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Game Strategies a.k.a. Monetizing Games

I always say to my friends that the minute I sound like I am making sense or know what I am saying, please hit the pause button cuz I’m not the sharpest guy you’ll meet. Having said that…let’s look at the trend in US gaming that seems to be trailing and copying Asia, EU and Eastern EU.

Fully 80%+ of game publishers are exploring monetizing their games via in game currencies and commerce. A couple of quick definitions to help make sure we are singing the same song, including the monetization strategy;

1. subscription based games - monthly recurring subscriptions provide enhanced levels/attributes/game play in exchange for paying a monthly subscription. These have been common in the US and are not popular in Asia or EU (more on that later). Recently, US companies are combining free2play models as the lure to get gamers into subscription services. When we think of subscription models we invariably thing of World of Warcraft (WOW) and the like.

2. Free2play - exactly as it sounds…play for free and have the opportunity to buy additional items/assets/resources with virtual currency that is earned or via hard cash (if you want to save time) in either the primary or secondary markets (see below). In Germany, one of the most successful and least known companies is gameforge.de, who have an awesome and impressive stable of cool games!…and 70M users! Yes, you read correctly 70 M-I-L-L-I-O-N subscribers. If you are a US publisher and you want to license your game to EU, these are the guys to contact (Lars Koschin - President of N.America)…as they can get instant eyeballs on your game!

3. Primary Market (publisher to gamer) - sale of virtual items or currency (usually via micro payments = sub $5 purchases). These games are highly addictive and as often as I don’t want to spend the money to play, find myself buying virtual currency or items to get me to the next step in the game more quickly. This is the standard of play in EU and Asia…which is coming in droves to the US as imported games and as US publishers are developing their games with this concept in mind.

* If a publisher doesn’t have their own primary market, they can always turn to the two primary companies in this space (Live Gamer, which is owned by Mitch Davis of Massive fame and Play Span, which has both a primary and secondary market solution + have recently acquired PayByCash to combine alternative payment options with their offering).

4. Secondary Market - a.k.a. known as Player3Player or Peer2Peer transactions - think of eBay and you get the point. Player 1 has a cool virtual item and wants to sell it…and along comes Player 2 to buy it. The publisher who maintains the virtual marketplace receives a percentage of the sale price. Briliant concept because virtual items have a zero cost of manufacturing, can be created in unlimited quantities if necessary, have 100% profit margin and their value is directly relational to the need for the item. The only legitimized player in this space is Play Span, as they offer both primary and secondary marketplaces for virtual currencies.

Geo Considerations - generally speaking, these rules apply…

US - was subscription and now easily 85%+ of publishers have virtual currency and virtual items as part of their development road map to include the free2play model with either primary or secondary market sales.

EU - free2play with primary market place being the key revenue driver…with companies like gameforge.de leading the way.

Eastern EU - ditto EU - a recent development there has been the creation of www.astrumonline.ru, which rolls the four largest publishers (Nival Online, Territory IT, Nikita Online and Time Zero) under one umbrella corporation, run by Robert Johnsson.

Asia - in a games heavy culture…monetizing via primary and secondary markets are king!

Alternative payments - game publishers, more than any digital industry on the planet understand how to localize their products abroad while offering the maximum ways to pay (localized payment methods). If you don’t believe me…go check out Habbo Hotel (Sulake Corporation) which quite simply offers every possible payment method known to man!

Alas fellow campers…it is late…time for bed!

All the best

Jamy

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