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You’ve spent a long time working on a video game during your downtime. You’ve done your marketing research, you’ve promoted on social media, a couple of blogs have written and reviewed your game. An influential Youtuber did a Let’s Play, or you may have even been featured on Steam. Whatever the case, your marketing efforts have resulted in moderate sales.
In the day of democratized development, anyone can be an indie game developer. Major successes like Minecraft and Undertale have inspired many to hop on the bandwagon, and rightfully so. The video games industry is expanding quickly, with a market value of $63.3B in 2015, and a projected $89.7B in 2019. But more and more games are financial failures, even from previously successful studios. The lack of marketing and promotional budget and expertise is a common reason. But even with good marketing, a game can still flop. Why?
The major reason indie games fail is the lack of expertise and knowledge of the industry. The indie game market is so saturated that breaking out with a successful game has become a lot more difficult, and generating the necessary revenue to recoup costs or continue developing becomes a rare chance, not a guarantee. And while marketing your game as soon as possible and as actively as possible is a necessity for success, it is not the only option.
Staying within the confines of video game development, producing DLC has become a popular tactic in gaining the necessary revenue. DLC is additional video game content made available by the game’s official publisher. In 2012, downloadable content sales rose by 33.9%, hitting $2.22 B in revenues. These numbers have continued growing; bypassing used game sales in 2015. DLC hits all-important aspects of a game’s success: acquisition, monetization, and most importantly, retention of users. DLC offers a richer game experience to its players, constantly captivating their attention with new content. Putting a price tag on new options leads to a continuous stream of revenue from an existing group of users. Most importantly, DLC includes a wide variety of options and applies to nearly every video game genre. Objects, levels, characters, challenges, extra storage, customization options all within fighters, shooters, puzzles, PRGs and episodic games. Simply put, DLC is a useful tactic for companies to capitalize on existing games. It’s much cheaper than making a new game and marketing it, and allows developers to add value to the game beyond the initial purchase. A consumer might spend above and beyond the cost of the game itself on DLC, extending the life of a game for years after its release. In 2010, 71% of video game spending was on physical format items, and 29% on digital items. Just three years later, 47% was spent on physical format, and 53% on digital format purchases.
But DLC is one of the most abused video game monetization strategies, extreme cases including developers withholding content that should be included for a complete gaming experience, or making levels unbeatable without paid extras. Overpricing DLC leads to disgruntled users who might feel they are being scammed out of their money. Most significantly, it can lead a studio to focus too much effort on one particular game instead of growing a portfolio of games that might lead to more success. While DLC is a popular and generally welcome way to expand user-experience and further monetize your game, it doesn’t always work in a game’s favor and its oversaturation leads to undesirable results.
Moving further away from game development, ad revenue is a particularly clever way to improve the revenue stream while not decreasing user experience. Ads are the most common method of monetization for mobile games, and rightfully so. In 2016, mobile users spend 79.3% of their time in-apps, as opposed to 20.7% on the mobile web. These numbers correlate to 73.2% of ad dollars spent on in-app ads, and as this industry continues to grow, so will in-app usage and ad revenues. By 2020, 63.7% of the population will use mobile devices to play games, making a good case for mobile game development as well as the functionality and accessibility of in-app ads.
Setting up an ad account for your game means deciding whether you want to allow rich media ads, native ads, display ads or video ads. The last two being most common for the indie game genre, and most effective. Presenting any type of ads to consumers requires seamless integration into the game, however. Displaying ads relevant to your game’s target user base, and doing so during the right time within the gameplay can make the indie title a moderate success.
But ad revenue can significantly decrease the enjoyment and gameplay of a game if done improperly. As with most techniques discussed in this paper, moderation and balance are key. Ad revenue can and will work if your active player base is large enough to engage with ads, but the more ads that saturate the game, the more users will turn away from it. This is especially true for free-to-play mobile games that depend solely on ad revenues and in-game purchases, and struggle to find the balance between personal profit and user experience. Alienation from your game is something you don’t want to happen.
Finally, it is important to discuss the limitations of ads. While this is a widespread technique for mobile and online games, ads are not welcome in most other gaming venues, especially if the game was priced at a premium. As such, an indie game developer working on a PC game will find themselves unable to use ads directly in their game, making this technique of revenue acquisition not applicable and limited.
In 2014, video games appeared as the number one category in Kickstarter’s Top 50 Highest Funded Projects. It accounted for $100 million in funding, an increase from 2012’s $83 million. Current media is filled with video game crowdfunding successes, skewing the reality of using this technique and the very real possibility of failure.
Putting the consumer in the driver’s seat of a project seems like a good idea to both get funding and market validation, and this method has been rising in popularity since 2013. Indie video games more often than not try their hand at Kickstarter, Indiegogo and other crowdfunding venues that have sprung since the concept’s inception and popularity. However, the success stories are exceptions, with Kickstarter citing the success rate of projects at 44%, and Indiegogo at 34%. The overall success rate of the platform also depends on a large number of variables: size, pre-approval, funding model, campaign length and many others. Game projects hosted on Kickstarter only have a 33% success rate, which is lower than dance, theatre and music projects, all hitting above 50%.
Maintaining the momentum, especially in the first 48 hours post-launch is vital in upping the chances of success. Yet building momentum and gaining exposure is extremely time-intensive, not to mention time-sensitive. Marketing your campaign is a full-time job, and many indie game companies don’t have the time and budget to focus all their energy on it. With the generally intensive competition and saturation in the game category with nearly 26,000 projects launched on Kick-starter alone, success is not guaranteed. Nor is it easy.
Kickstarter or Indiegogo campaigns require incentives that are often out of a video game’s range of expertise or knowledge. Offering merchandise is one of the most common ways to attract backers, and this involves venturing into an unknown industry. The uncertainty of a campaign’s results can be discouraging or distracting and only benefit a game that is in the development stage.
Venturing into the merchandising industry is an amazing way to make revenue and one that is often considered by video game companies and indie game developers alike. E-commerce sites like Zazzle.com, RedBubble.com, Society6.com and others advertise their service as a way to transform your designs into physical products. Signing up with these services means a storefront of all featured products and a relatively simple interface. Upload your design, decide on the products you want it to appear on, and send it off into the stratosphere. The strong search feature will lead to views that might turn into sales, but it is up to the shop owner or “designer” to promote and market their products. Due to the relative simplicity, this method is a great way to dip your toes into the merchandising industry.
But there are major drawbacks. The range of products that commission-based merchandisers offer are low quality and often poorly integrated with individual designs. The products range from apparel to home accessories but are limited by high prices, making them less accessible than others. Finally, the loss of control due to production and fulfillment done by the services often leads to customer dissatisfaction.
“Designers” earn revenue by commission on each sale. Though it is determined by the video game companies, merchandise services monitor and limit the commission percentages to encourage higher sale volumes.
The merchandising industry has been growing at a steady pace. As has the 3D printing industry, which has skyrocketed in accessibility in the past 3-4 years. By 2022, the 3D printing market is expected to reach $30.19 B, growing at a CAGR of 28.5% between 2016 and 2022. As the awareness of 3D printed products increases, the demand for sculptures, custom avatars, characters and figurines increase as well. In 2012, the market for the toys and merchandise was estimated to be around $92 M globally, which increased to 4118 M in 2014. With the growth of the gaming industry, and in combination with the 3D printing industry, the opportunities for merchandise sales have increased dramatically.
Choosing 3D printed merchandise means choosing superior quality and variety, and achieving a level of customization that is unheard of with traditional modes of manufacture. There are currently more than a few 3D printing manufacturing services that will print your design in bulk. That said, these only eliminate the obstacle of variety, quality and customization. To successfully launch a merchandise line for your game, you’ll still need the budget for production, the expertise of setting up an online store, and the time to process, fulfill and ship each order, providing customer service and marketing and promoting your products. It is also important to note that without the proper connections, 3D printed manufacturing can be very costly.
There are plenty of techniques that promise unique ways of making additional revenue. It is vital to recognize the advantages and disadvantages of each as they pertain to your video game. Merchandise has always been a true and tested technique for a variety of media and entertainment venues and is a sure way to make essential revenue for your game.