s jurisdiction.

Griffin knows what it’s like to deal with these frustrations, as he tells us it took over two years for Betable to get the necessary licenses for the platform to operate on a global scale, even with a savvy legal team working on the project. “If I could do it all over again, knew exactly what I was doing and did everything perfectly,” he says, “the process would take around 18 months.”

The platform can be used in any type of game, not just social/mobile gambling titles. We were shown two examples of how this could work via screenshot mockups: With Zynga Slots, players could simply click on a title screen button to play for real money, while another option would allow users to bet on the outcome of player-versus-player titles like Hero Academy.

Details about the funding are being kept quiet for competitive reasons but the more-than-25 investors are led by Greylock Discovery Fund, FF Angel LLC, True Ventures, Dave Morin and Yuri Milner. Griffin also says Betable will try to close a Series A round of funding by the end of 2012, but is keeping quiet on any further details. There are currently over 30 developers in Betable’s private alpha test, but the company is now accepting a limited number of other partners for the beta version. Interested developers can visit the Betable’s official site to apply.

5th Planet Games making $10M in revenue between Facebook, Kongregate

Facebook seems like the last platform on which a small, independent games developer would want to get started. Cost per acquisition is rising, competition is fierce and when someone does come up with a unique game concept, the clones aren’t far behind. It is where 5th Planet Games got started, however, and its story is proof that indies can make it on Facebook despite the odds. At three years old and with just 300,000 monthly active users, the developer is on track to make over $10 million in annual revenue this year.

Here’s what the odds on Facebook look like going into 2012. Zynga dominates the market, projecting up to $1.5 billion in annual bookings for 2012. As of its first quarter earnings report, Zynga makes 5 and a half cents average revenue per daily active user, with 65 million daily active users across social and mobile platforms. Farther down the developer leaderboard, the picture is less clear as private companies avoid disclosing revenue and ARPDAU. Mid-market developer Kixeye, however, recently told TechCrunch it’s expecting $100 million in 2012 revenue at something like 80 cents ARPDAU. Cost per acquisition is lower for Zynga than for Kixeye by virtue of its massive cross-promotion network; but we’ve heard the average CPA on Facebook is around one dollar.

This picture was very different when 5th Planet launched its first game, Dawn of the Dragons, on Facebook in 2009. For one thing, Facebook Credits were not mandated for game developers back then. The social network had also clamped down on virality, cutting off social games from posting stories in News Feed. To get its hardcore collectible card game off the ground with no funding to its name and no actual marketing budget, the 5th Planet had to get creative.

“The only choice we had was guerilla marketing,” CEO Rob Winkler tells us. “We set up our official forums and started talking to people, then we started talking to them on their walls, then in Facebook groups they had for other games and so on.  What began touching as many message boards as possible, which grew into over 1,000 posts and messages across hundreds of forums and walls to drive that initial traffic surge.”

Dawn of the Dragons peaked on Facebook at over 300,000 MAU and 54,000 DAU in August of 2010, as tracked by our AppData traffic monitoring service. Those are not big numbers compared to other games of the day, but they were enough to keep retention north of 15 percent (which indicates a reasonably healthy social game). A second game, Legacy of a Thousand Suns, launched later that year and managed to climb to over 500,000 MAU and 60,000 DAU at peak traffic — but retention slipped below 10 percent. Its third game, Clash of the Dragons, launched on Facebook in July of 2011 and didn’t even break 100,000 MAU. The platform had changed so much that 5th Planet was forced to change the way it did business.

“Facebook Credits and rising CPAs certainly changed the way we viewed the platform,” Chief Business Officer Braden Moulton says. “Our CPA [in 2011 was] in the $.50 range, so we were better than most. Today that same user would be well over $1.”

This led the developer to look at expanding to new platforms and games networks. For its first expansion, 5th Planet settled on Kongregate, a games portal purchased by brick-and-mortar video game retailer GameStop in 2010.

“The integration was very easy,” Moulton explains. “One of the main differences (and attractions) for working with Kongregate is that they handle promotion themselves. So while they take their cut of revenue, we aren’t burdened with driving users to our games. When we launched Clash of the Dragons there in December 2011, Kongregate poured a ton of traffic into our game — 300,000 installs in just 30 days. We had never seen numbers like that.”

At the 2012 Game Developer Conference in San Francisco, Kongregate broke some of those metrics out for the audience — highlight an average spend per paying user of $120 per month and 90 percent of revenue from players spending over $100. Moulton updated us to say that spend per paying user is now closer to $160. Even so, average revenue per monthly active user is still higher on Facebook than Kongregate for Dawn of the Dragons — a little over $3 compared to $2. Across Facebook, Kongregate and its destination site, 5th Planet sees around 70,000 daily active users and calculates ARPDAU at about 40 cents.

5th Planet Games is planning to debut its fourth game exclusively on Kongregate in June before expanding it to Facebook and European platforms. It also plans to release mobile versions of its game sometime this year. Beyond games, 5th Planet recently acquired collectible card game developer To Be Continued and will likely look for other indie studios to acquire as it expands. The developer is still proudly boostrapped, but Moulton says 5th Planet would explore funding if the right opportunity to accelerate growth came along.

As for other small studios looking to get onto Facebook, Moulton advises, “Make something completely unique or make a good slots game. Facebook can still be profitable, but it’s going to be tough.”

Japanese developers abandon kompu gacha mechanics in social games

Developers GREE, DeNA, Mixi, CyberAgent, Dwango and NHN Japan have announced they are removing a controversial monetization mechanic called “kompu gacha” from all their mobile-social games by the end of the month.

Kompu gacha (“complete gacha”) is akin to a virtual toy machine where players pay real world money to receive an in-game item at random. Players have the opportunity to win grand prizes, but only if they can acquire complete sets of specific items. Although an extremely lucrative income stream for Japanese developers, kompu gacha has drawn harsh critisism both for how close it is to real-world gambling and for the easy access children have to it. Over the weekend the mechanic was found to be in violation of Japanese law and a ban is widely anticipated.

Although the news will mainly affects Japanese developers, several western companies also make use of the mechanic in their Japanese mobile-social games. Zynga, for example includes kompu gacha in its Android role-playing game Montopia. For a more detailed explanation of kompu gacha and how its elimination will affect developers outside of Japan, read our feature investigation at our sister site Inside Mobile Apps.

Adobe allies with Unity for Flash Player 11.2 release, introduces premium APIs

Adobe announced Flash Player 11.2 and AIR 3.2 versions today along with a set of premium APIs for PC and mobile games. The software giant is also collaborating with Unity to create a unified workflow that can deliver Unity games via Flash.

The premium APIs are a combination of the GPU accelerated Stage3D APIs Adobe first announced with Flash Player 11 last fall and fast memory op codes. On mobile via Adobe AIR, developers can use the APIs for free — but on Flash Player 11, the software company takes a 9 percent cut of revenues after the first $50,000. These terms go into effect August 1, 2012, giving developers between now and then to determine if the APIs are suitable for their games. Adobe acknowledges that the majority of gaming content currently created in Flash probably won’t need to use the premium features. Developers do not have to pay royalties on each of the APIs if used alone or on software rendering of Stage3D with or without the op codes.

The Unity collaboration is born of Unity’s own efforts to tap into the Flash audience without players needing to download a plugin. In September of last year, Unity announced that it would support Flash in future versions — which is what prompted Adobe to reach out and work with the company to create a unified workflow that better serves developers. The Unity 3.5 Flash export functionality is currently in preview mode, but beyond that release, Adobe says it’s also working on integrating future Adobe gaming services into Unity. At some point, we may see Adobe partner with other engine creators on similar projects — in October last year, we saw Epic Games’ Unreal Engine running Unreal Tournament on Flash.

Both moves seem like solid ones for Adobe. By introducing APIs as a service, rather than giving them away with a one-time purchases of its authoring software, the company can take a slice of the virtual goods revenues social and mobile game developers enjoy. At the same time, Adobe is also building bridges to console video game developers, providing a way for non-Flash developers to tap into Flash’s broad reach on PCs in the social and casual games space. The Unity collaboration reinforces the approach, and Adobe tells us it’s working with a number of 3rd party frameworks to help developers to reach 2D or 3D content markets.

Interestingly, Adobe is pushing a monetization angle in Flash Player 11.2 and AIR 3.2. By creating a unified platform for desktop and mobile, it hopes to reduce fragmentation in those markets. Adobe also plans to offer analytics and revenue optimization features as part of its game services in the near future — not unlike what we see from Kontagent or Flurry.

While Unity isn’t that common in social games, it definitely has traction in mobile games. CEO and co-founder David Helgason told Inside Mobile Apps earlier this month that mobile developers account for over half of the company’s total business. On Facebook, the healthiest Unity game we’ve seen so far is CMUNE’s UberStrike, which requires a plugin.

You can find out more about the premium APIs and the Unity collaboration on Adobe’s Digital Media blog.

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