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(source: http://www.quakelive.com)

A hot topic in the news this week has centered on technology that brings quality 3D game graphics to the web browser. Articles featured on GigaOM, VentureBeat, TechCrunch and GameDaily all touched upon the idea of melding console-quality graphics with the ease of web play and the companies behind these technologies.  As James Brightman of GameDaily states, “While the casual sector has done well with simple browser-based games, there haven’t been many sites that truly offer the hardcore audience what they’re looking for.”

If what they are looking for is visually intense game play without having to leave the PC - or wait for long downloads - then Brightman appears to be right.

One of the companies that is helping these hardcore web gen gamers, InstantAction, has built a platform that allows game developers to port existing 3D games to the web browser with ease. Now with companies like InstantAction and others such as Valve (who just announced a deal for digital delivery of Square Enix games) becoming more popular, this move should be a no-brainer right?

The logic behind the success of these technologies is based on the principles that users want to play games in this manner and that game developers will want to publish in this manner. Both of these depend heavily on one component – money.

How much will it cost to play? How much return will I make?

A huge concern with gamers is that digital versions of games can’t be equated to the real thing, making it hard to validate a high price tag. Sure, publishers can charge a lower price than the retail version, but why not alter the revenue model altogether? The key to making both players and publishers happy is creating a payment/revenue strategy that works with web games. Take some of the well-known names in the industry testing new methods:

-Valve has recently experimented with a new pricing strategy for one of their digital download games and according to Mary Jane Irwin’s article on Edge, had increased sales of the game on Steam by 3,000 percent.

-This week, id Software released the beta of Quake Live as a free-to-play game, proving the older game development companies are thinking of new business models.

With companies running tests like its apparent there is room for a better model, and the experimenting is only beginning. Adding the option to purchase virtual items (a good or currency) through microtransactions in addition to or in place of a lowered price model is a logical next step.

Offering an advertiser supported transaction platform like Sometrics as a method of exchange satisfies both variables of keeping the cost down for users and putting money in the pockets of publishers. By introducing a low barrier of entry for these traditionally pricey games, publishers will receive the benefit of a burgeoning user base, which equates to more possibilities for transactions – and offering users the chance to earn virtual items without actually spending money will increase conversions of  “paying users” quickly.

(Source:http://fortumo.com/)

Sometrics, like Fortumo, realizes there is a huge opportunity to gain microtransaction market share in Eastern Europe, along with other less saturated geographical regions. In this Virtual Goods News post, Fortumo reps say they are looking to expand their SMS-based payment system into many of these countries that have emerging virtual goods markets. This proves to be very difficult for most payment platforms. Fraud is rampant in Eastern Europe and Asia, so companies have found it very difficult to profit in these markets. Thus, Paypal, credit cards and most other microtransaction payment methods are not viable options in these markets. We believe alternative payment methods are the solution.

Fortumo isn’t the only company that sees great value here. We are currently expanding the presence of our alternative payment platform in these markets. However, Sometrics is going about it in a slightly different way. Our payment platform is a CPA offer-based system, rather than the SMS-based system Fortumo provides. Also, we are not necessarily looking to work with developers based in these countries, we are looking to monetize the users in these countries no matter where your game is based. Many of our social gaming partners have told us the best way we can help them gain a lift in revenue is by adding as many offers from these untapped geographical regions as we possibly can. The CPA offer market in these areas is very fragmented, thus we are trying to consolidate as many offers as we possibly can into one platform. By doing this, we help game developers monetize a high majority of their traffic, not just the North America or UK-based users.

Making money is the social gaming space is difficult business. Game developers should take advantage of companies, like Fortumo and Sometrics, which help them monetize these untapped markets.

(source: combatarms.nexon.net)

The free-to-play game model has proven widely popular in Asia, but until recently game publishers directed to the North American audience have clung to more traditional revenue models. The companies that adopted the new trend here are seeing tremendous user growth, and now many top game developers are following suit.

As Virtual Goods News reported of game publisher Nexon’s free-to-play title, Combat Arms, “Since the game launched in October 2008 in North America, its first million users were likely registered within roughly a month’s time.” Those numbers are pretty significant, and roughly 4 months later they are at 2million and growing.

On Acclaim’s free-to-play games, James Brightman writes in his article on Game Daily:

Brightman also notes Acclaim’s CEO as quoting they will soon announce their 10 millionth registered player. Not bad at all.

Though skeptics do exist on the sustainability of this model, after watching companies such as Acclaim and Nexon report this type of growth, it looks like competition will be heating up for free-to-play market share.

To succeed, publishers will need to continually refine their revenue strategy and the options they offer their users. Luckily, Sometrics is here to help.

(via - Virtual Goods News and Game Daily)

(Source: myYearbook.com)

There is an article on Mashable today stating that social site, myYearbook, has begun offering premium virtual gifts in exchange for their “Lunch Money” virtual currency.  Jennifer Van Grove claims that in the last 24 hours there have been over 1,000,000 Lunch Money transactions already. In the post, Jennifer breaks down the numbers and comes up with a revenue number of around $500,000 in 24 hours! I am a big advocate of virtual economies as a way to monetize your social site, but I find that number hard to believe. According to Quantcast, myYearbook sees about 4.8 million monthly global uniques. Given this number, 1 million transactions the first 24 hours does not seem feasible. The mathematical breakdown of the numbers looks correct, so I am wondering if there is not a miscommunication here. Either way, facilitating a million transactions or having 1,000,000 in lunch money exchange hands are both impressive feats in the first 24 hours of this new business model.

I have always been fan of myYearbook and I am happy they chose this course of action as a long-term strategy. I will be keeping a close eye on the progress of this new economy and I wish myYearbook luck.

(source: PlayFirst®)

As I was making my rounds of blog reading earlier this week I was drawn to a particular post on Inside Social Games, “Ten Reasons that Social Games May Eat the Casual Market”. Andrew Mayer argues that Social Platform Games are both “casual plus plus” as well as the “new bigger better thing”.

I happen to agree that the 10 reasons he outlines have helped turn social games into the hit they are today. Though, I would argue that casual games aren’t going to roll over and let social games take their market share. No, my friend, there will be war… or 10 new reasons to alter how casual games work today.

Casual game developers and publishers have taken significant time and resources to create inviting (and addicting) games and portals. The problem here comes when users decide the $6.99 and up cost for one game just might not be worth taking out their credit card, even if the free demo was awesome.  A couple options come to mind to help keep users returning to casual games as well as keeping money in publishers’ pockets.

1. Learn from social games

As mentioned in the article, micro-transactions are a key for social games to keep users engaged while still making money. Mayer states, “While you can buy a new level or outfit for a casual game, it’s harder to sell someone a new experience” but you can think of casual game portals as an entire social experience in themselves with each game a piece of that experience. Some type of global currency or point system can be the glue to hold these games together as part of a larger goal or simply to create a way for users to get premium games/items.

Casual game publisher PlayFirst illustrates this point well with the PlayGold currency they created allowing for the purchase of items as well as a point system to give meaning to time spent on the site (and in the future enhance user experience).

Along with adopting an economy like social games, offering numerous and alternative ways for users to pay for currency and goods is important. Social game publishers realized that not everyone has a credit card or wants to pay cash, so many adopted some form of alternative payment method such as advertiser supported transactions or mobile payments.

2. Use casual experience as an advantage

Many social games are quite addicting and have huge followings but the case is also true that many of them die off after some time or lack entertaining graphics to entice game play. Casual games tend to be simple yet graphically pleasing, creating a natural hook for repeat engagement, especially if there is a social atmosphere built into the portal.

While no side may have completely figured it all out the truth remains that they have and can continue to learn from each other. I look forward to watching the social and casual game markets evolve and being a part of them both.

(via - Inside Social Games)

I wrote last week that virtual currency will be the revenue model of the future within social gaming. Well, Sachin Rekhi of Imeem brings up a great point in his blog. He asserts that virtual currency can be just as effective in non-gaming sites as in the social gaming world. Sachin mentions five very interesting examples of this; myYearbook, heysan!, Scrapblog, Dogster and Mahalo. I agree with Sachin that all five of these sites do a tremendous job leveraging their virtual economies.

How about eCommerce sites? They can also benefit greatly from leveraging virtual currency. There are many examples of software companies giving away their product in exchange for “virtual points” consumers have earned by filling out advertising offers. With the current state of the world economy, we all know how hard it is to convince consumers to spend real money on any product. The situation we are is an opportunity for many eCommerce sites to incorporate a virtual economy. Giving away a product for “virtual points” that can be earned is an ideal way to boost sales since consumers don’t have to spend any real money in these tough economic times.

Whether you are a social game, MMO, non-gaming or eCommerce site, Sometrics can help you incorporate a virtual economy.

(source: Facebook Gift Shop)

A guest column appeared on the Wall Street Journal tech section this week from Lightspeed Venture Partners, Jeremy Liew, entitled “Why do People Buy Virtual Goods?”  Yesterday, he had a guest post on the blog, Inside Facebook, diving a bit deeper into the topic of virtual goods with “What Could Facebook Do to Increase Its Digital Goods Revenue?”

Both of these pieces touch on a subject that has increasingly been put in the spotlight as of late – virtual goods, why people want them and how to generate money from them.

Liew brings up three main theories on what motivates people to buy virtual goods; doing more, building relationships and establishing identity. The first, doing more, is a key to how virtual goods fit into game mechanics.  Unless I “do more” by say buying a key good to increase my ability, I won’t have as great a chance to win the challenge, proceed further into the game or create new opportunities.

Building relationships is a fairly basic concept brought from the physical world we live in – everyone loves to give and get “stuff”. In this case, whether a virtual world, social networking site, community or game; virtual goods allow people to easily connect with others via an online medium. Relationship building is where Facebook is currently targeting their virtual goods “gifting” platform, which Liew argues can be expanded into these other categories for additional revenue opportunities (among other things).

The most interesting theory is that of establishing identity. In our everyday lives we can do certain things to form our individual identity, but there are limits that don’t necessarily apply in the virtual realm. Virtual goods can add to your personal identity such as buying items necessary to create your avatar or enhance your personal space. A mainstream example of this is the Coca-Cola ad that played during the Superbowl this year, with the idea that avatars express a part of our individuality.

Virtual goods are becoming a part of our online experience. Users will always be looking for ways to purchase such items in many different applications. Our goal in this equation is to help publishers that incorporate virtual goods increase their reach to users that will buy, therefore increasing that ever elusive word – revenue.

(via - Wall Street Journal and Inside Facebook)

Social gaming site I’minlikewithyou announced that it will start selling virtual goods in an effort to help monetize the site, according to Silicon Valley Insider. This is a trend that we’ll see continue due to the perpetually low revenues being generated from traditional banner advertising on these sites (and in this economy).

Further enticing companies like I’minlikewithyou to pursue this course of action are the reports that Facebook and social gamer Zynga generated $30-$40 million and $50 million in revenue, respectively, last year alone. With most social gaming sites trying to figure out how to effectively monetize this highly-engaged audience, the future should prove that having a virtual economy or selling virtual goods will be the winning business model.

If I were to launch a social site or game today, a virtual economy would be a key feature.

We wish you much success I’minlikewithyou! Be sure to let us know if you need help monetizing your virtual currency.

An increasing amount of engaged users have been investing time, emotion and money into social, casual games and applications, helping to nurture a lasting and growing market. Subscription and CPM advertising have traditionally been the revenue models used in these games and applications but we are beginning to see a shift. There has been a trend by these developers and publishers to provide new or additional mechanisms to promote user adoption and increase revenue, namely introducing virtual economies and microtransactions as a payment method for virtual currency and goods. The impact seen on revenue has demonstrated the strength and long-term growth of this model.

A thriving market such as this attracts advertising dollars and not just in the form of banners on the peripheral of game play. CPA advertising has been increasingly popular as a means for users to earn virtual currency or goods by actively connecting with advertisers.  The landscape of networks providing these CPA options is changing with an influx of existing affiliates, along with new providers realizing the potential of this shift.

Now is more important than ever for publishers to determine the difference between offer networks/providers in this expanding pool of choices. Currently, when it comes to transparency, the options are quite limited.  Publishers need the tools to A/B test easily in order to determine what will work best for them and their users, not only in measuring the effectiveness of networks as a whole but how they perform down to specific demographics. There are additional tools and methods that can help publishers in attracting and converting players into paying users, but I will save that for another post.

Take a close look at the diagram above for a simple visual of how Sometrics fits into the picture, and feel free to ask for a more in-depth discussion anytime (general contact or jennifer at sometrics dot com).

(photo: Stephen Dunn / Hartford Courant)

All of us here at Sometrics would like to congratulate our friends at PageFad on a feature in The Hartford Courant and on Fox61. Adam and Joshua have established a large and very engaged audience with their portfolio of social games: Online Athletes. With more than three million registered players and over a million in revenue, PageFad has definitely cracked the social gaming code on successful and profitable applications.

How are they doing it?

1. Make a fun and highly engaging game: Premier Football is a new twist on fantasy football (soccer).
2. Utilize the social graph. Players on Premier Football can easily challenge friends.
3. Create a leader board that has value and meaning to players - world and local rankings.
4. Make virtual currency valuable. The currency can be used to purchase power-ups.
5. Sell virtual currency via multiple payment methods - Paypal, Mobile, and Offers.

Congrats guys on your continued success!