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Mobile Games Revenue Models Presentation at Gamer Tech Law conf. oct 2013


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Riaz Karamali's Presentation on Mobile Games Revenue Models at LSI's Gamer Tach Law Conference in Seattle, October 2013

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Mobile Games Revenue Models Presentation at Gamer Tech Law conf. oct 2013

  1. 1. Pillsbury Winthrop Shaw Pittman LLP Mobile Platforms and Business Models Presented by: Riaz Karamali, Partner Palo Alto, California Monday, October 07, 2013 Gamer Technology Law New technologies, opportunities, regulations and business models
  2. 2. Foundation: Common Revenue Models  Show Me the Money!  Advergames  Advertisements  Auctions – Player Trades  Crowd-Funding  Free Games  In-App Purchases  Real Product Sale  Selling Games  Subscriptions 1 Mobile Platforms and Game Revenue Models
  3. 3. Revenue Model: Advergames  Game is made to a specific advertisement campaign of a company.  Different types: above the line, below the line and through the line  Pros  Simple production  Shared risk  Cons  Shared risk (brand and developer)  Unlikely to be a hit – capped upside 2 | Mobile Platforms and Game Revenue Models
  4. 4. Revenue Model: Advertisements  Using ads inside games.  Different types: static, dynamic, product placement, others  Pros  Users aren't charged for this and allows apps to be free.  Cons  Less money per user, need great user base to make good money. 3 | Mobile Platforms and Game Revenue Models
  5. 5. Revenue Model: Auctions / Player Trades  Create in game or parallel online economy around virtual goods.  Pros  Can be lucrative and engaging to users.  Cons  Best suited for virtual worlds and MMORPGs.  Fraught with real world issues. 4 | Mobile Platforms and Game Revenue Models
  6. 6. Revenue Model: Crowd-Funding  Use a crowd-funding platform to pre-sell the game  Pros  Cut out the publisher  Validate demand prior to large investment in development  Engage your community  Cons  The odds are stacked against lesser known developers  Managing a successful kickstarter campaign is a full time job 5 | Mobile Platforms and Game Revenue Models
  7. 7. Revenue Model: Free Games  Game devs use free version of games to promote the paid version, use free games just to promote themselves or in combination with other revenue model.  In combination with free: shareware / paid upgrades or solicit domations  Pros  Lowers barrier to download  Cons  Cannibalization  Can lower quality of user interactions with each other 6 | Mobile Platforms and Game Revenue Models
  8. 8. Revenue Model: In-App Purchases  One of the most successful models for mobile games.  Game is a free-to-play game that sells virtual goods to let users accelerate things, get more money or buy special thing.  Goods – functional, decorative or functional AND decorative  Pros  Users can decide how much to spend – hello whales!  Cons  Need strategy to engage users to pay for goods without alienating them or skewing gameplay 7 | Mobile Platforms and Game Revenue Models
  9. 9. Revenue Model: Real Product Sale  Sell products around your game and sell them to players within game setting  Pros  Source of revenue beyond game itself  Cons  Players must be fan of game outside of game setting 8 | Mobile Platforms and Game Revenue Models
  10. 10. Revenue Model: Selling Games  This is the most common revenue model  Pros  Easy and straighforward  Quick results  Users are familiar with this model  Ability to change pricing / have “sales”  Cons  Some players will not buy; so demand is reduced  May invite free imitators 9 | Mobile Platforms and Game Revenue Models
  11. 11. Revenue Model: Subscription  Players pay a periodic fee to play.  Pros  Recurring revenue  Cons  Frequent updates  Difficult to manage 10 | Mobile Platforms and Game Revenue Models
  12. 12. Hybrid Approach: Using Multiple Models Free Games + Ads Selling Game This is a good combination to earn money both ways, using a limited free version to let people try your game but still monetizing them with ads and if they like it sell the game. In-App Purchases + Ads A nice combination to have a good number of users and monetize them in two ways: Selling premium options (ex. Virtual goods) and ads. This way you monetize even the user that don't buy premium options Selling Games + In-App Purchases This combination is selling game and using in-app purchases to sell virtual goods to maximize the game revenue. 11 | Mobile Platforms and Game Revenue Models A few possible examples:
  13. 13. Changing Gears 12 | Mobile Platforms and Game Revenue Models King Quits Advertising Since It Earns So Much On Candy Crush Purchases Game developers are using a number of different revenue models: • Some game provide multiple revenue models within one games • Other games are changing their revenue models as they build and engage a player foundation
  14. 14. App Stores 13 | Mobile Platforms and Game Revenue Models When in the initial stages of game development, developers should clearly outline monetization strategy and goals and align those with legal and regulatory guidelines
  15. 15. Mobile Operating Systems: Competitors and Also-Rans 14 Mobile Platforms and Game Revenue Models Operating System Units 2012 2012% 2011% Android 136 million 75% 57% Apple 26.9 million 14.9% 13.8% Blackberry 7.7 million 4.3% 9.5% Microsoft Windows 3.6 million 2.0% 1.2% Symbian 4.1 million 2.3% 14.6% Linux Mobile 2.8 million 1.5% 3.3%
  16. 16. Analysis of Key Terms and Conditions Governing Software Application Development and Distribution 15 | Mobile Platforms and Game Revenue Models
  17. 17. Case Study: Crowd-Funding  Typical Scenario – product pre-sales  Android Terms  Open distribution policy – no problem  Apple Terms  Apps must be sold through the AppStore  50 promo codes per version  Possible Solutions  Brief free period  Gifting  Special donor version with unlock code  Special deal with Apple (e.g. Amazon free apps) 16 Mobile Platforms and Game Revenue Models
  18. 18. Questions? Riaz Karamali | Partner Pillsbury Winthrop Shaw Pittman LLP 2550 Hanover Street | Palo Alto, CA 94304-1115 Dir 650.233.4052 | Fax 650.233.4545 | Cell 650.814.5597 Email: Bio: 17 | Mobile Platforms and Game Revenue Models