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Digital Game Monetization Summit analyzes gaming tendencies and trends

Wednesday, 12th December 2012 22:54 GMT By Naren Hooson

The recent Game Monetization Summit in San Francisco saw panels delve into the topics of casual gaming, mechanics that keeps gamers playing, transmedia marketing, online gambling, monetization strategies and in-game advertising, a great deal of which touched on free-to-play.

Courtesy of GamesIndustry, Paul Thelen of Big Fish Games, which has 14 million gamers visiting the site each month, notes that free-to-play games reach 1.2 billion PC users. “Free-to-play is a huge market, and there are people making crazy amounts of money,” Thelen said. “Supercell came from nowhere after a lot of mistakes, and they are now making $300 million on two games on iOS alone.”

Thelen says that Big Fish has a growing audience for PC games, making it a growth platform for them, where PC is not considered a growth platform. “You need to match the game mechanic to the business model, and the monetization needs to match the business model of the game,” Thelen said. “If you have a game that has 6 to 8 hours of linear gameplay and when you finish it, you’re done, there are very limited ways you can monetize that game. What we’ve done is a simple transaction; you buy it, just like you would buy a book. It’s very hard to monetize a book with free-to-play.”

Mark Long, CEO of Meteor Entertainment, talking about game mechanics that keep players in the game discussed some key changes that were made to Hawken. “In our closed beta exit survey, we saw a lot of players play one session and leave, and this concerned us,” said Long. “We came up with the idea of what we call Newbie Island; your first five sessions you’re only playing new players, so there’s a safe place for them to not get their asses handed to them and hopefully get the them to come back after that first session.” Long also pointed out a game that does a great job of getting new users into the game. “CSR Racing, I’ve never seen onboarding that’s so flawless.”

Long also went into Hawken’s transmedia approach to marketing in another panel. “For a company that has raised $28.5 million we are still perceived to be an indie Cinderella story,” he said. He puts it down to the creation of a 20,000 word story bible to seed the game, a feature film now in production, a graphic novel, prose novels and anime, all being rolled out over the next few years. All the media is optimized for search engines with the purpose of driving all traffic to the playhawken.com site.

Online gambling was addressed in another panel. With $35 billion market, there’s plenty of motivation for companies such as Zynga to move in the market. The difficulty being that it will have to compete with the established casinos and operators wanting their share of the market.

Nick Bhardwaj, the VP of monetization for Natural Motion, discussed acquisition costs with the advice to look for ways to get people to share content to create interest with others that bring them to the game. “I was in mobile advertising, I understood user acquisition, I understand all the price points, and the truth is, it’s a shitty industry,” Bhardwaj said. “It really is. The first harsh reality is: CPIs [Cost Per Install] are only going to go up. You think they’re high now? It’s going to be just like gas prices. Right now, average CPIs in the industry on the weekends are over $2, $3. There have been previous weekends where I’ve seen major players bid upwards of $10 per install. This will only go up for two reasons: new entrants, and cash influx from Asia. There are a lot of great companies in Asia who’ve been doing great games in Japan, China, and Korea, who now want entry into the US. Next you’re going to see the influx of real-money gambling apps. The LTVs [Life Time Value} of those customers are hundreds and hundreds of dollars, 10x, 20x higher than anything you see in even the greatest mobile games. I would assume by the end of Q2 next year you’re going to see average CPIs above $5.”

DFC Intelligence analyst David Cole led a panel on in-game advertising, discussing moving into this way of creating revenue for developers. Many free-to-play games monetize just a few percent of their players and advertisers have yet to fully embrace the medium of games. The panel felt that we’re likely to see more ads in and around games, especially as companies like Zynga and King.com work to generate more revenue from the huge numbers of players.

The panels went on to discuss player categories in terms of one off players, repeat players, regulars as well as whales, those big spenders, who can spend up to $2,000 in a single game.

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