its always a good time to start a company if one has identified a need that is very well defined and can be converted to revenue. The claim that downturns are a good time to start companies is a fashionable thing to say. It is the case that a lot of the “curiosity driven” entrepreneurs get weeded out in downturns. But that does not make it easier to build companies. In downturns pros are: more resolute people start companies, everyone focuses much more on expense and revenue and hence companies are built more tightly, fewer competitors start then. On the cons side for an entrepreneur, its harder to raise money, customers are less willing to buy because many paralyzed, exits become harder. So it depends on the particular person and company and is not a generic claim that can be made.

(This is an excerpt from an interview that appears here)

Electronics Arts opened a new studio, Pogo Austin, expanding its team behind casual games community Pogo.com, which also has locations in Redwood City, CA and Shanghai, China. Led by studio head Sean Clark, the new 12 person-strong division in Austin, TX — co-located with the BioWare Austin offices — will focus on creating family-friendly titles based on Hasbro properties.

Is gaming recession-proof? The argument is that if people spend more time at home, online gaming provides entertainment very cheaply.

An in-game advertising campaign for Barack Obama’s U.S. presidential campaign has appeared in Electronic Arts racing title Burnout Paradise.
First confirmed by technology website GigaOm, the campaign appears to use Massive Inc.’s standard dynamic in-game advertising technology.
This allows for virtual billboards featuring an image of Obama with the text “Early Voting Has Begun: voteforchange.com” to appear in the Xbox 360 version of the game, which debuted in January 2008.

I can confirm that the Obama campaign has paid for in-game advertising in Burnout,” said Holly Rockwood, director of corporate communications at EA, to Gigaom.
“Like most television, radio and print outlets, we accept advertising from credible political candidates. Like political spots on the television networks, these ads do not reflect the political policies of EA or the opinions of its development teams,” she added.
A recent Xbox Live vote involving 100,000 online users saw Obama and running mate Joe Biden take 43 percent of the vote, ahead of Republican ticket John McCain and Sarah Palin on 31 percent.

David Jenkins

I personally sit on the fence when it comes to In-game advertising but this is defiantly pushing the seams bring political advertising campaign to video games. Something which in most part is viewed as a “children’s past time” .

Technorati Tags: In-game advertising

Case in point: Facebook struck a deal to become a featured social network on a low-priced cell phone due this year from INQ, a London-based subsidiary of Hutchison Whampoa. The company has integrated Facebook into every facet of its upcoming phone, INQ1, to be released in Britain and Australia by Christmas. The phone’s address book displays contacts logged into Facebook; its camera posts pictures directly to the social networking site; and its home screen shows photos loaded by friends onto the site.

The social networks did begin working with the mobile carriers since the past year, e.g., Facebook was featured on 100 portals in more than 50 countries, however, the rate of adoption was lower than they desired.

Better integration with handsets can dramatically increase user engagement with a mobile site. A year ago, Research In Motion (RIMM) released a Facebook application especially designed for BlackBerry devices. The app lets subscribers more easily use their handsets to befriend and interact with fellow Facebook users. One in 10 BlackBerry users now has the application, says Facebook Mobile Manager Henri Moissinac.

The mobile social networks present a new medium for game developers. The real challenge is that most of the  games available on social networks are not mobile-ready. This means  they are built using technologies meant for the Internet and cannot be run as-is without a significant conversion effort for the mobile platforms .

jgc

Technorati Tags: Mobile gaming, FaceBook, MySpace, Nokia, Blackberry, Apple, iPhone, INQ, BusinessWeek

Read the article here.

Technorati Tags: online advertising , gaming revenue, startup funding

If you guessed

1. Automotive companies
2. Retail
3. Financial Services

you are right.  However, all three sectors are hurting. BusinessWeek advises caution (The Sucking Sound of Ad Dollars Disappearing) and suggests that you should re-evaluate your revenue expectations because

Ford Motor’s (F) ad spending was down over 31% for the first half of this year. Car sales’ slide has accelerated since.

.. retail, which is now under severe pressure as consumers spend less.

In 2007, Merrill Lynch (MER), Lehman Brothers (LEH), Bear Stearns (BSC), and Washington Mutual (WM) spent $213.1 million on advertising. Even if those companies’ new owners spend something to reassure old customers, you’re likely looking at a nine-figure sum sucked out of the ad marketplace by those guys alone.

jgc

Technorati Tags: online advertising, gaming revenue

I’ve also been playing around with the App Store. From a technical point of view, it’s amazing. You just install app after app after app, and it just works…

But from a customer experience point of view, I’m not yet sold. Figuring out which apps are going to be any good is almost impossible. Even with only a few months of development, third parties have crammed every single category in the store full of apps. Most of my time in the store is spent scrolling through endless lists. And what distinguishes a good app? I can’t really tell.

I think this is a major challenge for companies that hope to build dominance in some category on the iPhone …

Browsing the app store is an awful lot like shopping in a retail grocery store. You see row after row of tiny boxes, each vying for your attention. They can’t present much information…

So what is the solution? Eric points out that you should look at the lessons learned in the retail industry for selling consumer packaged goods.

This is what brand marketers and consumer packaged goods companies have been studying and refining for years: how to win the battle in your mind before you ever set foot in the store. Once you have come to think of Crest as the #1 toothpaste, and, more importantly, your toothpaste, it’s unlikely you’re going to pay attention to the other boxes on the shelf, no matter how shiny they are.

…  we may revert to the retail model, where good positioning and good branding will win. When I’m scrolling through the endless list of games in that category, the icon that I’ve come to associate with “that company that makes amazing iPhone games” is going to get a disproportionate share of my attention.

You will have to think about, what differentiates/distinguishes my game from the competition? What can I do to capture the customer’s attention when she finds my game?

jgc

Technorati Tags: IMVU, Apple, iPhone, consumer packaged goods, marketing, positioning, branding, online gaming , Procter and Gamble

Second Life is a virtual world that made virtual business transactions using a  virtual currency popular. There are several other MMO and RPG, such as World of Warcraft, Mob Wars, King of Chaos, Kongregate, that have wide participation and are successfully generating revenue. The following post from Adam Martin  provides a perspective about monetization models that are very different from the run of the mill ad-based monetization schemes, and is meant as food for thought for casual game developers based on what is working for other online gaming businesses.

Background

I’ve been in MMOs in some form or other for ten years, and I’ve seen VWs arise as a viable product, but the companies I meet seem to often haveserious lack of understanding / plans of how they are going to make anything more than trivial revenues. Each year, the average technology of new companies (both presentation/graphics, and back-end/servers) seems to improve, but each year the monetization plans of new companies seem to get poorer, on average.

This is quite disappointing, so I wanted to do a session on ways to monetize VWs, and show that there’s no excuse to merely say “advertising”, or to stick to one or two plain derivative revenue models.

Reference points

How much revenue should we be talking about here?

2008 FaceBook – $300m
2007FaceBook – $150m

2008 MySpace – $800m
2007 MySpace – $550m

So … if your monetization method tops out at a million dollars a year, forget it.

How can you monetize a VW or MMO?

Here I opened it up: in the few minutes before the presentation, I had thought up 9 different unique methods of monetization; how many could the audience come up with?

My ones (shared afterwards)

• virtual item sales
• dual-currency systems (currency-sales)
• physical merchandise
• lead-generation advertising / research
• sponsoring
• marketplace ownership
• subscription
• event fees
• consumable / rentable resource fees (LAND, also INGREDIENTS)

Audience ones:

• subscriptions
• virtual item sales
• ad-supported
• sponsorship
• merchandise
• event fees
• physical goods sales inside virtual worlds
• currency exchange fees
• be a deposits bank
• licensing in-world businesses
• tax

…I liked the “licensing” and “become a deposit bank” in particular .

We then ran through them all and shared what our estimations of the total amount of money people across the industry were making using that particular monetization model. I can’t remember exactly what we said, and it was heavily influenced by me (because I’m quite up to date on figures for global public companies for this – its something I’ve researched a lot and tracked for the past few years)

Something in the region of $5 billion for subs, $3 billion for virtual item sales, a guesstimated $1b or less for advertising (really really unsure of this one – I was guessing blind basing it mostly off CPM figures for ad-driven games – I hoped someone else present would know a real figure for this), a few billion for merchandise.

But … Villi shared a figure he had researched formally for a report last year: $2.1 billion for the worldwide revenue from virtual-item sales. I reckoned that is looking like $3billion for 2008 (going off the projected revenues of the Chinese operators and how much they’ve gone up).

An interesting comment…

“Many VW’s don’t think about the problem of getting physical money into the world in the first place – the use of payment providers etc”

Think about that. Think about it until you understand what it means, what it implies for those “many VWs” – and how it relates to the current real-world financial crisis.

Summary

Companies are spoilt for choice when it comes to VW monetization, really.

And there are half a dozen forms of monetization that – straw poll – are already producing billions of dollars revenue across the industry.

And … forget “advertising”: there are better things out there, each of which is as good or better than advertising.

Technorati Tags: online gaming, gaming revenue, virtual world, MMO, game monetization, World Of Warcraft, King of Chaos, Mob Wars, Kongregate,

You (a game developer) can avail of several payment mechanisms including credit cards, PayPal, pre-pay cards.  Adam believes that pre-pay cards will become popular because of the convenience and security they provide.

Service providers have historically been very poor at handling your customer’s money in a secure way, leading to serious customer dissatisfaction and  loss of trust:

Ultimately, it could drive increasing numbers of consumers back to preferring to purchase their games and other online content via retail, where the companies and transactions are more trustworthy. OH, THE IRONY!

The knock on effects include:

• Good companies get tarred with the same brush (c.f. Daniel James frequent comments about the pain that Three Rings has been through with payment-processing, especially ridiculous attitudes to chargebacks, where the company regularly got shafted)
• Good customers stop paying for your service, and probably quit the service completely
• “could-have-been”customers stop paying for ANY online services before they even start using your service, and will never pay for yours
• Pre-paycards are going to get even bigger, much bigger than most mainstream games companies and MMO companies have realised

Brick and mortar as well as online businesses have become successful at retaining customers by ensuring that they remain satisfied with their  purchase, derive value from it and come back to buy more. Customer satisfaction builds the momentum that drives the flywheel for the growth of a business. The lesson is to choose a payment provider who cares about his brand and has a track record for upholding customer satisfaction. Yes, it may cost you more but the results will pay you back for the premium.

Sumit

Technorati Tags: online gaming, mobile gaming, payment providers, PayPal,

WASHINGTON (Reuters) President Bush signs a bill to stiffen penalties for movie and music piracy and create an intellectual property czar, despite opposition from the Justice Department…

Games are also valuable intellectual property that should be covered by the Anti-piracy Law.  Should we form a Game Developer’s Association of America?