Monetizing Your Web Game Part 1
Currently there are many choices when it comes to monetizing a web game. It can be daunting to decide which model is best for a developer. On top of this, there are conflicting reports as to which ones are truly lucrative. The hope of this series of articles is to shine a light on many of the monetization methods to choose from by presenting hard facts based on case studies from a number of developers as well as statistics we have been tracking at FlashGameLicense.com and GamerSafe.com.
Part 1: Sponsorship and Licensing
Before I get into the ins and outs of licensing a web game, let me define some terms:
- A deal made between an entity (the sponsor) and a developer in which the sponsor pays to have their branding/ads in one of the developer’s games. The terms Sponsorship and License are used interchangeably in most cases (and in all cases for the purposes of this article).
· A sponsorship where the Sponsor has their branding in every copy of the game on the web except where the developer has explicitly sold a Secondary License (defined below) to another entity. The developer has complete freedom to remove the primary sponsor’s branding and make any other changes to the game as long as it is licensed and locked to the other entity’s domain.
· A Sponsorship where the license of the game is not exclusive to the buyer. The buyer is purchasing one custom version of the game.
Secondary License (aka Non-Exclusive Site-Locked License)
· A Sponsorship where the license of the game is not exclusive to the buyer. The buyer is purchasing one custom version of the game, and this version must be “locked” to the buyer’s domain. This is the most common type of non-exclusive license and it is compatible with the primary license.
· A bonus paid by the Sponsor to the Developer based on pre-defined performance milestones. Bonus structures take many forms. A couple of examples are: a lump sum payout if a game gets a certain number of plays, or a CPC (cost per click) deal where the Developer is paid for each unique user sent back to the Sponsor’s site.
There are many more licensing types, but these are the most popular and most important for this article. You can find a longer list of licensing types and terms here: http://www.flashgamelicense.com/view_library.php?page=license-terms
At its core, the Primary Sponsorship model is simple: A Sponsor is interested in getting his or her branding into a game that will potentially be viewed and played by millions of people. In most cases, the ultimate goal is to get those users to click back to the Sponsor’s site via the links in the game.
So, this is why your game is worth money to sponsors, but how do you get the most money out of the deal as possible? The trap many developers fall into is assuming that their game has a set worth to a sponsor, and that if the sponsor pays $x for the game, then they must surely be making more than $x from the game. This isn’t entirely accurate. Sponsors make money by licensing games in two main ways. One, is they plan on the long term funnel of new users a game will bring them. And two, they sponsor many games in hopes that a handful will be successful. So, what this means is that they are investing in your game so that they can make their money back long term or, if that doesn’t happen, that your payment will be absorbed by another – more successful – game. Of course, it is slightly more complex than that in the sense that they are getting brand association with your game and other perks like having high quality content for their site, but when thinking about how to get the most out of a deal the two main factors of long term earnings and uncertain returns should be considered the most. In short, if you can convince a sponsor that your game will have massive, long term, appeal and that their investment is well spent, you can make more money.
Easier said than done, right? Maybe not. Having a great game is definitely most of the battle when it comes to sponsorships, but there is a lot you can add to a game to increase its worth to a sponsor (as an aside I want to mention that you should NOT release your game before you seek a sponsorship. Once a game is released “into the wild” it is virtually worthless to a sponsor). The easiest way to do this is to give players a strong incentive to click back to a Sponsor’s site. This can be done by adding bonus content that is only playable on a Sponsor’s site, or linking to walkthroughs on the Sponsor’s site, or any number of other things. Take note, however, that you have to be extremely careful in how you execute, and present, this sort of tactic. You need to make sure that the game, on any site, is fully playable and not limited in any way. If players perceive the game as being nothing more than an advertisement, or that it is trying to trick them in some way, the game will undoubtedly be rated down and hidden on sites.
Before I continue I think it is important to point out something that will be a reoccurring theme in this series. It is important that you choose a monetization model for your games that you are comfortable with and that suites you. There are pros and cons to any path you choose. Some may have high risk, high reward. Others may be low risk low reward. Some may provide you with the creative freedom you desire, but limit you in how you can monetize the game, and so on. So, with this next bit of advice I caution you to decide what model you are most comfortable with. Based on what has been discussed this far, my recommendation is to strive to invest in the success of your game. This is usually a little bit more risky, but ultimately it drives everyone involved to push for the game’s success. The reason it is more risky is because it usually means you take less up front in the deal. Here are a few examples of how you can invest in your game’s success:
- Aim for a performance bonus (preferably based on CPC to the Sponsor’s site).
- Include links in your game to your own, Developer, site where you have site ads.
- Aim to include Ads in the game and Microtransactions if appropriate. Implementing either or both tastefully is key.
Notice that none of these investments harms the sponsor. In fact, they should increase the value to the Sponsor as well. Services like GamerSafe and CPMStar have built in mechanics to share revenue with Sponsors. And since you make more money by making the game more successful, the Sponsor is benefiting from a very motivated developer wanting to make sure the game does as well as it can.
Another great thing about Sponsorships is that you get to benefit from the Sponsor his/herself. Sponsors want the game to do well, and in most cases they know what players like. A Sponsor’s advice can be invaluable. Of course, you should never feel forced to make changes you feel will hurt the game, but you should be open to any suggestions a Sponsor may have.
Once you have accomplished these steps, the real fun starts. This is the point where you are actually pitching your game to sponsors. The easiest way to do this is at FlashGameLicense.com where we have an entire system built to assist you in this exact situation. The easiest and fastest way to find out your game’s worth in Sponsors’ eyes is to get them to bid on your game. Bidding wars often get heated and in the end the most motivated Sponsor ends up on top. And who else would you rather have investing in your game?
And once your Primary Sponsorship deal is complete you can start to sell non-exclusive licenses. This has proven to be a great secondary source of income for the Developer, but also a harmless condition for the Sponsor to allow. The point of a non-exclusive license, for the buyer, is not to drive traffic but instead to retain traffic and acquire quality content. Most sites who buy non-exclusive licenses would never take the distributed version of the game anyway since they do not allow branding other than their own on their site. What this means is a sponsor is not losing any traffic, but the developer is able to resell their game indefinitely. Oftentimes a sponsor will ask for a short period of time after the Primary Sponsorship deal is done before you can sell non-exclusive licenses, however.
This is merely an introduction to the world of sponsorships and licenses with web games, and is not meant to be all encompassing or definitive. I invite all readers to visit our site: FlashGameLicense.com to find out more. FGL is also THE place to buy or sell web games, so be sure to visit if you are hoping to do either or both.
To summarize what has been covered here:
- Make a great game (or have it nearly finished)
- Don’t release your game!
- Give players an incentive to click to the Sponsor’s site
- Invest in the success of your game (if it is right for you)
- Be open to Sponsor’s suggestions
- Get your game in front of as many Sponsors’ eyes as possible and have them compete to get you the best deal
- Sell non-exclusive licenses
As a final note I want to stress that the Sponsorship model and all of the models that will be covered in future articles in this series are not mutually exclusive of each other. Developers can, and should, take advantage of all of them. I am merely presenting them individually as to make them less confusing to understand. The final article in this series will cover the best ways to combine as many of these monetization models as possible to maximize the revenue generated by your game.