In this year's ION Game Conference closing keynote, WildTangent CEO talked about “The PC Gaming Comeback,” predicting the death of video game consoles and the rise of online PC gaming, as well as the increasing importance of monetizing games with advertisements.
St. John introduced attendees to WildTangent by noting that the company has the fourth largest private game network in the U.S., and said it receives 50 percent of its revenue from ads sold on both single-player and multiplayer titles.
Games As Unique Media
St. John went on to describe games as the only addictive media and the only extremely re-consumable media: “The value comes after or during consumption, not before. The game can be different each time it's played, unlike a movie. Games are the media of interactivity, making them uniquely difficult to interrupt.”
Consoles are Dead!
Beginning one of several brazen claims in his keynote, St. John spoke of the death of video game consoles: “Nobody needs a console when a game's value and DRM is defined by community or an input device. Consoles just serve to keep you from playing a game you didn't pay for.”
He asked, “What's Sony and Microsoft's motivation to make another console? It's been so rocky, and it's not about the pretty graphics anymore.” According to St. John, spectacular graphics have become a commodity, and not the platform for games to differentiate themselves. “The Wii is the exception that proves the rule -- it's not about the graphics, it's about the input device.
Online PC Gaming Renaissance
St. John speculated that we’re in the early days of an online PC gaming renaissance: “There's a wide open opportunity here. Anybody can get into this, and everything the traditional publishers and game companies know about doing business will ensure their failure.”
“There's no advantage to traditional game publishers online,” he argued. “The box game industry requires the money up front before they'll let you find out if it's any fun. Online, you get to try it before you put money down. And in that world, brand doesn't matter. Brand is the promise of entertainment, but now it's the experience that matters. Great games are best monetized after a consumer is hooked.”
Intrinsic Value Of Games
Further emphasizing the lessening importance of brand, boxes, and communities, St. John listed replay addiction, persistence, ease of consumption, and ease of payment as the elements he believes now make up a game’s value: “Every game has an intrinsic ‘value’ that can't be changed with great marketing. A game has a constant conversion rate. Marketing gets more people to look at the game, but the same percentage will buy it.
Imitating Television’s Advertising Model
St. John believes that at least 50 percent of the monetizable value of any premium game will eventually be in advertising, comparing future models to television ads: “Television is ‘free’ because the value of the content to an advertiser is greater than the capturable value of the content to the consumer.”
He continued, “Advertising does not cannibalize games sales when it is presented correctly, thus not designing a game to support advertising wastes 50 percent of its value.”
St. John presented WildTangent data, explaining that the 'average value' of a game comes to about $0.36 per session to a user, and about one dollar per thousand clicks (CPM) to an advertiser. Games with free and pay options will see about 50 to 100 times the audience playing for free versus those that pay, and players will visit a game 50 to 100 times over 120 days (excluding MMOs).
Who And How To Target
Contrary to many casual game audience theories, St. John said games targeting young males are amongst the more valuable to make, adding that console-type games get the highest CPMs, and saying the landscape needed more classic 3D console/arcade style games.
So how can developers maximize revenues from their games? Design your games to be consumed in small units of value, he said, and ask for advertising revenue share from your distribution partners.
Other suggestions: do play a video ads during the load time of the free play, but avoid interrupting game play with ads, avoid advertising in paid game play, and avoid "crapping up" the interior of your games with in-game advertising. "It doesn't work," concluded St. John. "It's a bad idea."