Business models for games | Hacker News Reader

Business models for games

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I'm sure some people might dismiss the list immediately because they're not game developers. But keep in mind that many of these points could be used seamlessly for apps (Facebook, MySpace, Yahoo!, etc etc) or even your own website. Good stuff!

Absolutely agree!

One of the best things I learned coming out of a failed video game startups (we had one win, our multiplayer tech is powering Quake Live :P) was the importance of positive and negative feedback for building an addictive community.

On BreakkUp.com, we're looking toward virtual goods instead of banners ads. There's no reason in this day and age that one can't easily produce and monetize e-cards and gifts on a micro level, for example. It better fits our demographic which is 25-35% teen — they practically ignore banner ads.

(It’s pretty great to get a subscription from people that don’t even play, so expect more people to design games were they will clearly KILL your characters if you stop paying. Not good for players, but it’s on the list as it’s a monetization method.)

I sort of disagree. I am getting occasional emails from CCP about how they still have my EVE Online character from 2005 and how awesome it would be to re-sub. I feel it's more likely to get people to spend more money versus "kidnapping" their characters. In EVE's case, though, I am pretty sure their policy was to delete characters 3 months after you cancelled your account, but they seem to not actually enforce this.

I would like to see some sort of figures to give weight to either side of the argument.

I had tried doing a game startup together with another guy, but so far we rather failed selling our first (and only) game. But afterwards I learned about another business models rather accidentally - advertisment for myself. We kept our website up and just having finished a good looking game was enough to get people interested in working with me. I do now freelance work and that game is my main selling point.

Also missing in the list was that you can certainly also sometimes sell the technology of your game.

I've decided, for personal reasons, that the best thing that could be done for gaming today is to grow a community of amateur game developers.

Therefore I'm working on a project - some open-source technology, and a targeted community portal - towards this end. I think there are a number of possible related business models, but at the moment I'm not going to jump for money. It doesn't motivate me well.

How does this differ from, say, MochiAds, GarageGames, WildTangent, Steam, XBox Live Marketplace, or the iPhone App Store? (not to be critical, just curious)

Don't forget the portals: Kongregate, Miniclip, NewGrounds, AddictingGames, Facebook App Directory

Those are marketplaces, I'm mostly focusing on an application.

ed: to clarify, the only reason to have any portal is to promote the app.

ed2: I should have just linked to this in the first place: http://ludamix.blogspot.com/2009/01/intro.html

I'm going to repost my comment here, because I cannot read blogs that have Trackbacks in their comments:

If the used game market goes away, so do AAA titles. You cannot have the risk mitigation of resale in digital distribution. Plus, the console makers control the pipe to their machine. With physical distribution, you can play GameStop off of Target off of Best Buy off of Walmart.

I like Dave, but he uses the same example of a hidden camera showing a GameStop rep pushing new buyers to used product every time he speaks. There’s no rigor to the objection.

Yes, I’m biased. But I did this analysis before I started Dawdle, and no one wants to give Microsoft, Sony, and Nintendo the same power that the music industry gave to Apple.

I don't quite follow your argument about AAA titles going away -- how does the sale of used games help the game developer? how does it encourage them to make them?

That would probably be the "risk mitigation". In simpler terms, I think he means "people are more likely to buy a (AAA, thus probably $50+) game if they know they could sell it used and recoup some cost if they end up not liking it, grow tired of it, etc.".

The AAA gaming market is already pretty fragile, as the games cost so much, the production values are ridiculous, and so on. It's a very hit-or-miss industry, where a partial success is a financial failure and blockbusters are what keep companies afloat.

It reduces the risk for the buyer. A buyer bears less risk than the $60 cost of a game because of the resale value of the game.

In 2007, there was at least $1 billion in new game sales funded through the proceeds of used game sales (between GameStop data and paid industry research).

There's a multiplier effect - game publishers can receive more than $100 in revenue for a given $100 in purchasing power.

Keynesian video games! Awesome.

And that's why you are seeing developers find different buyers. There is no point in making games for people that are broke, cheap, or pirates.

As a result, developers are moving away from making games for the traditional demographic.

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