This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.
If ever there was a Flash developer whose business model depends on multiple revenue streams, it's indie studio PixelJam Games, the brainchild of co-owners Miles Tilmann in Seattle and Rich Grillotti in Eugene, OR.
But that wasn't the duo's original strategy when, at the end of 2004, they launched their first game in the retro, low-res, big-pixel style of the Atari 2600 and Super Nintendo that would become their signature look.
"Our plan had been to quit our jobs as illustrators and designers, spend six months making a game, and live off the donations that we hoped gamers would send us because they liked our game so much," recalls Tilmann. "I guess you could call our plan 'Hope For The Best.' In retrospect, I'd say we were kind of naïve."
When money didn't start pouring in, the pair tried a different tack, this time securing an exclusive sponsorship for their second game, Rat Maze 2, which took them a month to build.
"We got $5,000 in upfront money which we thought was great at first," says Tilmann, "until we realized that that was all the money we were ever going to see from the game. And that $5,000 for two people working a month wasn't going to keep the business going."
The two quickly recognized their business model needed modifying. The resultant strategy of using multiple revenue streams was what made their game Dino Run their most successful, even though it took them seven months to build.
"We went from zero advertising and all donations to sponsorships to our present strategy," explains Tilmann, "which incorporates three separate revenue streams, none of which we could get by on alone. But, together, they support our business quite nicely."
PixelJam Games' Dino Run
Stream one involved micro-transactions. While Dino Run is free to play, a small donation gives gamers a code that enables them to customize their dinosaur, perhaps change his color or put a hat on him. Some gamers send a penny, others have sent as much as $100. "We let people decide what the game is worth to them," comments Tilmann. Micro-transaction donations generated about $4,000, lifetime to date all told.
Step two involved advertising -- a combination of Google ads on the PixelJam pages (generating about $4,000 in total thus far) plus pre-load ads from MochiAds (generating about $1,500) and revenue shares with other sites (generating about $6,000).
The third -- and most successful -- revenue generator involved licensing, which brought in about $22,000.
"For games the size of Dino Run, licensing is the best way to go," notes Tilmann. "They are paying you for the right to put your game on their site and you have the ability to sell as many licenses as you'd like. In fact, we got two really good deals through FlashGameLicense.com."
Bottom line: The three revenue streams have brought in approximately $40,000 for seven months' work with more still trickling in.
"We chose not to go the proprietary sponsorship route," says Tilmann, "because we couldn't secure one that would cover the seven months it took us to build the game.
Sponsorships tend to make more sense when a game only takes two or three weeks to make."