Flash Love Letter (2009) Part 1

comments 70
Ported Posts / Uncategorized
Flash Love Letter (2009) Part 1
Chapter 1: Introduction
Hello Flash game developer,
Over the past couple months, I’ve spent a bit of time looking at Flash gaming on web portals like Kongregate and Newgrounds.  There are over 14,000 games spread across 30,000 portals with hundreds of new games coming out every month.  The output alone is amazing. 
Let me cut to the chase.  I think that you, Flash game developers, are some of the most talented and inspirational people working today in game development. Your passion for building games burns so incredibly brightly. Your ability to quickly make and distribute games is second to none. You hold immense potential to transform the future of games. 
Let me tally your blessings: 
  • Cheap and effective distribution: Your platform reaches over 350 million players, more than all home consoles combined.  A poor college student can release a half decent game and within a month, a million people will play it.  Such reach is unheard of on almost any other platform. 
  • Robust technology: Graphics, animation, sound, video, physics and networking technology is freely available and works surprisingly well. You are building on one of the most accessible and robust multimedia platforms that has ever existed in the history of the world.  Where other teams waste man months just getting a black triangle showing on the screen, you can have a working game up and running in hours. 
  • World class creative tools: Flash is fed by an art pipeline familiar to millions of artists that has been polished and tested over the past decade.  
  • Thousands of developers making stuff just for you: With a few simple API calls, you have the entire power of the web at your finger tips.  Want to send emails, suck in friend lists from Facebook, access payment systems, or let people buy underpants emblazoned with your logo? It is all there waiting for you to piggyback atop. 
  • Immense creative opportunities: Flash is uniquely positioned to create social games, mobile games, location-based games, games that suck in databases, games that use video, games that use real-time audio, games that connect millions.  The number of radical new game genres is primed to explode like no other time since the 80’s. And you have all the tools necessary to  drive the wave of game play innovation forward. 
  • Freedom: You can make whatever you want. Unlike developers of other platforms, there is minimal interference from traditional gate keepers such as big company politics, retailers or publishers.  The Man doesn’t own you, at least not yet.  
Such riches! Your platform of choice contains almost everything you need to radically transform gaming as we know it. 
The mystery
So…where are the great world changing Flash games?  They appear to be missing.
What we’ll cover
Flash games are currently the ghetto of the game development industry.  Compared to the number of players it serves, the Flash game ecosystem makes little money, launches few careers, and sustains few developer owned businesses.   Despite the vast potential of the ecosystem, Flash games contribute surprisingly little to the advancement of game design as an art or a craft.  
In order to understand why this promising game platform is such a surprising dissapointment, we’ll look at Flash games from three perspectives: 
  • Chapter 2 – Making money:  How do Flash developers currently make money.
  • Chapter 3 – Generating value: How Flash developers currently create ‘valuable’ game for their players?
  • Chapter 4 – Reaching customers: How developers currently reach their players. 
  • Chapter 5 – Premium Flash games as a service:  A mental model for understanding the new world of web gaming. 
For each step, I’ll cover alternative techniques that give you, the game developer, make even better games. 
Chapter 2 – Making Money
Money makes the world go round.  It pays salaries and gives developers the time and space to create creative products.  Yet, Flash game developers don’t seem to be making much cash. 
Flash gaming’s Achilles heel
I took a look at the Flash ecosystem to see if I could spot the fatal flaw. 
The red flows are where people pay out money and the green items are places where people earn money.  Here are the common money sources for the developer: 
  • Direct: The game developer sells ads from a generic ad service on their personal website or portal. 
  • Game specific ad service: An ad service such as Mochi collects Flash ads that are typically placed in front of a game during loading. 
  • Site licenses: A portal pays a developer a fixed fee for a customized site locked version they hope will increase player retention. 
  • Sponsorship: A company pays a developer a fixed fee in order to direct customers from other portal to their portal in the hopes of capture those customer’s lifetime ad revenue. 
There is one obvious fact: the entire flash ecosystem is driven by low quality advertising.  Piddling amounts of ad money flows into the developer’s pocket through a variety of obfuscated middlemen.
Ads are a really crappy revenue source
For a recent game my friend Andre released, 2 million unique users yields around $650 from MochiAds.  This yields an Average Revenue Per User (ARPU) of only $0.000325 per user. Even when you back in the money that sponsors will pay, I still only get an ARPU of $0.0028 per user. In comparison, a MMO like Puzzle Pirates makes about $0.21 per user that reaches the landing page (and $4.20 per user that registers)    
What this tells me is that other business models involving selling games on the Internet are several orders of magnitude more effective at making money from an equivalent number of customers. When your means of making money is 1/100th as efficient as money making techniques used by other developers, maybe you’ve found one big reason why developers starve when they make Flash games.  
The effect of 1/100th as much money
Due to the low quality revenue streams, even great games make beer money, not rent money. A good game will make $1000 and a great game might earn $5000-7000.  A rule of thumb is that you need to release 10 good Flash games a year to convince your girlfriend’s father you are not a bum. 

    10 games a year may not seems like such a big deal to some, but there is a hidden one-two punch that knocks most developers into bankruptcy 
    • Most Flash game developers have little financial cushion and live paycheck to paycheck. 
    • Flash game revenue is highly bursty due to a reliance on landing sponsorships upon release of their latest game. 
    It is common for a developer to release several games in a row and get sponsorships or licenses for each one. But the inevitable randomness of game development results a month or two delay on your next project.  It only takes missing one or two of those 10 games to force a professional Flash developer into ever waiting arms of endless soul sucking contract jobs.  It is surprisingly hard to change the world when you are stuck re-skinning the latest Mountain Dew advergame. 
    Only cockroaches survive without money. 
    It doesn’t matter much raw talent you possess. With the right support, you could be the next Miyamoto.  Sorry, not important.  All that really matters is that you possess what I call the ‘cockroach gene’. Can you churn out ‘good enough games’ and survive if your games repeatedly fail to make money?
    The following are survival strategies employed by successful Flash developers: 
    • Be a full time student:  This is the dominant category of Flash developers. 
    • Live in a socialist country: I’m looking at you, Scandinavians.    
    • Have (rich) family that will support you: I’ve met folks that do this but it is uncommon. 
    • Starve for your art: The Jason Rohrers of the world are also rather rare. 
    If any of these fit, congratulations.  You are in the small percentage of developers that have the financial support necessary to be a Flash game developer. Everyone else, thousands upon thousands of talented developers, fall in a category called ‘churn’.  They can’t even survive on ramen and passion.  So they move on to richer markets or leave game development behind forever.  
    Such a loss. Such an incredible waste.  I’d guess we are losing 95% of our best Flash games because the people with the talent to make great games find the Flash market financially untenable.  
    Solution: Players as a revenue source
    Ads are a good secondary source of revenue, but surely there are richer sources of revenue?  There is an obvious one, used for decades by all other game industries…why not ask the players for money?
    Here’s the theory behind asking for money for a game. 
    1. Players have access to lots of games.  Most of which are free.  This is the reality of the market. 
    2. However, at a certain point, they start playing your game. 
    3. If you’ve created a great game, some players will fall in love.  They will be in the thrall of your reward system and your in game value structures.  At this point, they don’t care that there are other games.  They don’t care that they are playing on a portal. All they care about is your game.  Games create value through play. 
    4. When a player is in love, money is no object. If you ask the player for cash in exchange for more value, they will often agree. It is a good exchange in their eyes: They give you a small bit of change and in return, they get proven, addictive experience that they love. 
    Ask for the money  
    When game developers ask for money, they are usually pleasantly surprised.  Their customers give them money; in some cases, substantial amounts. I witnessed this early in my career making shareware games at Epic in the 90s and I’m seeing the same basic principles are in play with high end Flash games. Fantastic Contraption, for example, pulled in low 6 figures after only a few months on the market. That’s about 100x better than a typical flash game and in-line with many shareware or downloadable titles.  
    Here are the four steps you need to follow in order to successfully ask for money from your players: 
    1. Offer: Offer premium content
    2. Tell:  Tell players about what they get if they pay you. 
    3. Repeat: Repeat the first two steps until it clicks with the player. 
    4. Accept payment: Get the money in your bank account.

    Step 1 – Offer

    Offer the player something valuable. Take a careful look at what players find valuable about your game and try dividing it up into two buckets: Introductory content and Premium content.  Give away gameplay in the Introductory bucket, but sell the content in the Premium bucket.  Many Flash developers insist on giving away everything for free.  Stop devaluing your work and start creating a premium offer.  Below are some ways of creating premium buckets. 
    Time gates
    Players can play for some period of time and then they are locked out until until they pay.  For example, players could play for 45 minutes – 1 hour (effective free trial times in the casual space) and then pay to play longer. 
    Content gate Players play an initial teaser portion of the game for free and then pay to unlock access to additional content. For example, players could pay to unlock all the levels in a game.  This is how many shareware titles worked. 
    Aesthetic items
    Players purchase non-gameplay additions that increase their identity or status.  For example, players could pay to give their character a cool outfit that they can show off to their friends. 
    Abilities
    Sell unique abilities that let players experience the game in a new way.  For example, players could purchase new jumping boots that let them fly through levels in a way that let’s them re-experience the game all over again.  
    Bundles
    Virtual items can be bundled together to create additional value.  For example, if people love buying food for their virtual pet, let them buy a 10 pack of food for a 30% discount. 
    Consumables
    Some abilities can expire after a period of time or after a number of uses.  For example, you could buy a potion that increases your strength, but you can drink from it 3 times.  Also known as “item rentals.”
    Subscriptions
    If certain abilities or bonus are a valuable long term, consider charging a reoccurring fee.   For example, you could offer extra storage for advanced players, but charge a monthly fee. 
    Stackable subscriptions
    If certain abilities are additive(such as an experience or currencies multiplier), let players buy multiples of the same thing. 
    Rare items
     Limit the number of items available so that players feel special when they purchase it. 
    Time limited items
    Offer some items for short periods of time so that players feels that they lucked out finding the product in time. 
    Sale items
    Set a standard pricing system for items and then offer some items for sale.  This works great with time limited offers. Again, players love to get deals. 
    Gifts Players seek to maintain social bonds by gifting other players with items or abilities. 
    Accelerators  Many games have a ‘grind’ that artificially lengthens the game. Players with little time are willing to purchase items that let them reduce or eliminate the time consuming activities in the game. 
    Physical goods T-shirts and other branded items
    Examples of premium content bucketing techniques

    There is no need to limit yourself to any single one revenue stream.  There are lots of different types of players and each player values something differently.  Some players may be willing to buy a t-shirt.  Others may want 5 stackable subscriptions.  Others may just want a pretty new character with a panda head.  When you restrict your game to a single revenue source, you miss out on gaining money from all the different types of customers that would have paid you if you had just given them the right offer.        
    When you design your game, pick three or four revenue streams and build them into your game.  Here are some categories of users that you may want keep covered. 
    • People who don’t want to pay:  Advertising is a good option to keep around. A few hundred bucks is still money in the bank. 
    • People who are interested in more of the same: Once you’ve established the value of your game, some players want more.  Give them more levels, more puzzles, more enemies in exchange for cash. 
    • People who are interested in status or identity improvements:  Some people see games as means of expression and identity.  Give them items that let them express themselves or customize their experience.  
    • People who have limited time: Some people live busy lives and want to consume your game when they desire and how they desire.  Cheat codes, experience multipliers and other systems that bypass the typical progression all help satisfying this customer need.

    Step 2 – Ask

    Tell the player what they are going to receive in return for their money.  If people don’t understand the promise of what they are buying, they won’t pay.  
    • Ensure the user sees the offer: Screenshots, feature lists, and evocative language should be placed clearly in front of the user.  You want convey to the player the value, both practical and emotional that they will experience if they were to gain access to the premium content. 
    • Tie your offer of premium value to an explicit request for money.  We live in a capitalist society so people understand the concept of buying something.  Don’t ask for a donation.  Don’t ask players to “give you what they feel like giving.”  People will think you are a charity case and in my experience your revenues will drop by 90% or more.  Give the offer a specific price, be it $10 or 200 gold in your favorite virtual currency.  
    • Time the appearance of the offer.  You can ask for money when players are caught up in the emotional moment of play.  Which is more valuable to the player? A Pirates of the Caribbean T-shirt at the mall or a Pirates of the Caribbean T-shirt right after you walk off the Disney ride and are flush with excitement?  Both your odds of buy the shirt and your pleasure in owning the shirt are greater when you buy it after the ride.  Use game design to make players fall in love and in their moment of game playing passion, they will be willing to spend money. 
    Step 3 – Repeat
    Repeat telling and asking several times until the value of your offer sinks in. Players need to see the offer multiple times before they’ll commit to making a purchase. One technique that works well is to put the offer in the natural flow of playing the game. 
    • Prominently place the offer in high traffic areas of the game such as entry, save, in game store and exit screens.   
    • Email the user periodically to let them know about specials or sales.  By asking them to read an email, you are costing them time, so make sure that what you offer is valuable and delightful or else you’ll end up with angry customers. 
    You can risk annoying the user if you do this too much, but in my experience coaching indie and Flash game developers, they err on the side of being hiding their offers. I’ve seen offer screen buried in option menus, guaranteeing that less than 1% of users will ever see them.  I’ve seen offers that appear only if you click a tiny button.  Users see it once and then never see it again.  Don’t be embarrassed. As long as your offer is clear, professional and doesn’t attempt to trick or overwhelm the user, most players will see your purchase button as just another useful, functional part of the UI. 
    Step 4 – Get the money into your bank account
    Use a payment service to process their order.  The good news is that there are dozens of 3rd party payment systems on the market.  The bad news is that they all have subtle differences that have a huge effect on both your short term and long term revenue. 
    The many layers of payment middlemen, each taking their cut.  
    (Margins are approximate and will vary depending on the service)
    Some things to consider: 
    • Margin: How much does the payment service take?  The payment company is providing you with a service and deserves to be paid.  However, you’ll find that some companies take 10% and others take upwards of 75%.  Companies pitch various bundled services such as storage or fraud protection as justification for their increased fees. Some companies will also share some of the margin with portals in return for them carrying the games. Shop around and be honest with the trade off you are making.  Remember you’d need to get 5 times as much traffic to makes the same amount of money if you pick a service with a 50% margin vs a 10% margin. 
    • Processing fees: Most Flash payment systems are simply a repackaging of non-Flash payment services with a pretty UI and a bigger margin tacked on top.  The existing payment services already takes a chunk of the user’s money in the form of ‘processing fees’  Ask if the advertised payment company margin is inclusive or additional to the existing ‘processing fees’.  A 30% margin seems reasonable, until you realize that it is on top of an existing 50% margin for a mobile provider.  I like to ask “If the customer pays $10 on their credit card or phone, how much cash ends up in my bank account?” 
    • White box or branded?: Some services like Super Rewards can be reskinned so that they are transparent to the end user.  Until the player enters into the actual payment portion of the process, they feel like the stores and such are part of the game.  Services like Noboba and MochiCoins are heavily branded with the payment company’s logo.  Their goal is to get the customer to invest their trust in them, the payment provider.  The downside is that customers don’t invest as much trust in you, the game developer. 
    • Customer registration?: In order to track customers and their purchases, you’ll want a secure login system.  Some payment services let you build your own.  Others require you to use theirs so that they can control the primary relationship with the customer.  Often these services will not release customer lists to the developer.  This becomes a problem long term if you release multiple games and want to run cross promotions. 
    • Storage support: Once players purchase an item or feature, they’ll want to have access to their stuff when they sign back in.  This means your game will need online storage and a server back end.  Some payment services offer this as part of the package, which is great for the common situation where the developer doesn’t know much about back end programming. 
    • Lock-in: Do you have the ability to easily switch to another payment service?  In general, the more comprehensive solutions with customer make it more difficult to switch.  With some comprehensive services, capturing customers is more valuable than your money.  You only provide cash for a single game, but a customer can be sold and resold dozens of times to dozens of games.  Run far, far away from such companies since their best business interests are not aligned with your best interests. 
    We are in the early stages of the Flash payment market.  Often new game developers will unthinkingly jump on the first service that they happen across.  In this low information environment, payment services can charge unreasonably high margins and very few developers will complain. Many will be excited to give away 50% of their money because they weren’t earning any money previously. 
    A payment provider should be a reliable commodity service, not a major business partner. Over time, I predict we’ll see more transparency and competition which should drive down prices.  The ideal payment service is one with low margins, low switching costs, no branding and APIs that let you cheaply and easily tie into generic, developer controlled login and storage services.  This will come about as a competitive market works its magic, but until then the opportunists are out in full force and Flash developers will pay a premium for their ignorance.  By asking, comparing, and publicly publishing information about margins, developers can encourage payment providers to compete openly and honestly. 
    The good new is that some generic payment systems are cheap to hook up to your Flash game and allow for experimentation.  On one project, we used SuperRewards and reskinned their front end to it fit nicely into our game.  They charge 20% margin on all purchases, but we can now transparently swap in primary payment provider for credit cards, mobile etc.  By mixing and matching we can build a payment front end that makes us more money.  We own our own virtual currency and we own our customer data.  
    This was accomplished with one programmer in 2 weeks of work and can be reused across multiple games.  Such a path isn’t for everyone, especially if you lack web programming skills.  However, with a little elbow grease, you can tap existing, proven, generic payment services to roll your own with very little downside. 
    Execution matters
    Most Flash game developers are ignoring all of these steps.  A few are doing a couple steps poorly, failing and then running about screaming that you can’t make money off charging for premium content.  Instead of jumping to ill formed conclusions, try executing with vigor some of the basic business lessons learned in the past 2000 years of capitalism.  Just going through the motions isn’t enough. 
    Here’s an example of a good idea poorly executed. Dan Hoelck is the very talented developer behind the polished Flash game Drunken Masters, a game that attempts to charge for premium content.  He created a content gate, displayed his offer to the player and integrated a payment service.  Unfortunately, the resulting sales process is torpedoed by multiple fatal flaws.  As a result his conversion rates are miserable: 0.01% of users purchase his offer.  You’d hope to see numbers closer to 0.1 – 1%. 
    • The call to action isn’t clear.  The offer is labled ‘cheats’ (not a positive connotation) and then crams lots of little detail in a tiny font at the bottom of the screen. I’m looking for a big ‘buy now’ button and some pretty pictures telling me all the lovely things I’ll get. This is nowhere to be seen.  
    • The value of the offer is questionable.  He gives 90+% of the game away for free, and lets you purchase a few miscellaneous features that most people don’t need. A good rule of thumb when using a content gate is that your premium content should be seen as twice as valuable as the demo experience.  
    • Making purchasing difficult: In order to purchase, you need to manually type in a URL, find the right link to click on and then purchase. Is this necessary? Every step of the pipeline, you are going to lose large numbers of users. As much of the purchase flow should be within the game as possible. 
    • Charging too little.  Dan charges $1.50 for his game and this is likely too little. Beware your natural tendency to undercharge.  People who love your game are surprisingly price insensitive. For example, in the microtransaction-based MMO Domain of Heroes, prices range from “$0.99 to $349.99 and about 80% of the revenue comes from purchases at the $19.99 pricepoint.” With a little price experimentation I suspect Dan could have increased his price to $5 or $10 and increased his overall revenues substancially.
    It is okay to fail.  The basic system Dan made took him ~40 hours to implement and it is obvious he has learned a lot of lessons from the experiment.  Building an effective sales pipeline is just as much a craft as making a great game.  As a game developer you need to approach the task as a new skill to master that you likely aren’t going to get right the first time.  Put in the basics, measure your results and apply what you’ve learned to your next project.  
    But people will hate me if I charge money! 
    Some developers I’ve talked with worry that they’ll alienate others by charging directly for their game.  Here are some common concerns: 
    • Bad reputation: Many Flash game developers are not in it for the money, but to be part of the indie community. The threat of a poor reputation can be frightening. The truth is that modest, self effacing developers that find financial success are worshiped like heroes. Just ask Colin of Fantastic Contraption how he was received at GDC.  If you are worried about your reputation, stop starving yourself into hipness.  Instead create great games and be generous to others. A good reputation follows naturally. 
    • Players complaining: So what if you end up being hated by a few kids that feel entitled to free stuff?  It isn’t the end of the world. Usually the money and thanks from delighted customers more than make up for a few sour grapes tossed about on dark and skanky corners of the Internet. 
    • Bad rankings: It is true that players will occasionally mark down paid games out of ignorance and spite. Luckily there is a solution.  If you offer real value to customers in love with your game, your fan’s rapturous applause will drown out whiners.  Players, in aggregate, tend to forgive great games, even if they need to pay for them. 
    • Sponsors: Sponsors don’t want the game they serve competing directly with their primary source of revenue, ads. If you can promote that your premium game results in better player engagement and repeat plays, most portals will happily take their cuts of the resulting ad revenue and leave you to monetize your customers.  A smaller number will worry that your premium content will pollute their ‘free’ label.  An even smaller number will be greedy and ask for a cut of your hard earned customer revenue.  In the short term, you can ignore demanding portals.  The market is highly fragmented (30,000 portals!) and no portal owns more than 5% of the players.  At this point in the market, developers have the ability to walk away from the greedy minority.  Suggest reasonable terms where portal keep their existing ad revenue and you keep all in game revenue.  If they balk, leave the bastards to rot. 
    If you make a great game played for hours on end by millions of people, you deserve to be paid.  Stop worrying about how people ‘might’ react.  Ask a fair price for the value that you provide. 
    Quick monetization check list
    • Are you asking users for money? 
    • Are you telling users what they’ll get if they pay you?
    • Have you hooked up a payment system before you launch your game?
    • Are you tapping multiple revenue streams that appeal to different types of users?
    • Are you basing your design decisions on the behavior of people who make you money? 
    • Are you appropriately filtering the feedback of people who do not make you money?
    Take care
    Danc. 
    PS: Time for a short break!  I’ll follow up with the next few chapters in a couple of days. 
    References

    70 Comments

    1. Danc,First and foremost, thank you for an exceptional article that explores the economics of the flash game ecosystem. I too have thought often about the ridiculous cycle of bad ads leading from one portal to another portal (which in turn has more bad ads leading to yet a different portal etc). I agree with you that the best current solution is for developers to charge for premium content, and you do an excellent job describing how to avoid common pitfalls.My personal theory for why flash games are usually a low return on investment is because of the perceived audience that play these games. The vocal majority of these individuals seem to be young 10-15 year olds who 1) do not yield high returns on ads and 2) are unable and unlikely to pay for content. Because the field appears to be dominated by the young kids, advertisements are geared to kids and thus don't appeal to anyone else. However, what most flash game developers do not realize is that there exists a substantial number of players who are 20+ years olds that are able (and willing) to pay for extra content, provided it extends the lifetime of the game considerably.As I have not yet produced any games of my own, my background in this area comes from Colin Northway's Fantastic Contraption (mentioned above a couple times), where I joined shortly after launch a year ago, and still maintain an active presence in the community (under the name OfficiallyHaphazard). I agree with you that the reason his game sold wasa) It is a very compelling productb) There were clear benefits upon purchase. c) It has a distinct and obvious way to pay.d) There is a lengthly (but definitely limited) free-to-play mode that gets one addicted.I feel that one last thing that helped sell the game was a line that said \”It supports indie game development.\” I think this is a subtle yet effective way to remind people that the work behind these games is substantial and deserves to be rewarded with real money.I agree with a number of your other points, but instead of reiterating them here, I will just say thanks again for such a deep exploration of flash game economics in this article!-Ryan

      Like

    2. What a great article! I have long felt that many Flash developers undervalue their work. I tend to think of flash portals as modern arcades- they are great places to pop in and kill some time.The only difference is that we used to drop a quarter per game, and now players expect to play for free.

      Like

    3. With such an orientation towards money (no, I'm not a cockroach!), it seems truly hard to actually answer the question: \”So…where are the great world changing Flash games? They appear to be missing.\”I don't think that money is the issue of good games. At the very end – in my opinion, it's money that brought us where we are now in this fairly unbalanced plane that calls itself game industry. To cite Tony Stark, from the Iron Man movie: \”That's how my dad did it, that's how America does it, that's how I do it.\”I don't like that..There's a large group of artists in both graphics and programming in the Flash category, I agree, and the possibilities are wide open, the multiverse of possible designs at their fingertips, but they should just organize and see what they have and what they lack.I'm not saying that your studies are wrong in any way, it's a quite long and to-the-point answer, but, it seems to me – to the wrong question.. Maybe you've been keeping something for part 2? :)Cheers!(while writing this, happy for holding another first-comment-place, everyone rushes in.. Bad timing! 😦 :P)

      Like

    4. Most of this comes down to one issue: running a business. It's the part that most independents hate to do, because it involves things that seem to distract from making a cool game.But, business is important! If you can't make enough money to pay the bills, you'll have to do something that isn't making cool games.If I might make a plug, I helped edit a book on business and legal issues (http://psychochild.org/?p=223). I did the book to help small, independent people get the basics in order so that they know how to run a business and therefore how to keep making cool games. This would even apply to people making Flash games. :)Looking forward too future articles, Danc.

      Like

    5. Anonymous says

      I definitely agree that many flash developers undervalue their work. I also think that it is sad that it often seems to make more sense to work for someone else (e.g. an ad agency) than to build your own ideas. Building your own ideas might be more profitable in the longer run (as well as more rewarding) but it's hard to take that risk when the alternative is a guaranteed income for working 9-5. I also don't think it's restricted to just flash games development, other areas of flash (and web in general) development suffer from the same issue.I have a plug to make too… We've developed a system called Sharify ( http://www.sharify.it/ ) to make it easier for flash developers to turn their (AIR) applications into shareware. The idea is to minimise the complexities of this process and hopefully kick-start a marketplace like the iPhone's app store. I think that games will play a big part in creating this marketplace. As you say, users (customers?) are more than happy to pay for quality content. And I definitely believe that there are many developers who could produce absolutely amazing stuff if they felt that their work would be rewarded…

      Like

    6. Great article, Dan. Big, in-depth, insightful. I look forward to reading the rest.Pursuing a vision is hard. But it can also be very rewarding. I am glad to see you encouraging Flash developers to go for it. 🙂

      Like

    7. I like Kongregates implementation of a \”Tip Jar\”, and have used it to tip games I've especially enjoyed. I'm not sure whether this is typical consumer behaviour, but having a portal implement that sort of \”100% goes to the developer\” system is very cool.https://kong.zendesk.com/#tipjar

      Like

    8. Wow, brilliant article. I agree that really good games can make a profit, but it is such a big marketplace that unless the game is really good there's no way it can work.Unlike other media, there's no marketing. Games succeed only on merit. Turning the success into money is something I'm trying to learn very quickly, so thanks for the very direct help!My first game, Baby Vs Spiders, is nearly finished. It is a big expensive game and we are expecting users to get addicted to it. We will be using micro-transactions as well as sponsorship to try and cover the cost of development and create a market for a sequel.If it does go well, then I we can continue to make the games we want to for an audience that want to play them.So, yeah, erm, thanks for the article Dan!Making Fun Games

      Like

    9. I'll be covering the following two topics in upcoming essays: – Making the game great: Providing value to your customer- Distribution: Getting your game out to a lot of playersJust as there are techniques for monetization there are techniques for other stage of the pipeline. You need all three in order to make a successful game. Releasing a profitable game is not easy. Sturgeon's Law will live on. However, my hope would be that games that follow a set of best practices end up with a 10 to 20% chance of success instead of the <1% chance of success they have right now. Success is defined by feeding the developer. 🙂 take careDanc.

      Like

    10. Thank you for the article, DanC! However, most flash games are too short or in low quality to be able to sell by themselves. And the big ones, even they are made mostly by developers that have been experienced in flash world, they don't have the knowledge on business. I think it will took a lot of time to learn and manage.. don't forget the community manager issue 😉 . Ryan, I think majority of flash players are adults. That is what portal owners say in flashgamelicense.com . These players doesn't like to interact like visiting forum, chat, or leave a comment so they are hardly known. 🙂

      Like

    11. Wow – great article. It's pretty close to what we've done with Now Boarding (www.nowboarding.us) It's been a great success – we've been able to support two families for almost a year now.We used a flash demo version(first episode only) that upsells to an AIR download version. We use Paypal and PHP do the sales/serial number generation.Getting AIR to encrypt was the only tricky part. Oh and we set up auto-updates so we've been able to patch and and add content.We're happy to share our code with other devs if they don't mind learning a bit of PHP – if not, that sharify service sounds about like what we've done.We've found a division in the customer base – older users buy more when they get a download install, and younger users hate downloads – don't mind paying for something completely in a browser. But since the older audience is more likely be able to buy, we've found it best to err on that side.

      Like

    12. This is a great primer.I'd just like to add a couple of ideas.1) You don't have to be a cockroach, be a monkey instead. While your hands are busy doing your real job write your game on the side with your feet. Then quit the real job when the money starts to flow.2) Be a free game with pay content instead of a pay game with a demo. The culture of Flash is the culture of free. But you can be free and still charge money. If you're soft with your sell and give away alot of content up-front then people will embrace you and share you. And you can eat your cake too.

      Like

    13. You know, all through this chapter, I kept expecting Nicolas Cannasse and Motion-Twin to come up, but that never happened. ;)Anyway, excellent write-up; looks like you're covering a number of things I've theorised on and I look forward to the rest.Cheers,Wyatt

      Like

    14. Wow, excellent reading. We can really make history with flash games. The big companies are investing in so many free-to-play games for soething, they want to take a piece of the cake.

      Like

    15. Interesting article and interesting references to it. Cant' wait for continuation.Tough I must say I disagree with some of your monetization policies. I don't think they will ever work in current Flash games environment. As some stated here Flash games are games which are played for free (at least for most part). I can remember 3 games that worked by \”play trough 10%-30% of levels and buy then\” mode. They were even not that bad and above the average level of quality of Flash games. But initially ,including from me, they received a bad welcome as it kind of feels bad in Flash market… Tough may be it was a price… I mean that they cost in 5-20$ range and for that price I can get a lot better game for my PC… Why to bother with Flash game. They were good but not as good as some non Flash game for alike price. So selling Flash games in same way console and PC games are sold is bad idea… Piracy, community culture and pretty intense competition from console/PC games market kills such games…But some other ways you mentioned that actually make game it self look like free but still making user to pa for some thing (not game it self) can work if you make it right. I wonder if some sites will start picking ideas I have in store for portal I want to make.

      Like

    16. Indeed, excellent article & looking forward to the next one(s). Also great comments by ColinNorthway re: monkey & free game w/ bonus content- right on the ball IMO

      Like

    17. Excellent work, Danc. Thank you.When I read this I thought, where's the Steam (Valve) of the Flash world?? OK, maybe not a Steam-like model but where can go for high-quality games that I fully expect to pay for? I agree that some of us are willing to do so based solely on the quality of the game but I believe there's something to be said of a premium pay-only flash game portal. Want free games, hit up Kongregate/New Grounds… want high-end titles? Head over to…By setting the expectation that players will need to pay when they arrive, players _will_ pay when they arrive.

      Like

    18. Excellent article. Been living this \”dream\” full-time for a year and a half and the problems you mention are spot-on.The one area I would perhaps differ in is the \”no portal controls more than 5% of the market\”. I am unsure if this is really true. I have looked at about 7 million plays worth of Mochi stats for our own games and I find that the large portals attract the vast majority of the audience. If you add Kongregate, Armor, AddictingGames, and Newgrounds into a group, they account for over 50% of the plays of every game we've done. Addicting actually gave us over 250K plays *per day* for a game that hit their frontpage.If these large sponsors won't support/allow games with microtransactions on their sites then there will be a big problem getting serious eyeballs. Some of those sites (such as Kongregate) do have their own system for select developers, but this requires re-implementing API's and skinning for individual site-locked versions. Not to mention, of course, that the portal will want a cut of the money.I also think that the first system to make it easy to pay by cellphone/SMS will make a killing, given the age demographics of the audience (15 year olds can't exactly pay via credit card, or sign up for Netflix accounts)- andrewhttp://www.diffusiongames.com

      Like

    19. Awesome article, Danc. This is so inspiring. :D\”By setting the expectation that players will need to pay when they arrive, players _will_ pay when they arrive.\”Very good point, Phil Peron. I wonder if the Flash virtual currencies (MochiGames, GamerSafe, Heyzap, etc.) will end up filling that role.

      Like

    20. I am torn. Will we truly trend towards all free games? I've given Steam several hundred dollars in the past year.It is just a feeling, but I can't help but wonder if we will simply have a spread of markets and prices. Some free games, some freemium, some pay. How will the division break out? I don't know. But I think I would always be willing to pay $20-50 dollars for a good game experience. I also like playing them for free online.

      Like

    21. Danc,I think you're a genius, and thanks for this great article – please write the follow-ups quickly. :)In this piece you mentioned the drunken master game author (Dan Hoelck), and in his developer advice article he suggest there is a 'better way'.\”The ideal system would involve one website that sold premium versions of several different games. In the game, players would be encouraged to buy the premium version to unlock additional content and features, and would be directed to the sales website.\”Sounds a lot like Steam to me. Is it possible for Flash developers to band together and build FlashSteam? I'll pony up the first 50k.

      Like

    22. Re: Flash steamWe do need portals that are accepting of premium games. Absolutely. However, it is a big audience and one portal isn't going to serve the hundreds of millions of people that play Flash games. The real solution is to have a lot of very valuable content that players love. Portals will put that on their sites because there is a customer demand. It ultimately is in the hands of the developers. Make engaging content that players love and will return to again and again and a lot of opportunities emerge. I hesitate to rely on portals to solve developer problems. 1) The portals aren't big enough and 2) Developers usually get screwed when portals gain a dominant position in the market. See the casual game space for an example of this in action.

      Like

    23. Thanks, Danc. A great article. I think you make a lot of good points, particularly about execution, ask, and repeat.I do have some quibbles, though. One is that the top end of Flash game devs make more than beer money from current sources, which I know for sure because I know what we've paid out here at Kongregate. Great games get a lot more than $7k just from sponsorships. Dev ad revenue on Kongregate is also a lot higher than the numbers you threw out — $1-$2 CPMs are typical for devs at a 35% share, and we've got quite a few devs who've earned five figures in just ad revenue — and we're just one portion of their revenue. My estimate is that top games can make $30k-$50k from all sources, and while that's a lot less than six figures, it's not an amount that devs are easily going to risk.My other quibble is that to say that no portal controls more than 5% of gameplays is to miss a major dynamic of distribution, which is that most of the small portals pick the games they feature up from the large portals. If a game doesn't get featured on Kongregate, Armor Games, Newgrounds, or AddictingGames it's probably not going to end up on a whole lot of other sites.

      Like

    24. Again a very thoroughly put together job Dan, I don't know how you find the time.I'd be curious to know how much developers can charge for a branded game, since a lot of what goes into one game can go into another. So under the 'be a monkey' principle mentioned by Colin Northway, working on advergames could sit alongside making one's own games and even integrate to a degree.What does an advergame or branded game sell for?

      Like

    25. I dropped a link to this over at the Newgrounds Flash forum. So far, positive feedback. Some rambling thoughts though…The problem I can see with attempting to monetise games in this way is management of a proper support structure to keep the game's paid for content secure.The standard I've seen in Flash games is to package all assets up into a single SWF with no external files or server communication – that way, if the game goes viral a developer's site won't suddenly have to cope with thier game demanding data from the massive number of users over an indefinate period, and to ease the less scrupulous games portals copy and pasting thier game to thier sites. With the current Mochi and CPM style adverts, at least spreading your game around the net means that even if you're not getting the foot traffic to your site, the money is still being monitored.Proper monetising will need some kind of security on the back end- there is no way that all the content can be kept within the single SWF model as decompiling is too easy and too prevailant. Which means the savvy game developer needs to learn a server side language, stress test it to cope with the potentials of a NG Frontpage or a Kongregate promotion, and most importantly keep thier server online indefinately. Some users might be a bit put off if some of your game can't be played offline…Its also my experience, having beta tested a friend's Flash card game that had a log in system included, that if the clientelle of a site doesn't want to log in JUST for your game then they'll be quite spiteful towards it (as someone else has pointed out, if you're not well promoted, you don't get your game played).I've seen Nonoba introduce a micropayment API. It would be interesting to see just how well that's caught on behind thier multiplayer API. Maybe that would be the foundation of the \”Flash Steam\” thats been meantioned above…

      Like

    26. Truly brillianr article!Thanks alot!But you mean 200 years of capitalism, not 2000, didn't you?

      Like

    27. Do you think posting a flash game would be a good way to bring people to your website? I know it must work at some level because the whole reason I went to armor games was because of the advertising… but can it be used for branding?

      Like

    28. Eye-opening post. Can't wait for the next one.I can't say I'm hopeful, however. You mention the casual market and how portals are screwing developers. Well… As you mention the majority of Flash creators are full-time students, ie, a constant supply of people with boundless enthusiasm and very little financial sense. I dare say we ain't seen nothing yet.I fear we can't inform people enough about this. In global web-point-diddly marketplaces, be it casual or iPhone, there seems to be a worrying trend. There always seems to be enough people happy to get screwed as to outweigh the developers trying to make a decent living. Everybody gets dragged down to the bottom.There's plenty of naive hobbyist creators out there ready to be taken advantage of. \”What's marketing? Wait, I can sign away all my business responsibilities and benefits, tie myself into your system indefinitely AND give you 50% of my profits?! Wow! Where do I sign up???\”I guess the question is not of whether we can avoid this market being plundered to the ground by opportunistic middlemen. Can we really fight the tide? What might be worth trying is for the developers with the business and technical know-how to band together. Unionised, fair-trade, open-source co-operative… I don't know. There will always be people smart and skilled enough to come out on top, maybe united they can bring some balance to the equation (And take me with them. Yay.)I think I know now the meaning of the word indie: The freedom to bend over on your own terms, rather than let everyone else pull your trousers down for you.

      Like

    29. As a current full-time student game developer wondering if becoming a full-time developer after school is a worthy pursuit, I must say this is one of the best articles I've ever come across. Thank you so much for the words of wisdom, I look forward to the follow up!

      Like

    30. I sent this email to you, but I just got a return saying delivery has been delayed for 2 more days. Odd, huh?\”In your recent post on Flash development You put up a chart on money flow. You used two colors that are very difficult for color-blind people to discern when separate, let alone side-by-side. :(If you have the source, do you think you could change the image to be easier to read for us broken people?Thanks!\”

      Like

    31. Caleb, in that diagram the colors are also very close for non-colorblind people: red and orange. But in this example, the colors carry no meaning whatsoever! So I think you're set. 🙂

      Like

    32. Really nice article. I think much of it applies outside the constraints of the flash environs. There are some aspects particular to flash gaming but in large part, you could just be writing about internet gaming in general.

      Like

    33. axcho, I disagree. The colors seem to have some importance, as this is said: \”The red flows are where people pay out money and the green items are places where people earn money.\”I don't know which flows are red and which flows are green. I may be color blind, but I'm pretty sure I don't see any orange in this image. :)I wrote the email before I finished reading the entire post. It also appears that this image has red and/or green text that might have different meanings if one could tell them apart.Thanks.

      Like

    34. The diagram is drawn so that the coloring on the text is just another visual cue. You can read the text and get the same information. – Text that starts with \”Pays\” is colored red. – Text that stars with \”Earns\” or \”Takes\” is colored green. I'm color blind too. 🙂 (Though to a lesser degree) Danc.

      Like

    35. Wow, this is an incredibly helpful article! I recently helped start a company called Make it Play it (http://www.makeitplayit.com) which we hope will soon become a great resource for flash game developers. We're making a wiki full of basic flash tutorials as well as concepts and game theory, and a community to test them out on and get feedback.We're trying to find a number of ways to monetize flash gaming, including monthly contests with prizes. We're hoping that as Make it Play it gets more popular, our contests will hold more acclaim, and winning a contest would be more important than the money – helping the developers market their games to sponsors and others. Danc, if you read this, please contact us, as we would like to use this article and others for our wiki on making money with flash games. In addition we love your idea for the \”perfect\” payment provider and would like to discuss that in greater depth.Make it Play it is going to be a community run website. We'd love to get more input from you, and others in the flash gaming community, so please take a minute to check us out: http://www.makeitplayit.com/OfpXg/.

      Like

    36. Great article Dan! I came here from Jeremy Liew's summary…Kudos to your for owning your own virtual currency and customer data. If you're looking to charge directly and even potentially offer new business models in the future (dual currency, subscriptions) as you move further into direct monetization, you should look at Vindicia (http://www.vindicia.com/solutions/online_gaming.html). We're in complete agreement about owning not only your customers, but the complete customer experience. Our solution is completely whitelabeled. We also store your customer's payment information, allow for multi-currency balance management and the creation of customer self-support pages where users can check their account balances and purchases history or update their payment information. We bundle this solution with fraud management and customer communications and our price point is significantly less than the 20% you mention in the article.We've seen many online content companies shift from ad-based models to direct revenue. I strongly suspect we'll see more of the same in the casual and social gaming industry.

      Like

    37. I don't know if this was mentioned by anyone already (I don't have much time to read the other comments), but I have always felt that there should be a portal by game developers for game developers. Consider the potential benefits:* Developers getting a fair percentage* Tokens that can easily be spent on anything* Quality Assurance — only games of a certain standard of quality* A tag-team of developers who can help polish up potentially good games* Developers would not need to worry too much about complicated matters such as payment processing, ad networks, or business in general* Etc.Despite the available resources, it is still tough for many people to make a living as an indie game developer. There should be somebody trustworthy developers can turn to for help and know that everything to help ensure success.We currently have, essentially, pyramids built on the backs of slave labor with a few extremely wealthy people at the top. We need to strengthen the base. Developers need to be given their fair share.

      Like

    38. To continue my thought, with a more positive tone, consider what a potentially great business such a portal could be! It makes the most sense to try to have everybody profit all around so as to have the best developers keep returning with new games.Such a portal can invest in sprucing up games — guaranteeing the best graphics, sound, gameplay available on the internet. What a draw it would be for players to know that every game is good.With an easy token system for developers to take advantage of, a player can quickly and easily make micro-transactions across countless games made by many different developers. Such unification can have a reinforcing effect on all the games on the site — players knowing they can spend their tokens on any game, prize, or product on the site.Not only that, but a really great portal would help to build upon the intellectual properties of the developers. Consider being able to purchase figurines, toys, t-shirts, posters, etc. relating to game content — such as characters.It can be an active portal working hard to make sure the most money is made for everyone while at the same time providing great value to the players. It would not just be a dumping ground for games with the portal doing nothing more than listing whats available.So many people could be making so much money and the games can be so much greater if the focus was on helping everyone involved succeed.

      Like

    39. I really like that idea, SlawDog. What do you think would be the best way to get something like that started?Maybe all the revenue and expenses could be easily visible by anyone, so it becomes more of a co-op thing than a big pyramid.

      Like

    40. On the whole, I think it's a great article. However, I have one small objection to the bit about monetization.If you offer \”accelerators\” or other things that let people get ahead in your game, then you're basically letting players cheat for money. Some people might find this cheating objectionable. For example, I would never donate money to Kingdom of Loathing, because they always give items that have in-game effects; I don't want to be seen as a cheater.Of course, this only applies to the \”accelerators\”, not other strategies like content gates.

      Like

    41. Accelerators are neither always good or always bad. Your player's reaction to accelerators depends on the type of game, the social implications of usage, the individual player's past experience and the expectations that you set as the leader of the community. Some typically irritable players: – Players of zero-sum competitive games – People who feel that their status in the community is threatened by 'upstarts' who didn't follow the same path as they did. – Players who come from previous 'hard core' games where such tools weren't used. \”It's unnatural!\” On the flip side, other players simply see accelerators as tools that can purchase that help them enjoy the game more. Some styles of game a non-controversial In single player RPG style games, accelerators tend not to upset anyone. In general games where player play in parallel and one person's advancement doesn't hurt others directly are good candidates for accelerators. Ultimately it comes down to community norms. If it is standard and always was standard in Kingdom of Loathing for items to have in-game effects, the majority of players will accept it without comment. Sure there will be a small minority that complain, but in *any* community there are going to be small minority that complain. Often this a customer service and messaging issue, not just a core game design issue. There's a concept in business about firing your customers. If you have someone who doesn't pay you, who complains incessantly taking up substantial customer support time, and disturbs your other customers…you have a choice. You can keep pouring money into that person. Or you can send them to a competitor. It sounds harsh, but game developers often need to decide who their customer should be and then optimize the experience for that person, not for all players (no matter how vocal) take careDanc.

      Like

    42. Axcho, that's what I was thinking. Complete transparency would be a must. It would be best to consider developers almost as business partners with a focus on the mutual success of everyone involved. There would have to be a fine balance between freedom and interdependence. Anybody should be able to have the opportunity to join in with a new game of their own design while at the same time helping to support each other. It would have to be a community focused on success — helping each other to best monetize the games being made.If I had money to invest and the business knowhow I probably would have attempted to create such a site already, but I'm not really in much of a position to attempt it.

      Like

    43. It's kind of depressing that you're using advertising terms and concepts to describe the monetization options open to Flash game developers (\”call to action\”). Low-end web advertising is a volume game, and it's not one game developers want to be in. Some people will do well, but it's like having \”win American Idol\” as a business plan.The problem is that, fundamentally, the way to make money off games is to *sell them* — or sell the service of making more games (e.g. advergames where an advertiser hires you to build a game for up-front money, vs. the whiff of impression revenue).Flash as a game development platform is actually *remarkably terrible* in almost all respects except target platform. Despite being at version 10, Flash remains a comparatively unproductive platform to build games in relative to, say, shockwave (to pick an older example) or unity (to pick a newer) — both of which let you (for example) build animated assets in a decent tool (versus Flash which sucks even for drawing beziers) and import them directly without jumping backwards through hoops — shockwave and unity have poor penetration, but in no other respect are they inferior to Flash.The *only* killer feature of Flash is target platform — and I'd suggest that JavaScript + Canvas is a better target platform than Flash (and a more productive development platform) — write a game in JavaScript and it will run on almost every conceivable platform; require canvas and you're down to … what … only iPhones, Pres, late model Nokias, Androids, current gen game consoles, PCs, Macs, Linux boxes?

      Like

    Leave a Reply

    Fill in your details below or click an icon to log in:

    WordPress.com Logo

    You are commenting using your WordPress.com account. Log Out /  Change )

    Google photo

    You are commenting using your Google account. Log Out /  Change )

    Twitter picture

    You are commenting using your Twitter account. Log Out /  Change )

    Facebook photo

    You are commenting using your Facebook account. Log Out /  Change )

    Connecting to %s