The Business of Casual Games
Posted by Ian Purnomo, Jul 25, 2008 09:19
Sometimes considered time killers, casual games have gained popularity among the major industry players including Electronic Arts and Activision. Everyone, from media companies to video game developers, are trying to tap into this fast growing market. Kathy Vrabeck, EA’s head of Casual Entertainment estimates the worldwide casual games market at $10.5 billion over the next "couple of years". Therefore, one of the key topics at this year’s GC Asia Conference is the business of casual gaming in Asia.
From the business and development point of view, casual gaming is a very lucrative market, especially on the PC platform. Unlike blockbuster AAA games, which require 2-3 years and millions of US dollars to produce, online casual games can be developed with smaller budgets and shorter production times. By exploring alternative business models such as free-to-play, or micro-transactions, companies can guarantee wide reach for their casual games.
It’s no wonder why major gaming and media companies like Yahoo!, Real Networks, Electronic Arts and Viacom are exploring free casual games. Recently, Jeff Bezos, founder of online retail giant Amazon, entered the casual game market with a $3 million investment in the user-generated web-based casual game site Kongregate.com.
Normally, PC casual games are distributed and sold via retail or online purchase, with digital download the most common method. Through digital distribution, gamers are given the opportunity to try before they buy, by downloading free trial versions and experiencing the gameplay. Trial versions usually provide the first few levels or limited playing time to give a sense of the overall game. Once the trial expires, the game will prompt players to purchase the full version of the game in order to continue.
"Free trials are the best way to distribute casual PC games. It has really been the factor in making this market and this is the main way to distribute casual games," says Timur Kamanin, founder of Logler.com, a site that charts out the weekly Global Casual Game Top-10. "Casual games can be likened to the fast food of games where players can quickly and easily try and buy titles whenever they want."
So if the conversion rate of customers purchasing a game from trials is less than two percent industry-wide, how do casual game publishers make money?
The answer lies in advertising. Similar to the business of TV advertising, online free casual game publishers gain most their revenue from selling advertising space within the gaming portal or gaming interface (e.g.: 30-second video advertising while the game loads).
In an interview with CasualGaming.biz, Mika Salmi, the global president of MTV Networks’ digital division stated, "Advertising will be driving a lot of the casual games we see as we move forward."
MTV indeed saw the importance of the casual games market quite early by acquiring two renowned casual game portals, Shockwave.com, and Addictinggames.com, in 2006, which gave the company a combined community of 50 million people.
According to Salmi, "Advertisers have understood that a huge percentage of people are playing games on the internet and spending a lot of time playing them." And, with its multimedia networks, including its flagship music channels, MTV indeed has the advantage of providing advertisers with a multi-platform marketing solution to reach the most desirable demographics.
Adding to this opportunity is the fact that the gamers are okay with advertising appearing in casual games. A recent survey by Real Networks showed that 90 percent of casual gamers watch in-game streaming video ads in exchange for free gameplay. So, free casual games can be financed through advertising, while at the same time acting as a vehicle to build brands.
For example, MTV Asia has the MTV Arcade section where gamers can play casual games based on MTV’s programs. Vincent Low, MTV Asia’s Project/Business Development Manager for Digital Media describes MTV Arcade as, "A place for our audience to have access to games that allow them to interact with our properties, and the games are MTV branded, which serves to generate additional awareness for our shows."
The movie industry is also known to use web-based casual games to create awareness for films. The latest example is the Diner Dash-eque, Zohan’s Super Spa, which is based on the new Adam Sandler comedy, You Don’t Mess with Zohan and available on Shockwave.com,
In conclusion, casual games seem to be becoming more and more an advertising-driven industry similar to television. This development has also been predicted by the Yankee Group which reported that the global in-game advertising market will grow to whopping $971.3 million by 2011, compared to $77.7 million generated in 2006.
The Games Convention Asia is the only platform in the Asia-Pacific region where the best minds in the digital entertainment and interactive industry gather to explore the various business opportunities available for a company in the industry.
The Games Convention Asia will take place at Suntec International Convention & Exhibition Center Singapore from September 18th-20th, 2008, with the GC Asia Conference (GCAC) being held alongside, September 18th- 19th.
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