Should more game developers be looking closely at Flash games as a source of income and potential influence? Swedish game development CEO Magnus Alm thinks so, and explains why all developers should be looking to web-browser games in this exclusive Gamasutra editorial.
"Do you run an indie game development company looking to make good business by doing projects in manageable sizes? Or are you perhaps working with a strong, rooted studio looking to find new business areas? I just might have a suggestion for you.
In contradiction to what many developers seem to believe, there is a huge growth in the Flash game industry these days. Mainly because of these reasons:
• The upward economic trend within the games industry in general.
• Advertisement agencies realizing the need for skilled game design competence.
• A growing online and casual games market.
• And let's not forget that flash games now are being ported to other platforms.
Marketers Spend Money
It's not a news flash, there are huge budgets for advertising. The typical advertising budget for a medium sized company can be larger than the budget for a next-gen game production. As the games industry keeps gaining focus from the public and other business areas, advertising agencies are not late to follow the trend. 72% of online marketers said they planned to increase their online ad spending during 2007, according to a survey from BtoB magazine.
Advertising agencies are going to continue to pitch campaigns based around games even more often than before. It's all about prolonging the time a consumer is willing to spend with a brand. Playing a game is fun, you can do it for hours on straight. Put a recognizable logo anywhere in the game and you're branding instead of playing.
Boundaries between gaming and advertisement are getting blurred. Spending on in-game advertising will pass $2 billion in 2012, up from $370 million in 2006, according to Parks Associates' "Electronic Gaming in the Digital Home: Game Advertising" report. Games are becoming stable platforms for marketers.
So here's a little secret for you: Advertising agencies work just as hard as game development companies, they have just as creative and even more diverse jobs than we have, and guess what? They send invoices for a heck of a lot more money to their clients than game studios typically do. That's why they'll spend more money per man-month on your small Flash game than a publisher would do on your next-gen title.
My company has been working with campaigns such as Fight for the Flavor, an online fighting game for Doritos. We recently completed a game for Paramount Home Entertainment, and the experience was quite similar. Advertising agencies love to work with game companies. They'll ask for your creativity and crazy ideas. They'll most of the time give you complete control of the design process, within the limitations set by the client of course. And what's more, they'll pay you good money for your work.
There Are A Lot Of People In Asia
There's a whole lot of buzz around the growing online games market in Asia, and China in specific. It's not only the MMOG sector that is growing. Casual flash games are seeing more and more players each day. According to industry analysts, the casual games market in China generated total revenue of $0.16 billion, almost double that of 2005. By 2011, it is estimated that the casual games market in this region will see $1.15 billion annual revenue in total.
The trick here is to find the sound revenue models. Free to play is standard, but what values can you reach by gaining the interest from millions of players? It depends on what kind of game you are working with, but you could opt for a branding solution. Designing or modifying your game for a company looking to promote a new product or just strengthen their brand. For everyone that plays your game, you'll get a kickback. Your task is to design a game which will attract a huge mass of players, and if you're able to do so, congratulations! If you have a good deal with your client or partner, you might be in for a particularly good revenue split.
And let's not forget micro transactions. The payment model that is up and coming and oh-so-perfect for mini games online. Giving players access to inexpensive but unique items, often just visual attributes, as opposed to modifiers to the game's balance, is a good way to do business. The Korean publisher and game developer Nexon is probably best known for their game Kart Riders, which is free to play, but thrives on the sales of in-game items. In 2005, Nexon had worldwide revenues of $230 million, 85% of it from virtual items.
A key concern here is to ensure that your product is well protected from copying, reverse engineering and cheating as there are huge issues in this region. And by all means, don't try to go on the market alone, find a good partner. It took our company three tries before we got it right.
Opt for a partner that is already established and can show a good track record. The bureaucracy, especially in China, can be somewhat daunting. And you'll need someone present locally who you can trust and communicate fluently with.
Console games come in all shapes and sizes
With the download services up and running on two of the next-gen platforms and announced on the third, things are brightening for small studios. There are rumors that the PSP will get a download service soon as well. This is of course good news for any game developer, since it means a fairly straight channel to the consumers, without too many revenue splits in between.
So, consider that, and the following.
At the moment, Flash games are playable on the Wii in the built in web browser. Alien Hominid HD, released on Xbox Live Arcade, started out as a Flash game. flOw, available on the Playstation Network, is also a Flash game which saw new light on a next-gen platform. I'm willing to bet that we'll see more examples like this in the near future.
How can I be sure? Our company has recently been approved for development on one of the next-gen platforms. The prototype started out as a Flash game. It has come a long way since then, but if it weren't for easy prototyping and inexpensive technology we might not have achieved the development contract.
The point is, he gap between developing with Flash and console development might be narrower than you think.
Finding Business Models
Any company interested in these opportunities needs to find business models which suit their specific needs. Since the projects are often fairly small and the technology is inexpensive, there is a low risk. On the other hand, one needs to gather many clients and be sure to find partners interested in repeat business, to get the economy thriving.
Using generic code and optimize it for many projects, reskinning advergames and rebranding them for different regions are some easy ways to lower the risk even more.
Also remember that buzz phenomena such as user generated content and Web 2.0 work perfectly together with Flash games. If you are looking to fund your company with venture capital, those might be two good angles to push.
On the upside, you'll have short projects; good pay per hour; inexpensive licenses; designer creativity encouraged and appreciated. You will often have total control of the design process. On the downside it can be an insecure business model. You will need to find and work with a larger number of clients.
But if developing games in Flash ever seemed interesting to you, now is the time to get on the train. We are making good business right now, and getting good competition means that we will keep on raising the bar together. It will only make this business bigger, stronger, better, and reach even more new consumers beyond the hard core audience."
[Magnus Alm is the CEO of Swedish game development firm Muskedunder Interactive.]