More news of the economics of online games development.
I have just come across this piece published in Venture Beat this week by Dean Takahashi : Thousands of Flash game developers make more than $1,000 a month.
It examines the findings in a recent survey of 1,104 Flash game developers and publishers conducted by Ad Network Mochi Media. I recommend you go and have a look at the article yourself.
Very briefly, the quoted numbers indicated that 16% of developers earned more than $1000 por month and the top 1% made in excess of $25,000 per month. About 30% of the developers claim to be making a full-time living out of games.
According to Comscore over 1 Billion people play online games worldwide every month. So what is interesting is the quoted usage figures. The article suggests that about 2% of games are played more than 10 Million times during the life-cycle of the game. Based on a CPM rate of $0.50 per 1000 hits that would suggest that the most popular games would deliver a return of $5,000 over its life-cycle.
While the bottom 32% of games have less than 200,000 hits or a projected ROI of less than $100. All of which suggests that online Flash games suffer from the dreaded long tail that plagues iPhone Apps publishing.
Of course if you can improve your CPM rate or issue multiple ad impressions per play things look a lot better.
The quoted figure of $25,000 per month means that the top 1% of developers are achieving upwards of $300,000 per annum. This would suggest they are either producing multiple games or achieving higher levels of CPM and Impression Rates. For example, issuing 10 Ad Impressions per play would make the ROI on the most popular games worth $50,000 to the developer. As would a $5 CPM rate. If you can managed to combine both then you would have a comfortable SME business.
You may also find Jeremy Liew’s recent article for paidContent.org of interest: Why The Economics Of Social Gaming Are So Attractive To Investors. Jeremy’s reasoning goes like this…
The best video games (“AAA” or triple A games) now cost between $30 million and $50 million and can take three to five years to build. While social games cost just hundreds of thousands of dollars and can be launched in three to six months.
Jeremy argues that social network games developer are successfully playing the Speed and Agility innovation card we have been talking about over the past week.
Finally, Eric Eldon’s Game Companies Making Good Use of Social Network Ads provides some useful insights. In the article he quotes extracts from a comScore press release on the recent growth in Social Network Display Advertising.
The comScore figures suggest that Zynga served up just under half a billion Ad impressions in June 09 to an audience of 40 Million uniques. 97% of those impression were on Social Network sites like Facebook and MySpace. This of course follows on from our recent discussion on the economics of developing and publishing online and iPhone games.
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