Wednesday, June 26, 2013

Monetizing a Freemium Game

In this article, indie developer Dave Calabrese discusses how Cerulean Games will seek to monetize a freemium mobile game via three different revenue streams.

Our reasons to make Tumblecaps Retro freemium were strongly based around what we discovered our potential customers wanted. We discussed how we are adding lots of new content for players to enjoy, and touched lightly on some of our bigger plans. Now, we want to take a moment to talk in detail about how we intend to make a profit from the game. After all, this is a business, and without an income the games can’t be made.

There is no question that when working with the mobile space, you generally tend to have a different type of gamer - or at least a traditional gamer looking for a “quick, on the go fix". We can’t easily sell a game to mobile gamers the same way we would a console or PC / Mac title - not unless we were a huge AAA developer. In many ways, indie mobile developers have spent a lot of time digging through the box of monetization - sell in-app currency, allow players to upgrade their content and experience, time based limitations, etc. Overall, these have proven to be a rather successful set of methods. However, it seems like it is just one of the methods. This is selling content to the consumer - and it is what we will call Monetization Method One.

Placing banner ads in a product has been around forever. Think back to the glory days of when the Internet was nothing more than Prodigy and you might remember seeing banner ads on pages while you surfed what their service had to offer. And overall, players are fine with banner ads. They look at and sometimes click on ones they are interested in, and can easily ignore the ads which don’t intrigue them.  And you will want to tweak those ads to their tastes. These ads earn the developer a decent profit, and in some cases developers have earned significantly more from free applications using banner ads than a paid version of the same application without the ads. Banner ads are Monetization Method Two.

This is when we start peeking outside of the box and feeling around its edges. The safe, comfortable zone of traditional monetization does not exist here. I’m talking about the theory of “making money because of your player, instead of from your player". The concept is simple - the player performs an action within the game which costs them nothing, nets them a reward, and as a developer you make a profit from it. This concept has been around in various flavors for a while now - including technically the banner ad, however our integration options are becoming much better. We have been fortunate enough to speak with multiple companies who have ventured outside of the box to introduce these more creative forms of monetization - which we will call Monetization Method Three. After careful consideration, we have decided to use the Paedae service.

According to PaeDae’s SVP of Business Development, PaeDae focuses on two things:
  1. Delivering industry leading monetization rates, and 
  2. Maintaining the integrity of the original game design / user experience.
He says: 
We achieve these previously conflicting objectives by presenting players with relevant, targeted rewards at a moment of success and through our white label solution. PaeDae partners with major brands to deliver prizes that match the context of the game. You have a pet game, we have pet related prizes. And we make sure the prize is relevant by targeting the individual. These brands are giving away gift cards, free headphones and even a chance to enter a million dollar sweepstakes. That’s right, a chance to win $1 million.

Next, our white label solution allows game developers to customize the prize presentation to make it feel native to the app. Developers can add textures from the game, add icons or other creatives, so that it feels like a part of the intended experience. We also recently released BARTR, a free user acquisition platform, to help independent developers get past that increasingly more difficult process of game discovery. All in the spirit of helping the indie community.
PaeDae has been working closely with us to help make Tumblecaps Retro a success. As with any knowledgable vendor, we find their experience to be invaluable to our success.

To recap, through these three methods, we believe that a game can be made a financial success.
  • Method One: IAP. Allow players to upgrade their experience - however be sure to keep content in there as well, as traditional players would rather purchase content than spend on quick upgrades.
  • Method Two: Banner ads. Be smart, don’t overdo them, and be creative in your integration.
  • Method Three: Make money because of the player, not from the player. Let their actions trigger payouts to your company, and give them a reward for doing the action.
What monetization methods have your tried? What kinds of success (or failure) have you had? Tell your stories in the comments!

[This article was adapted from Cerulean Games' blog on Tumblr. ]

Dave Calabrese is an award winning author, designer, developer, manager, and producer with over ten years’ experience in the independent games industry. He specializes in development and production of cross-platform titles for iOS, Android, PC, and Mac using the Unity 3D game engine.


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