Nicholas Lovell<br />GAMESbrief<br />Edinburgh Interactive Entertainment Festival<br />August 11th 2011<br />NEW BUSINESS ...
Nicholas Lovell, GAMESbrief<br />Author, How to Publish a Game<br />Director, GAMESbrief<br />Clients include Atari, Chann...
Subscribe to the blog<br />
Show offer: Get 80% off<br />Go to www.gamesbrief.com/store<br />Enter code EIEF80<br />Get How to Publish a GAME for 80% ...
Free – It WORKS<br />
Free has been hugely successful<br />Zynga: <br />filed its S-1<br />$600m + in revenues<br />Valuation expected >$10bn<br...
Free is a marketing technique<br />Free means you have a lower barrier to entry <br />Free means more people try your game...
Why does free work?<br />
The price/demand curve<br />In an era of physical distribution, you need to set a single price<br />For games, around $40<...
Now we let users set the price<br />Hypothesis: Allow users to choose how much they spend on your product, and your revenu...
LOTRO and Everquest II showed a similar story</li></ul>$3<br />$5<br />$5<br />$1<br />$5<br />$3<br />$10 MMO subscriptio...
WRONG!<br />
Allowing users to choose how little to pay is not the secret<br />We all knew that 95% of users played for free<br />We no...
Find the whales<br />
An iOS example: Pocket Frogs<br />
An iOS example: Pocket Frogs<br />
Content is the hardest thing to sell<br />
It’s deeper than that<br />
People pay for status, for emotions, for feelings, for progress<br />People will pay to:<br />Fit in: “everyone else has g...
Some basic rules of free<br />
ARM yourself <br />Hoping for the best is not good enough, you need to ARM yourself<br />ACQUISITION: How do I get people ...
The rule of 0-1-100<br />Make it enjoyable for people to play for free for ever<br />Make it easy for people to spend $1<b...
Be generous<br />“Give, and it shall be given unto you” Luke 6:38<br />
You’re not making films anymore<br />
Free is flexible<br />
Are free / freemium / F2P games evil?<br />
NO<br />
F2P = evil (or not)<br />The business model is designed to take money from you<br />So is the coin-op, or the MMO, or the ...
Some valid concerns<br />How much money is it ethical to take from a single player, in a single month?<br />Are microtrans...
Morph – a thought experiment<br />Business model 1<br />Make an iPhone App<br />Offer a Lite version and a 99¢ game<br />B...
Incorporate ads for a limited edition, 1,000-only print of the original Morph, framed for your wall for $999
Conversion rate of 0.1% = same revenue  (oh, no 30% to Apple)</li></li></ul><li>I love free<br />
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New business models: how to make money giving your game away for free

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“Free” is proving to be the most profitable price point for a game.

It’s working for giants like Zynga (Cityville) and Bigpoint (Dark Orbit). It’s working for small companies like Nimblebits (Tiny Tower) and Snappy Touch (Flower Garden). If you make games (or want to), you need to understand the power of free.


I originally presented this at the public sessions at Edinburgh Interactive on 11th August 2011. http://edinburghinteractive.co.uk/public-programme

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New business models: how to make money giving your game away for free

  1. 1. Nicholas Lovell<br />GAMESbrief<br />Edinburgh Interactive Entertainment Festival<br />August 11th 2011<br />NEW BUSINESS MODELSHow to make money giving your game away for free<br />
  2. 2. Nicholas Lovell, GAMESbrief<br />Author, How to Publish a Game<br />Director, GAMESbrief<br />Clients include Atari, Channel 4, Channelflip, Firefly, IPC, nDreams, Rebellion and Square Enix<br />@nicholaslovell / @gamesbrief<br />
  3. 3. Subscribe to the blog<br />
  4. 4. Show offer: Get 80% off<br />Go to www.gamesbrief.com/store<br />Enter code EIEF80<br />Get How to Publish a GAME for 80% off:<br />Digital: £99£19.90<br />Physical: £149£29.90<br />Both: £149£29.90<br />
  5. 5. Free – It WORKS<br />
  6. 6. Free has been hugely successful<br />Zynga: <br />filed its S-1<br />$600m + in revenues<br />Valuation expected >$10bn<br />Tiny Tower:<br />2 men, four months<br />Currently #12 in the top grossing chart<br />Conservative estimate: $3m revenue in first 12 months<br />(PS: # 1, 3, 4, 5, 6 are free too) <br />Bigpoint<br />€200 million in revenue<br />€650 million valuation<br />
  7. 7. Free is a marketing technique<br />Free means you have a lower barrier to entry <br />Free means more people try your game<br />Free gives you players; players are potential customers<br />It’s all about the conversion from free users to revenue generating users<br />If you are not free, you are competing with free<br />Advertising-funded<br />Pirated<br />Free from someone else<br />
  8. 8. Why does free work?<br />
  9. 9. The price/demand curve<br />In an era of physical distribution, you need to set a single price<br />For games, around $40<br />PRICE<br />“It’s great <br />value, I’d have paid much more”<br />“That’s too expensive for me”<br />Demand<br />
  10. 10. Now we let users set the price<br />Hypothesis: Allow users to choose how much they spend on your product, and your revenues will go up<br />PRICE<br /><ul><li>DDO revenues up 500%
  11. 11. LOTRO and Everquest II showed a similar story</li></ul>$3<br />$5<br />$5<br />$1<br />$5<br />$3<br />$10 MMO subscription<br />$3<br />$3<br />$3<br />$1<br />$5<br />Demand<br />
  12. 12. WRONG!<br />
  13. 13. Allowing users to choose how little to pay is not the secret<br />We all knew that 95% of users played for free<br />We now know that 80-90% of revenues come from 0.5% of users<br />PRICE<br /><ul><li>Spending $50 - $10,000 or more</li></ul>Demand<br />Free: 95%<br />Paying: 5%<br />80-90% of revenue from 0.5% of users<br />
  14. 14. Find the whales<br />
  15. 15. An iOS example: Pocket Frogs<br />
  16. 16. An iOS example: Pocket Frogs<br />
  17. 17. Content is the hardest thing to sell<br />
  18. 18. It’s deeper than that<br />
  19. 19. People pay for status, for emotions, for feelings, for progress<br />People will pay to:<br />Fit in: “everyone else has got a Santa Hat, I want one too”<br />Stand out: “Look at me with my twin flaming swords of Poinsettia”<br />Fit in AND stand out: “Hey, we’re the guild where everyone wears purple”<br />Build friendships: “Here, let me give you some flowers as a sign of our friendship”<br />Flirt: It’s the Internet. Of course it’s about sex.<br />
  20. 20. Some basic rules of free<br />
  21. 21. ARM yourself <br />Hoping for the best is not good enough, you need to ARM yourself<br />ACQUISITION: How do I get people through the door cost-effectively?<br />RETENTION:How do I keep people coming back for more?<br />MONETISATION: How do I build money-making strategies into gameplay<br />Most developers focus on one of these <br />All three are really important<br />
  22. 22. The rule of 0-1-100<br />Make it enjoyable for people to play for free for ever<br />Make it easy for people to spend $1<br />Make it possible for people to spend $100 per month<br />
  23. 23. Be generous<br />“Give, and it shall be given unto you” Luke 6:38<br />
  24. 24. You’re not making films anymore<br />
  25. 25. Free is flexible<br />
  26. 26. Are free / freemium / F2P games evil?<br />
  27. 27. NO<br />
  28. 28. F2P = evil (or not)<br />The business model is designed to take money from you<br />So is the coin-op, or the MMO, or the DLC<br />Some people spend lots of money on it<br />You get lots of content for free<br />Instead of paying for access, you pay for the experience that you VALUE<br />They’re not real games<br />Grow up. <br />Oh, and the games will grow up too<br />They don’t have enough skill / fairness / challenge<br />Well don’t play them then<br />Just because you don’t like them, doesn’t mean they are evil<br />
  29. 29. Some valid concerns<br />How much money is it ethical to take from a single player, in a single month?<br />Are microtransactions appropriate for children?<br />Are there certain games that aren’t suited to free-to-play<br />I say no<br />There may be some players who aren’t suited to microtransactions<br />Free games require certain infrastructure and expertise that may challenge the indie developer<br />Will it stop working?<br />
  30. 30. Morph – a thought experiment<br />Business model 1<br />Make an iPhone App<br />Offer a Lite version and a 99¢ game<br />Business model 2<br /><ul><li>Make a free iPhone App
  31. 31. Incorporate ads for a limited edition, 1,000-only print of the original Morph, framed for your wall for $999
  32. 32. Conversion rate of 0.1% = same revenue (oh, no 30% to Apple)</li></li></ul><li>I love free<br />
  33. 33. Free is changing the games industry – for the better<br />Free allows small studios to make big money from serving niche audiences<br />Free reduces risk, and hence increases diversity<br />Free gives more choice to consumers<br />I get lots of games for free!<br />
  34. 34. Thank younicholas@gamesbrief.comFollow my blogwww.gamesbrief.comBuy my booksEIEF80 (until Friday 5pm)<br />

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