Show me the money! The present and future solutions for HTML5 games monetization.

Posted by przemek on 2012/10/16

There is still a discussion about the best solution for HTML5 mobile games monetization. We all know that the market we work in is still insatiable. There is a continuous growth, new publishers and developers are showing, and they all are looking for best monetization solutions. We might find out this activity very satisfying in the coming years, because there was always a trend for each promising technology solution to develop with the time flow. We have to keep in mind that HTML5 mobile games still have their limitations, mainly in performance. This will lead us to conclusion of which types of games we will be able to produce, and what model of earning will suit them best. But I will speak about it in further part of my article.

Following the “performance issue”, we can see a constant battle between native and HTML5 mobile games. These are two, totally different realities. I wouldn’t like to make any judgements here, but I’m sure most of native games followers will defend superiority of native apps over the HTML5, and vice versa. It’s natural. The biggest advantage of native games is performance, ease of development and distribution now. Nowadays, various App Stores are really huge distribution networks, and they allow anyone to upload their products. But in this world, there is one disadvantage. Native developers must be aware, that there are thousands apps coming out in App Stores every day, and to be supported, promoted, and sold, they need to have great product, or to make it simple, I will quote Simon Whatley with part of his blog entry: “Native apps (based on iOS, Android, etc.) are distributed through app stores and markets controlled by the owners of the platform ecosystems.”

The reason I pointed this out is that HTML5 has couple features which in contrast to native games market in my belief, in the near future will create new, big, and very dynamic market for mobile games. Of course HTML5 games can easily be converted into native, but I want to focus on a web based games. The biggest reason for my words is another quote of Simon Whatley, who speaks about games distribution: “HTML5-based apps are distributed through the rules of the open Web: the link economy.” And that’s one of their greatest advantages. Imagine, you have a game, and all you do is sending a link to your friends, they click it on their smartphone, play at once, then they pass the link to others friends, and friends of friends pass it further. It can be done by social networks, emails, communicators, etc. Pretty easy economy? Yes, and it’s not the only feature allowing greater monetization. An interesting confirmation of another great HTML5 feature, crossplatform has been shown shown at Mobile Monday blog. Andrew Betts, Director, FT Labs, which publishes the Financial Times HTML5 app, puts out one of most powerful arguments. “He maintains that HTML5 truly is the only cross platform solution.  It uses a single codebase.  It provides a much wider reach allowing greater monetisation.”  Sounds great, but we still remember performance, and hardware issues which nowadays don’t allow to make full fledged, fantastic working game mostly because of lack of development resources for many HTML5 game developers. “Alex Caccia, President, Marmalade went further, contending that whilst HTML5 is great on a surface level, the challenge lies in the hardware market” (Mobile Monday blog).

Basically, we know that we have a chance to create possibly new, profitable market. We know that it still needs time and development. HTML5 code itself needs improvements, and mobile devices need to be more powerful to cope with performance issues. Developers are already trying new solutions, and in the next years we can expect changes and possible rotation of market to focus on crossplatform games that will gain high revenues thanks to their advantages, where social is really entertaining, and accessible for anyone independently on the devices they use.

That may be the future. But how it works now? Frequently, we are finding new gaming networks and publishers who provide support for HTML5 mobile game distribution. Most of them use well know business models. In further part of my blog entry I will focus on two most interesting, which in my opinion have biggest chance to become profitable for HTML5 gaming future. Very nice article about monetizing HTML5 games has been shown in blog entry of  Ben Chong, of MarketJS. His conclusions led me to my summary. Below I gathered models of monetization which are now popular, which in my, and opinion of others work, and give financial results. Moreover those conclusions came from my team experiences in the past, and present activity in HTMl5 mobile gaming market.

• Fixed fee license – most popular model nowadays. It’s been in use since the Flash games times, and now it is still popular among HTML5 publishers and developers. It allows you to receive a nice amount of money, especially in the situation if you manage to sign non-exclusive licences with couple networks interested in your games.
• Advertisement revenues – as old, and popular as fixed fee license. Many PC browser games have been using it for years, and still it helps to earn not bad revenues if your game is popular.
• App Stores – HTML5 games can be converted into native versions, and they can be sold, downloaded as any other native production for fixed price.
• Freemium – based on virtual currency in social network. It allows you to buy items, upgrades, food, machines, grain, etc. in games. Developers get revenues shares split from sales of virtual currency.
• Subscription – very interesting solution, user pays an amount of couple bucks for time limited gaming portal access, and developers receives shares of incomes depending on number of games installs.

In the beginning of my article I mentioned about performance limitations, and type of games which a developer should match to business model he wants to use. As you can see, we have various business models, we have future solutions, and the reality. The reality stops us from creating dynamic, animated games with complicated physics. The idea of crossplatform gaming pushes us to create full fledged social games, focused on gathering players with various devices in one area for competition, and mutual help. Let me remind you here my previous blog entry, and presentation of Henric Suuronen. Hardcore gamers, gathered together in the battlefield will look for improvements, and better solutions to beat their enemy, or fasten up technology they develop in game for better units and defense. Social gaming require higher focus on cooperation, group raiding, or PvP rather than reaching a goal of another level in bubble shooting game.

This lead me to another conclusion. Two models I will mention below, IMHO will become the best solution for mobile gaming in the coming future. They tend to grow among existing HTML5 gaming networks, and along with new networks showing up on market, they seem to be a trend, that may become a standard, as advertisements revenues are now. Of course you may use any model you like, or even in some situations mix them together, but my idea is to point out those solution, that I believe will work best depending on a type of game you produce. What’s more, I believe they may be more profitable than traditional, and popular ways of game licensing.

• Subscription based models allow a high quality arcade games to gain more players through specifically created gaming networks. Promotion of games according to my researches will be lead through traditional channels (advertisements on social networks, crosspromotion, etc.). Players won’t be forced to pay high sums for games access, or downloads. There will be a time based subscription, which for example for $5 gives a player a week access to various games, and checking them out instead of spending a fixed sum to download couple titles they are interested in. This way arcade HTML5 games can obtain a separate market of casual, and quick fun. If developer creates a nice, and attractive gameplay, his financial results can grow better along with traffic and higher revenues from game subscriptions.

• Freemium is already known to all of us. But yet, it is still not well popularized in HTML5 mobile gaming. There are already couple social networks using it, and from what we learned, it works best with social, “time management” games. Now imagine, that thanks to crossplatform solutions you can invite more players to your games, you may push more social features. You may truly gather more devices to join one game, and all players can compete or cooperate with each other. That boosts up a monetization couple times more than usual social PC browser game! Imagine a teams of players entering one battle from their smartphones, tablets, PCs, Tvs, etc., and they all use bought resources to win. Thats true social, and fantastic way to monetize the game, and I believe that along with link economy may become best business model for future.

Final conclusion. Despite the disadvantages coming from low performance, and not fully developed technology, HTML5 monetization, especially for mobile is tending to grow. We already have couple financial solutions, that actually work, and give benefits to the developers. What we really lack is a support for technology development, and there is still low popularity of HTML5 mobile games. But this is also changing along with new publishers showing on the market. If you create a high quality game, which tends to become popular, and you will choose proper business model for it, you may be sure that it will earn satisfying revenues. Focus on fitting the gameplay to existing business models, because IMHO this way you can feel more comfortable during negotiations with publishers. When you know how our game acts in social networks, you can easier fit it with another publishers. I believe that if we will focus more on crossplatform gaming development, and we will be able to develop full fledged social games, they may not only become very popular and desirable among publishers and players, but also revenues supported by crosspromotion, link economy can grow high, for satisfying results.

Image courtesy of [tungphoto] / FreeDigitalPhotos.net