The monetization and sustainability of online games
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Once you start a company, how do you make it sustainable? You might not always have that sticky factor with every game you create, but what do you need to do to create a business that is successful not just in the short term but the long run? Exploring successful gaming companies – small, large and everything in between, how do companies balance the need to create sustainable business models that include games versus great games that that have a sustainable business model?
Industry giants such as Microsoft and Sony are very invested into creating an experience for gamers based on significant investments into consoles and games, and doesn’t see the industry shifting towards freemium rather than premium games. Jack Tretton, CEO and President of gaming giant Sony Computer Entertainment (SCE) doesn’t see social and free play games as something that will have long term staying power. “There’s a place for social and freemium, but it’s not going to replace the business models that are out there”.
Is there a business model that is sustaining itself for social and freemium games? Clearly there are examples with mobile and tablet game giants such as Rovio (Angry Birds), Halfbrick Studios (Fruit Ninja), Zynga (Farmville, Words with Friends, Draw Something), and many more companies that release their games based on leveraging social interaction and/or low barriers of entry to play.
It seems that SCE believes it is better to have a business model that designs great immersive games that can bring hours of entertainment and let that be the driving force to generate revenue and profit. SCE has seen high and lows but has always remained competitive in the console world.
Perhaps there is a happy medium between the two opposing models. Paul Crowe, CEO of Bnotions, finds that he has the best of both worlds. “Within one year Angry Birds was generating 10 million dollars in advertising revenue. If a brand had made that, and only their brands were being generated through that app… they would be able to save 10 million dollars in free media. The multiplier is huge. Nike has done it. Burger King went down this route. People are starting to play it… We position ourselves as an innovation partner, we want to come in and work with clients who take risks and use their innovation budget effectively.”
One area that we are seeing happen across the spectrum though is the growing integration of corporate brands and product integration in our games, which is helping companies stay relevant and stand out in the increasingly competitive market.
“I look at what Nike has done with their Fuel Band with Nike+ and Nike Run… it has gamified my life. That is actually a business in itself” noted Crowe. ” They are making profit. They don’t have to advertise it. I’m going home every night and syncing with my computer. They don’t have to pay me to look at their message, I’m actually paying them to look at that information.”
Bnotions in an example of a Toronto based company that has certainly had success with using casual games as vehicles to advertise products for their clients. “We want brands to build games that can become a part of their business model”, said Crowe. For example, The Lindt Perfect Match Tennis Game, staring Superstar Tennis Player, Roger Federer, has generated positive buzz for Lindt and is a sustainable gaming engine which can modify its advertisements to consumers, Rogers Cup earlier this month, and US Open later in the month.
While Bnotions has made a great campaign linking both product and company, sometimes games can promote a social campaign. In 2008, Burnout Paradise, by Electronic Arts, featured in-game advertisements encouraging players to vote for Barack Obama. Did Obama help sell more games? Or did EA contribute to Obama’s success? Either way, they most likely both benefitted from this partnership. If someone wants to make a Steven Harper/Bauer hockey app, please e-mail me ASAP. I have a great idea.
Want to learn more about how gaming companies are staying competitive in today’s markets and which business models are being experimented with? We know, this is a hot topic. Share your thoughts with us on August 29th at our live and intimate event as we discuss many challenges and opportunities that are involved in running a successful gaming company. Register today to secure your spot!
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