Developers, Demand More Money!

It seems that everyone and their mother is releasing a Flash virtual currency these days, from Nonoba's early entry into the arena, Kongregate's Kreds, and Andrograde's simple system, to the new and still-in-beta GamerSafe and MochiCoins. And let's not forget Whirled, OpenBAR, or CarrotPay. And oh, looks like another one just popped up today, Heyzap.

I've been finding it interesting to watch the discussions that have unfolded around the initial introduction of these systems. Developer reactions are suprisingly positive, despite the poor revenue splits that have been quoted so far. Reading the latest thread on MochiCoins, I ended up writing a response urging developers to demand more from these payment systems, which I've copied below.

Post by simianlogic:

"This all seems like much ado about nothing--Mochi has consistently done what's best for the developers. The ad-based rev share for publishers comes out of Mochi's 50%--nevermind that 50% for us is a great rev share to begin with."

I think this is a dangerous assumption. A 50% split may be fine for ads, but when it comes to players directly paying developers I think that a payment provider taking anything close to 50% is ridiculous. Remember Dan Hoelck's article on MochiLand about his experiences selling premium content with Drunken Masters? He described the difficulties with PayPal's taking a 24% cut of all his transactions. If 24% was too high, how would you describe a 50% cut?

If Mochi does not seriously increase the fraction of revenue flowing to developers using this system, then MochiCoins will never be a serious way to monetize Flash games. Right now it is commonly acknowledged that developing Flash games is not a feasible way to make a living. Sponsorships and MochiAds make it easy to make a little extra spending money on the side of a real job, but only the most successful and prolific developers could ever hope to make a living on such revenue alone.

The promise of micropayments is that selling directly to players could make Flash games profitable enough to live on. But if Mochi continues on the precedent it has set with MochiAds, it will do nothing to further this dream.

Given that the FGL team has recently announced its competing GamerSafe system, and accounting for earlier efforts by Nonoba and Kongregate, I can only hope that a price war will cause these Flash payment systems to undercut each other to a level that can support truly self-sustaining Flash game development. But if you are serious about putting microtransactions in your game, take a look at Gambit or Super Rewards, and drop one middleman from the loop.

Mochi is great, I like what they've done, I'm wearing a Mochi t-shirt right now, in fact, but that is no reason to cut them any slack when it comes to setting expectations for as big of a new wave as MochiCoins is sure to be. ;)

As developers, we've got to know what's a good deal and what's not, and be ready to ask for what we're worth, not simply take what we're given, however shiny it may be. You want this dream? Then start making it happen now.


CapnCleaver said...

I feel that you're ignoring the considerable costs involved in operating a platform. If all you are doing is a payment system for credit card/paypal, then I agree entirely that a high revenue share to the developer is appropriate.

I'm not sure what Mochi is exactly offering, but stored value, brand and cross-game network adds a lot of value, and some costs. They are probably sharing some of their revenue back to portals, which I think is good news in general.

On Whirled we offer a lower-yet revenue share; a three way split between developer, affiliate (sometimes the developer, sometimes a player, sometimes a portal) and us... and we give 10% to charity! Maybe we'll have to change that in the price war you talk of, but in the end I don't think the revenue share percentage is the thing, it's getting players to pay.

That will require a complex platform that rewards everyone in the ecosystem -- which means money has to be split.

Bear in mind also that a lot of the payment methods most popular with the younger (e.g. Flash) audience take ~50% of the transaction (Mobile, pre-paid cards, etc.) So if you don't want to cut off these potential significant sources, you're going to have to drop the developer %.

axcho said...

Thanks, first of all, for the detailed reply! It's an honor.

I will admit that I'm not aware of the costs of operating a Flash micropayment system, but I'm assuming something fairly light, basically aggregating various payment providers such as PayPal or Super Rewards.

I have heard that mobile and prepaid cards do take a significant cut, as you mention. So maybe exceptions will have to be made for those, or they could be somehow subsidized by profits from the other providers or advertising. I wouldn't use those expensive methods as the baseline though.

I think it is inevitable that developer cuts will increase, and most likely stabilize to similar amounts across all the competing Flash virtual currencies. With ten different competing systems, I don't see how it could not. I can't imagine how all of these systems could coexist, in the long run, given the trend in the in-game advertising space with GameJacket dropping out recently, leaving MochiAds as by far the dominant player. Though perhaps it would be a good exercise in creativity to try to visualize such a situation. ;)

I don't see Whirled as on the same playing field as the others, really. You have your own little island, distinct from the general Flash games space. I wouldn't imagine that the revenue split would be the biggest item of consideration for developers on your platform. And who would be so heartless as to resent your 10% set aside for charity? :)

Kongregate's system might also be less affected, though I think Nonoba is spreading itself too thin between trying to reinforce its portal's brand and also become some sort of universal Flash currency. What I'm mainly talking about are the systems vying to be *the* universal Flash currency, like Andrograde, GamerSafe, Heyzap, and MochiCoins. The trend seems to be toward expansion and dominance. Because as you know, the more universal it is, the easier it is to get players to buy in and the more money you can make.

And this brings us to what I thought was your strongest point. Thank you for bringing it up. As you imply, the big issue now is not the percentage you get from the pie, but the size of that pie. Right now the pie is very small, and I would agree that there is more to be gained in growing that pie than there is in fighting over shares (like startup equity?). This will of course require cooperation from portals and developers, and plenty of resources for the payment providers, to make the whole deal enticing to players in the first place.

axcho said...

But I think we're already headed that way. The momentum is there. But I don't see enough momentum toward ensuring a good deal for developers. I see developers just jumping onto this new trend without in any way trying to steer it based on their own judgment.

Maybe it's just too early. Maybe once these systems are out and in use developers will start to respond, and critique. But I don't want to wait until it's too late. I want to at least start the discussion now, before the portals and providers set the tone of the conversation on their own terms.

We need developers talking about this. Not just providers telling everyone how great they are and portals complaining about their revenue share. We need developers complaining too. Because it is really the developers who will have the most influence in whether microtransactions succeed or fail in the Flash games space. Good games will carry a platform, just like in the console space. That is my opinion, at least.

And we also need players talking. I'm sure that they will complain mightily once this really gets going, but why not get them in the discussion now? The players will make this whole new movement possible.

The main objection I've heard is that players don't know what they want, if it's new, like this. They only know what they've already experienced. I suppose the same could be said of developers. Or even portals. In this sort of situation the best response is usually to prototype and test, build something to demonstrate and learn, to bootstrap some concrete understanding based on real products and real responses. How do we do that here?

Is it simply a matter of taking an experimental attitude to this whole deal for the first few months? Should payment providers pay some high-profile developers to experiment with their system and try to come up with something that works? How do we get the players involved in a way that will be constructive?

Any ideas? I'm very curious what you think. All of you. Let me know.