Chapter 6. Business Models

Welcome to a new and constantly changing world. No, I’m not talking about the latest persistent world. I’m talking about the world of game monetization—in other words, how we make money from games. You may still be thinking that we make all our money from retail sales, selling box products in brick-and-mortar stores such as GameStop and Virgin Megastore. You may also be aware that online retail outlets, such as Amazon, EBGames, and others are increasing in market share. But change is coming, and you can’t rely on the boxes and jewel cases forever. It’s time to prepare for the future.

In the long term, digital distribution is going to dominate the game sales landscape. Good examples are the online stores of Microsoft, Nintendo, and Sony. In addition, there are the direct-to-consumer services on PCs, such as Valve Software’s SteamPowered.com and IGN’s Direct2Drive. These services offer direct downloads, or unlocking codes for games already on their services. Another good example is the application store on the iPhone/iPod Touch from Apple, showing not only how to do it, but how to make it profitable.

Digital distribution is just the beginning, however. What interests me the most is how many different ways we can monetize our products. Personally, I’m trying to learn as much as I can about free-to-play games because by massively increasing the number of players you get (removing the up-front cost), there are many ways to make money later, such as through microtransactions, premium packages, and even from outside sources, such as advertisers and sponsors.

Before addressing different monetization methods, however, let’s admit that not all strategies will be popular with all players. Change always faces resistance, so it’s not surprising that some players will complain about new ways to make money, but in the end they will play and grow accustomed to the changes—if they work. Some will fall by the wayside as we discover, perhaps, that they don’t actually work, but change is happening already, and Sony’s decision to incorporate microtransactions into their games is just another indicator that game companies are aware of the new options available to them and anxious to take advantage of those that work.

While writing this, I’m just waiting for Apple and Facebook to announce their microtransaction strategies, so developers that make games or widgets can assess “pay as you go” charges to the users of the applications. I don’t know if Apple and Facebook will do this; I just think they’d be crazy not to!

Giving it some thought, it’s not too hard to come up with a few ways to monetize games, other than the usual box products and digital distribution methods most common today. This chapter covers some of them:

In-Game Advertising

There are essentially two kinds of in-game advertising: banner ads (of various shapes and sizes) and product placement. Banner ads can be placed strategically in some games, although this works best in free-to-play games, where the players understand that the publisher needs to make money somehow, and it’s only a minor distraction. At Acclaim Games, we did an experiment in our 2Moons game where we included banner ads but gave players the option to turn them off. Keeping the ads on gave them a small experience boost, however, and the vast majority of players (96 percent) left the ad banners on.

Hollywood has used product placement for years. Every time you see a Coke or a Macintosh laptop in a movie, someone’s making a little extra dough. Why not in games? Why not, indeed, as it’s already happening (for instance, certain clothing, sunglasses, or vehicles you’ll see in Gaia Online). You can go even further with this idea by putting paid advertising directly into your story. One clear example occurred in the Lonelygirl15 series on YouTube, in which it just so happened that her “scientist friend” worked for Neutrogena. Nice plug. There’s no doubt that the money is flowing for in-game advertising, as there are several in-game advertising companies doing good business already, such as Double Fusion, IGA Worldwide, and Massive. These three field leaders are already supplying the advertising inventory images needed to be streamed into the game world.

Around-Game Advertising

Not all game-related advertising has to fit inside the game. In some cases, it can appear around the game—making money from the banner and skyscraper ads around the gameplay window. Around-game advertising is already common on Flash game aggregator sites, such as Kongregate.com, Armor Games, and Crazy Monkey Games, and many others use services such as Google, Commission Junction, or myriad other banner providers. Revenue from banner-type ads is earned using different methods:

  • CPM (cost per thousand views)

  • CPC (cost per click)

  • CPA (cost per acquisition of a player—who actually plays the game)

  • CPP (cost per “paying” player who buys something; people generally only want to pay a few cents for clicks but will pay many dollars to gain paying players)

So don’t forget the fringes. These ads don’t interfere with the game itself, but they do offer advertisers a way to be seen, players a way to find new products and services, and game publishers new ways to take in some cash.

Finder’s Fee from First Dollar

You need people to come and play your game, but if you can’t afford CPM (cost per thousand views) advertising (where you essentially bet on the effectiveness of someone else’s website), don’t despair! Even with no money to pay up front, you can offer video game websites either a percentage of net revenue or a “finder’s fee from first dollar.” As money comes in from a player who’s been directed to you from another site, that finder takes all the money until you hit the agreed fee (say $2.00 per player). In reality the finder takes all the risk and will be more aggressive in advertising your property than any campaign you could have paid for at CPM rates. If you balance the numbers, you can get a lot of websites working for you and sending you traffic this way. To make money from this, send your players to non-competitor games for this kind of arrangement.

Advert-Games/Advergaming/Re-Dressed Games

The idea of a game being one big advertisement is not particularly new. One of the early examples I made was the game Cool Spot, created in the 1990s as an advergame for 7-UP. Lots of people bought and played it without being overly concerned by its advertising message. The reason Cool Spot was successful as an advergame was because it was successful as a game, and it would have been even if the red 7-UP spot had simply been a red disk with no affiliation. It did get some added publicity because of its product ties, but making a playable game certainly enhances the idea of promoting a product through a game. More recently, the U.S. Army created America’s Army as a recruiting tool, but once again, the game is actually very well done, so it stands on its own merits.

Not every advergame is going to be particularly original or good, but in some cases, such as the Flash games you find on company websites these days, the quality or originality doesn’t matter. If it’s just another clone of Bejeweled, such as Bewitched, made for the Sony Pictures feature of the same name (get.games.yahoo.com/proddesc?gamekey=bewitched) by the Blitz Agency, it’s still fun to play and gets its message across for a relatively affordable price. Advergames don’t appear only on PCs, either, as evidenced by the Burger King games on the Xbox 360. Although the advertiser helps fund the game, your reputation as a developer, publisher, or designer determines how much cash you can ask for.

Finally, it’s not always necessary to create a new game. If you have something that can be repurposed for an advertiser, it’s often very quick and easy to modify some assets and provide a specific custom version of an existing game to serve an advertiser’s purpose and leverage your product catalog, sort of like those companies that put your logo on a pen or a fridge magnet. Okay, maybe it’s not quite that simple, but you get the point.

Try before You Buy

It’s called trialware, shareware, demoware, or timedware, and the point of all these “wares” is to let you play a crippled, truncated, or a time-restricted version of a game free of charge—the goal being to up-sell the full version. Various try-before-you-buy strategies have their challenges. How much of the game do you offer? Too much, and you may kill the future sale of the full version. Too little or the wrong content, and you may give the prospective purchaser the wrong impression of the product and once again lose a sale. Xbox Live seems to have hit on a pretty good formula: Offer one complete level and end with a cliffhanger. For instance, just as you are getting really into it, you find out there’s a major encounter straight ahead, and then you’re told, “Buy the full version to continue!” Of course, if you’ve gotten hooked, you’re going to want to “turn the next page,” so to speak.

Episodic Entertainment/Expansion Packs

People have been talking about episodic games for years, but only in the past few years has the concept become a viable reality. In part, that’s because persistent-world games, such as EverQuest, have established the “expansion pack” concept, which keeps the game world expanding and growing and not only sells more box products or per-pay downloads, but also extends subscriptions and generates new ones. A few companies, such as Telltale Games, have adopted episodic games as their primary model, initially with their Bone series, followed up by the Sam & Max and Strong Bad series of episodic games. While episodic content began with literature and was adopted quickly in movie theaters (with serials), then moved on to radio and TV, it has taken some time to become popular in the game industry. However, some companies are finding that “chapter-based” episodic content, in the form of true episodes of an ongoing tale or as expansion packs that add content and gameplay without remaking the entire game, are viable ways to increase cash flow, reuse engine technology, and leverage properties.

Buy the Win

This is the trick used on auction sites such as www.swoopo.com. What happens is that you sell items for a fraction of their value to the winner of an auction process, but (here’s the important part) players must pay to bid for the item. So, let’s say the purchase price starts at 1 cent. Imagine there’s a timer counting down 10 seconds, then you enter your bid, and that bid costs you 25 cents. The purchase price of the item goes up another cent, and because you entered a bid, the clock adds on 15 seconds (or some amount), and the process repeats. Then someone else bids, the clock goes up, the bid goes up 1 cent, they pay 25 cents... and this keeps happening until the time runs out because there are no new bids, and someone is the last bidder. This way you can have 100 people paying you for the same item or experience that only one person will win. If you take the time to do the math, you’ll see that you can make a ton of money doing this, and if the winner just joined the auction, maybe they just bought the item for 25 cents (for the bid) plus the final price (commonly a fraction of the real price). Say the item was normally $10. You (the company) ended up selling it for $3. However, to get to $3 one cent at a time is 300 bids. So you made 300 × 0.25 = $75 for the item. It might sound crazy, but that’s how Swoopo works.

Insurance

Think of games like regular items sold in stores. What do stores do to add incremental revenue? One thing they do is offer you on-the-spot warranties. “Sir, what if this hard drive was to fail? We’d replace it free of charge if you pay now.” How might this be used in games? As one example, perhaps many online games could offer anti-hacking insurance (so you never lose virtual items from hacking). I’ve never seen this, but the idea of this section is to think about all the possible monetization methods. So please don’t shoot the messenger (if you hate insurance salespeople). You would also need to be careful with the word “insurance,” because if you enter the domain of “real” insurance, that space is highly regulated. So for this one, legal advice is strongly recommended.

Financing

Again, just an idea I’ve never seen, but in plenty of sales situations, if you can’t afford what you want (and you are impatient), there’s often some kind of financing plan, where you end up paying interest on the deferred payments. In the game world, this could be a lot less complex, as there could just be an extra cost if the buyer pays later. Fraud will be a major issue (but if the items the person buys are virtual, the loss isn’t as significant as in the real world), and it would be prudent to seek legal advice on this one, too. But for now, it’s just food for thought. What other retail “tricks” are used to get people to pay more than they were planning to?

Velvet Rope or Member’s Club

There is always a free area, but there’s also a “members only” or VIP level of access that offers special privileges, access to special areas on your site or in your games, or even special cosmetic items, price discounts, and so on. VIPs may get access to certain products or updates before non-VIPs. The idea is to offer special perks to your “members,” who have paid a premium. In a variant of this concept, you may even empower your VIP members with special in-game abilities. For instance, a VIP player might have access to special areas of the game and could “invite” non-VIPs, but for a fee or for a limited time.

Subscription

Of course, the subscription model is the original online gaming model, first established with Ultima Online and then followed by most of the major MMOs, up through World of Warcraft and, more recently, Age of Conan and Warhammer Online. When you sign up to play these games, you also agree to pay a monthly charge, usually by credit card or automatic debit payment. You may also be able to purchase game cards in retail outlets or other places that have specific codes to unlock the service for a designated time period. Subscription games are often coupled with retail box products, which offer additional resources, such as maps, CDs or DVDs with all the installation files, a printed manual, and sometimes collectible items or special promotions. Since most subscription models allow players to set up an account that pays automatically from a credit card, companies often get paid by people who have stopped playing but didn’t cancel their subscription. From a company’s point of view, it’s not a bad deal to get paid by people who aren’t even playing and using bandwidth or requiring support. Some companies that maintain multiple online games offer special subscriptions that allow players to play some or all of their games, such as with Sony Online Entertainment’s Station Pass.

Support Tiers

This is where you offer different levels of support and charge. Basic support is free, but “front of the line” support costs money. It’s a bit like my last trip to Universal Studios. They offer “front of the line” passes if you pay a little more. There’s a certain percentage of people in society who are incredibly impatient (like me), and they will fork over the cash just to save time. So money can actually be made from your customer support. (Again, don’t be mad at me if you hate customer support systems; I’m just talking about monetization methods here!)

Become a “Brand Member”

Just so this doesn’t cause confusion, this doesn’t mean VIP service, nor does it mean subscribing or anything like that. This is where you join a membership in the publishing company, not any specific game. It’s like buying an “EA Sports Backstage Pass”—now you are just super-special to EA, as you’ve paid money to them that you really didn’t need to. So they will get creative to find ways to say thanks! Again, a certain percentage of people just don’t want to miss out on anything, and if they were not a member, they would actually be missing out on cool stuff.

What could you offer to people who pay just to be in the “inner circle” with your brand? American Express charges $5,000 to get their Black Card, and once you have it, you know you’re getting 100 percent of all the credit card services they offer. The mistake American Express makes is that they have made a VIP program, not a brand program. So the people who would pay even more for “Brand Member” status would want to know that for everything American Express does today and in the future, they will be invited to without question. For example, say they make a new “super-duper diamond card.” This person wants to be in the front of the line to get one. Say they sponsor a Formula One race; this person wants to be invited as a guest of American Express. The TED.com conference has a special $10,000 contribution you can make, which lets you get into the room before everyone else to get a killer seat. For a certain percentage of people, that’s totally worth it, but again, that’s a VIP feature. “For the opening night of the conference, want to join us for dinner tonight with the founders of Google?”—that’s the invite everyone else doesn’t get, so now the brand loyalty kicks in. You get the point. The Brand Members become people you need to think about when anything special is happening.

In-Game Stores and Microtransactions

Recently, especially in free-to-play games and console titles, the in-game store has become more and more common. These virtual stores allow players to make various kinds of purchases (using real money), generally for small, impulse-driven purchases. Items in in-game stores are often vanity items (such as cool ornamental gear), extra levels, time savers, special items for better communication options, special buffs and boosts (such as an item that temporarily boosts the amount of experience you gain), or maybe song packs for music-based games. In games that offer optional advertising, the in-game store may offer a special 30-day item for turning off advertising. Some sort of special points or value system (earned in the game or paid for with real money) is generally the currency used for making such microtransactions.

Selling Consumables

A specific category of microtransactions is the sales of consumable items, such as potions and ammunition, a virtual birthday card for another player, or maybe even the virtual gas you need to drive a car. Just like in the real world, it’s okay to offer price levels too, so if you want the “high-octane sports-car gas,” it costs more. If you want to really focus on the fact your game is free, you can also make the consumable items available in the game through ordinary gameplay (earned by playing). In addition, you might offer some special variants, such as auto-potions that automatically refresh health or energy when it drops below a certain level, special tracer or armor-piercing bullets, or maybe magic paint that you can put on armor that strengthens it for some time. These items might be rare in the game, but, though very useful, they are not required to succeed. Purchasing them might be a quicker/easier way to get them, and the advantage they confer on the player may be worth that small payment. They aren’t the most valuable of virtual items, so they don’t necessarily upset players in free-to-play games. Of course, to find out if this strategy works, you should check with your players, as different game communities will respond differently to certain monetization strategies. The good news (for the developer that sells consumables) is that because players keep re-buying the same item(s), it stops the developer from having to make a ton of different items to keep the players happy. That said, the basic caveat is that whatever you sell in-game (as a consumable) should never be anything the player has to buy to succeed. There must always be another way to get it for free.

Skill-Based Progressive Jackpots

Players buy a ticket to enter a virtual tournament, which generates a virtual jackpot, and the winner is determined by the criteria of the tournament. Of course, the developer keeps a percentage of the jackpot. For this to be legal (according to current international gambling laws), the tournament must be skill based. Two skill-based prize sites are www.king.com and www.prizee.com, although you can also create a skill-based progressive jackpot based around your own game property, either as a mini-game or an additional web game for a larger game property, or as a game in itself. The warning here is that when there are real prizes to be won, you can expect people to try to cheat, so you will need your cheat detection strategy in place when you launch. In my experience (I made a game called Prize Potato for Facebook), I’ve seen people cheat to win, even when it’s easier to just play the game! Meaning, they’ll work harder to cheat because they enjoy knowing they beat the system. So don’t assume that because cheating is tough, people won’t bother. We stopped the cheating, but it’s important that you know you will have to!

Player-to-Player Wagering and Item Sales/Trades

Again, players can engage in optional wagering before certain events, such as duels or guild battles, or even in certain types of missions and quests. The winner gets the spoils, but the “house” (the game publisher) gets a cut. This option is subject to the same conditions as the skill-based progressive jackpots model in that it also must be skill based. In place of money (or the game equivalent), players may wager with virtual items, as well as buy/sell or trade them. Although the publisher has made their money on these items already, there are ways to make the items ultimately obsolete, so that they no longer occupy a place in the economy, freeing the way for new purchases. This can be accomplished by making the item untradeable or by having it lose its qualities over time, such as a sword that started out as a +3 and gradually becomes an ordinary sword with no enhancements, perhaps losing value as it is used or with each trade. To prevent other items from being used as part of the in-game economy, developers may cause them to be “bound” to the user once they are equipped, preventing them from being sold to any other player.

Pay Players to Meet a Challenge

Some games will now offer you money to accomplish some specific challenge. One game once offered a million dollars to the first person who could verify that they had completed the game. I also saw an offer in a Mafia-style game (www.mafiamob.com) that offered $1,000 (in real money) if players could “Whack a Don” in the game. Of course, you make the task very difficult, but you also build in other revenue sources, such as incremental payments they will make for items, extra turns, or whatever. It may seem as if the game publishers are paying you to play, but in reality, they are extracting money from you in different ways, possibly receiving advertising revenues and collecting on other sources. The game is making enough money to cover those payments, and probably more. Also, the more players the game gets, the bigger the reward can be, which then attracts more hopefuls. With just the right balance, this can be a very successful monetization method.

Charityware

This is when you run your company as a charity or nonprofit. For example, you can form a real video game publishing or development company, but clearly the profits go to charities. Working with major charities can, of course, provide a lot of free and valuable PR. Is this a real business plan? Well, yes. The staff gets paid salaries and bonuses, and down the road (if the business is successful), the owner can sell the nonprofit entity to someone else who wants to merge or take it over.

Sponsored Games/Donationware

Sponsored games literally are games that have been paid for by some entity other than a for-profit game company or investor. Think of something like PBS or National Public Radio. It can literally come down to $5 from here, $5 from there. In practice, this sort of thing is generally applied to what we call “serious games,” which are generally games created to teach or to have a specific effect on players and society. Big sources of funding might include individual philanthropists, state or government grants, and so on. If you do get a sponsored game, make sure to include your profit in that development bid!

Pay per Play/Pay as You Go/Pay for Time

This is a pretty tried-and-true model, much like that of the old arcade and pinball machines. Players pay only for a specific experience, which might be defined as a limited time period or a specific number of lives, or just a session that lasts until they fail (such as the old Missile Command). This model is also used in some Internet cafes and game parlors where they sell computer time.

Player-to-Player Trading/Auctions

Some games and online worlds now allow players to trade land, property, characters, or items with other players—one on one, through in-game options, or even through external websites, with the publisher taking a cut of all money exchanged. By officially sanctioning and monitoring these exchanges, you also keep players safe from fraud and other pitfalls of the black market. There are even games that allow game money to be converted to real money, which can result in people making a lot of money in the real world, but can also open the door to various kinds of fraud, such as using fake credit cards or stealing personal information (phishing) to use in the transactions. Companies such as Live Gamer (www.livegamer.com) are trying to make this safer for players.

Foreign Distribution Deals

If you are seeking more development money, you can pre-sell foreign distribution rights to your game and use that to fund your project. It might work like this: You take advances from Russia, Asia, and Europe to fund a title you plan to release in the U.S. (where you own the rights). Once the game is successful in your primary market, you’ll be able to expand it to other markets. You can save a lot of money, and you own the IP rights to whatever you build, which you’ll appreciate if you end up with a hit game.

Sell Player Access/Co-Registration Offers

In effect, you obtain information from your players via a questionnaire or registration form, which you can then sell to an agency that provides the information to external marketing companies. Just Google for “co-registration.” In this model, you get paid for each form you provide, and the value of a lead is equal to how exclusive, how revealing, and how fresh the data is. The agency generally provides the questions and the website capture forms.

Freeware

Freeware isn’t about making money on the surface, but it’s one way to get your game out there, gain a lot of players, and position yourself to field acquisition offers or possibly to get lucrative deals for future games. It works out pretty well if you release something for free, get noticed, put yourself on the map, sell your company, or get hired into a good opportunity—all because you put something out for free.

Loss Leaders

Loss leaders are common in the retail world—in department stores and on car sales lots. Basically, you offer something very cheap to get people to come and shop with you. In the game world, it’s often the case that a console system is underpriced because the real money comes from selling the software—the games. For most of us making games, it means that we may sell a game for far less than the market might suggest in order to establish a strong and passionate following. Your loyal players then become resources for other types of monetization, ranging from microtransactions to big-money opportunities, such as toys or TV and movie deals. In reality, you’re establishing a brand or recognizable (and trademarkable) characters, which you can then use for other financial purposes. One example is www.KiddieCastle.com, which is doing something like this to get parents and kids to notice their vending machines at airports and theme parks.

Peripheral Enticement

Games can easily monetize through peripheral equipment, such as special guitars for Guitar Hero from Activision or Rock Band from Electronic Arts, and the Wii Balance Board or other gym equipment (such as virtual bikes or rowing machines) for the Nintendo Wii Fit game. Players will spend money on relatively expensive peripheral equipment if it is a necessary (or extremely desirable) addition to the game experience, which is really just an up-sell.

User-Generated Content

When your users are the content providers, the sky’s the limit. This was the genius of Spore—that to populate a universe of a million stars, they only had to empower the players to create the content, and there is no end to the creativity. Users can make endless new content, such as buildings, clothing, music, characters, whole planets—whatever you empower them to make. If you also make it possible for players to sell and trade items and you take a small commission from the exchanges, everybody wins.

Pay for Storage Space

In many games, players collect items—generally more than their personal inventory can handle. These items can be weapons and potions in some games, cars (for instance, in GTA), or music in a karaoke game, where players might pay to store an instant library of their favorite songs with their customized reverb/volume/lyrics settings. Or, in other types of games, and also referring back to the model for user-generated content, you can sell extra storage space (perhaps in the form of an item from your in-game store—a new backpack, for instance) for players to store all the virtual items they just can’t get rid of.

Host a Private Game Server

Think of hardcore players of games such as Counter-Strike. They require dedicated servers with very fast response times to get the most out of the experience. So you rent dedicated servers with the gameplay server software preinstalled. This meets the needs of the hardcore players, who can share access with their group of close friends. In such a case, either a guild or an established group may share the expense, or individuals may pony up a share. Of course, anyone can rent a server to enjoy a lag-free game experience with their friends. If your game has such a dedicated following that requires high-quality connections, it can become an up-sell for you.

Rentals

Renting games is another way to make money from your property. When games were first being rented, the idea was to make it so players couldn’t complete the game within one rental period, thus increasing the amount of revenue you (and the company renting out the game) received. Now, with such services as Netflix, which don’t fix a time limit on the rental, game completion time is not so important, and perhaps the total satisfaction element (money’s worth) is more important because you are more likely to get repeat customers if they loved your previous games. Because rental stores often stock the newest titles, they can also drive early sales of your boxed products. You can encourage specific store chains to support your products by making a “special edition” of your game for them to market or by working out special promotions. If you can come up with something special for the rental version of the product that gamers will want, you can encourage more rental revenues and make the rental companies happy at the same time.

Licensing

Licensing a property is a whole different approach, but one that can be very lucrative if you can build a licensable brand or property. For instance, you might be able to ink a deal with a cybercafé chain to unlock your game for their users. I believe https://cafe.steampowered.com offers this service.

Perhaps you can find a way to get your game incorporated in a TV show or let a corporation use your game brand and its “cool factor” to attract their customers. A good example of this is the McDonald’s/Line Rider ad (www.youtube.com/watch?v=SZw1lCPVbtY).

Sell Branded Physical Items

For instance, use a service such as CafePress to sell T-shirts and branded objects to your fans, or set up a deal with one or more companies that can create ancillary products, such as miniatures or action figures, board games, and collectibles based on your brand.

Pre-Sell a Game to Its Players

In this case, the fans actually pay for the development of the game. For instance, they pay $10 in advance for a $50 game. They get to beta test the game and give feedback before it’s launched, and once it is released, they get the game for no additional cost. But you got that $10 per player to help get the game out there. This is only likely to work if you have a fantastic reputation already or an idea or demo that is hot enough to attract people and excite them about the end result. It really helps if you have something to show, to prove that you are legitimately creating the game you are promising. This not only funds your game development, but it also generates good word-of-mouth publicity. This is the kind of game that could have pulled this system off: www.darkfallonline.com.

Before-Game Advertising

Players watch a video ad before playing a free-to-play game. They have to sit through the ad to get to the game, but most players will be a little bit patient if the game is worthwhile. It’s a pretty easy way to add to your revenue, and companies such as Game Jacket, Mochi Media, Google, VideoEgg, and Ultramercial can provide lots of advertising inventory. The actual revenue you’ll receive is pretty small, however, unless you are driving a lot of traffic, but you can also make a little money by selling players something to turn off the advertising, such as a 30-day item that exempts them from having to sit through the ad. Or, the other way is to make the advertising optional and offer an additional reward for players who opt in to the advertising instead of turning it off. Another relatively new trick is to offer what we call invisible wrappers. If the game is played at your website, there’s no advertising, but if someone takes the game and puts it on their site (and as of this writing, about 20,000 sites do this), the before-game ad turns on automatically, and, of course, you get revenue for it. Currently, you can find this type of technology at www.inviziads.com.

Virtual Item Sponsorship

Gamers love free stuff, and developers love to make their gamers happy. Why not do so, and at the same time make some bucks? The idea is to get an advertiser to sponsor free items for your players. This can be done in a variety of ways. For instance, a specific item might be won in a contest, and when the player receives it, he also receives a message saying, “This item was provided to you by XYZ Company.” Or, perhaps you sell Coca-Cola 500,000 magic potions (that boost a character’s energy) at a low cost, and you make the same item very expensive for the gamer to buy on his own. But you hold a special promotion with Coca-Cola, and players receive a pop-up where Coca-Cola offers them the item for free. Really, everybody is happy. The player gets a useful item that would be expensive to buy. Coca-Cola makes the player happy and, at the same time, gets their brand in players’ minds, and the publisher of the game gets paid by Coca-Cola to provide the virtual item. It’s kind of like making money from nothing, but it’s really a matter of achieving a trifecta of mutual benefit.

Add Download Insurance

These days, when you purchase a digital downloaded item, some companies offer you a way to keep that download available past the normal availability period. For a small extra charge—say, $3.95—you can download the file(s) again any time you need to. It’s another funky kind of digital insurance policy (mentioned earlier), just in case your drive fails or you lose the data somehow; but it’s also a way to make extra money, because you can charge more than the cost of data storage, and you also save customer service time since you won’t be getting that phone call: “Uh. My hard drive died. How can I get my product back?”

Feed Me or I Die!

Virtual characters can exert a tremendous, if only partially explicable, hold on players. Once you establish a bond between a player and a pet or other virtual character, you have people who are going to be very reluctant to let that character die or disappear—especially after they’ve spent uncountable hours nurturing and protecting that creature. There are quite a few ways to monetize this attachment. You can require that players purchase food for the character or items to keep it from becoming despondent. (For instance, in the case of a pet dog, toys and exercise are important, and you can offer special items that increase the dog’s happiness.) You could, less creatively, simply charge the player for access to the virtual characters, but this isn’t the most desirable method. There are a lot of possible options, other than the few I’ve just mentioned. You might require virtual visits to virtual doctors to maintain your virtual character’s virtual health. You might even introduce virtual diseases into your society (a different kind of computer virus), so that the player must seek out some cure or risk losing the virtual creature. The secret here is not to do these things just to make money, but to realize that it has to be fun, in the sense that nurturing a pet and meeting challenges is fun, and that the cost of upkeep is not extraordinary. So, again, keeping it reasonable, providing free options and “premium” paid options, and making the fun factor first on the list are all good guidelines when considering monetization in the “virtual pet” context. Acclaim has a game called Ponystars that does this, and we really are in shock over just how many people seem to want to do this!

Methods of Avoiding Buyer’s Regret

Micropayments have become a great way to monetize an online game. Players will purchase items from an online store for use in the game, and though typical purchases are inexpensive, in volume they end up being excellent sources of profit. After all, you’re selling virtual objects for real cash, and as long as your players think they’re getting real value for their money, everyone is happy.

Okay, what happens when someone buys something they aren’t happy with? This can be a problem. You want happy customers. Here are a few suggestions to keep your customers from having buyer’s regret.

  • Offer a Cooling-Off Period. This is similar to gun laws or large-item purchases.

  • Pre-Warning from the Seller. Let players know before purchasing if it’s something they can’t use immediately or it requires some preconditions or other items—for example, if they are going to purchase a boat when the lake is dry or a gun when they haven’t earned the “shooting” skill.

  • Use Intelligent Pre-Selection. Make useful suggestions by pre-selecting the “best” options for your virtual customer. This would be similar to the automatic selection of the right golf club in a golf game. For instance, based on the player’s level and other stats, perhaps some weapons are out of their current range, so you have the store select something appropriate to their current situation. The player is always free to select something else.

  • Give Free Advice. Offer some tips on the purchase—something more than the basic stats of the item. For instance, maybe suggest the kinds of situations in which the item might be used.

  • Give Advice for a Price. Unlike the free advice, this should be more detailed, offering tips that would be hard to discover on your own, such as perhaps special ways to use the item or less-common circumstances in which it might come in handy. For instance, you are buying a shotgun, but all you know is that it’s good for blowing people away. If you find the “gun expert,” who offers advice for a small price, he tells you about special walls or items that you can blow away with the shotgun to access extra locations or secret items. Or maybe he even tells you about a specific place where the shotgun can help you accomplish an unusual task.

  • Warning Labels. If you look closer before buying, the information you need is right there. “Carrying this weapon will make you more attractive to PvP players and will greatly increase the likelihood of you being attacked.”

  • By Reputation. Items get rated by other players, and you can see their reputation before you complete a purchase.

  • Try before You Buy. You can either get a loan of the item from a friend, or the seller can give you some kind of limited trial. (I saw a cool driving game that did this. You could drive any car just by walking up to it; if you wanted to “own” it, you had to pay.)

  • Demonstrate the Item. The seller will show you how to use the item.

  • Research Available. Provide a wealth of research information, including comparisons to similar items, to help players make the right decision.

  • Buy-Back. Let the player sell back any unused or unwanted items into the game store.

 

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