Free-to-play, ad-supported games the winners?
Nvidia Vice President and PC Gaming Alliance Chief Technology Officer Roy Taylor thinks that video game companies are missing out on future revenue growth.
"The West needs to recognize that the free-to-play model is the future, before it's too late," Taylor said, citing the massive growth of gaming across Asia.
I wrote recently about a report stating that the PC gaming market generated $10.7 billion worldwide during 2007. Half of that came from Asia, where, according to Taylor, "the free-to-play microtransaction and ad-supported model has found huge success." But it seems that outside of Asia, that model isn't nearly as popular.
What we must do as an industry is really start thinking about how we make money from games. When we figure this out, what we're going to see is a resurgence in PC gaming. These new business models, such as free-to-play, can take better advantage of the huge scalability provided by a massive worldwide PC installed base. Think about what that means: those 20 million Xbox users are a fraction of the audience that you can reach on (a) PC.
This is an interesting idea, but it's unclear how you can insert actionable advertising into video games. You do see ads in games, but they tend to not be too dynamic, and they are rarely actionable--you are unlikely to click on a Coke ad in your FIFA soccer game, as you are there to play a game, not click on ads.
On the other hand, a huge number of proof points exist to show that ad-supported, free-to-use products can garner huge traffic and generate significant revenue. I agree with Taylor that there are some very large opportunities on the horizon.
Dave Rosenberg dishes up "Software, Interrupted" with nearly 15 years of technology and marketing experience that spans from Bell Labs to multiple start-up IPOs to open-source enterprise software companies. He is co-founder of MuleSource and currently serves as the general manager of Hardy Way. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. You can contact Dave via e-mail at softwareinterrupted@gmail.com or follow him on Twitter @daveofdoom. 
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That said, there are plenty of various games out there now that are ad-supported. Dungeon Runners and the Pirates of the Caribbean game come to mind right away. But, oh yeah, the 5+ million people playing WoW in Asia paying $15/month or whatever surely are hurting the PC market...
Free to play has a place, and high quality games have a place. They are all part of the mixture of gaming that will continue to emerge over time, as new revenue streams from the interwebs evolve.
- by fatfoogoo September 8, 2008 2:32 AM PDT
- fatfoogoo has been building customized g-commerce solutions for a number of free-to-play titles over the years. We've seen clients that want only micro-transactions, only in-game advertising, only subscription management, and a number of them want a mix of 2 or all 3. Either way you look at it, the traditional state of online gaming is rapidly breaking down and monetization models are cropping up all over the place. Which one is the most successful? It all depends on the title, the consumers, and where the sweet spot is.
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