Online Games: Big Money or Nicer as a Niche?
Estimated reading time: 7 minutes Matthieu Vermeulen
According to a report by Newzoo (newzoo.com), online gaming has generated nearly $100B in revenue in 2016. In the same year mobile games will bring in more revenue than PC games. In all this, APAC contributes 47% of the total revenue. So, when you start a gaming company in APAC you should go after the big numbers then. After all, if you could capture 1% of that global revenue, your startup is doing $1B, right?
Obviously, that is what a gazillion established and indie start-ups are thinking. The online games development space is crowded and this reduces the odds to be successful to a near-zero value. Most of your competitors have better creative ideas, past successes to build on, or large amounts of cash to burn through till stardom strikes. Does this then mean that most start-ups are doomed to fail fast and fail forever? There might be an alternative start-up strategy though; focusing on a niche and accepting that smaller revenues and lots of fun can replace a multi-million pipe dream.
Fabien is an award-winning board game designer. He started his hobby a decade ago and has won international prizes and awards, specifically in Europe. His start-up is about taking board game principles online. So far he has published 3 games; Popcake Legend, Professor Brain Memory and AddX 1984. Going into the 3rd year of existence, there are quite a few learnings to share. As a minority shareholder, here are a few of my observations.
When I started my initial discussions with Fabien Chevillon about the prospect of starting a game development company under the name of Fabulous Games, I wanted to be sure of his focus and his approach to growth. Was he going after the big money or would his focus be on an un-addressed niche?
#1 Your minimal viable product is too complicated
For the launch of Popcake Legend they did a few things right. Fabulous Games developed a game with only 20 levels. Since the game is a relatively simple memory game for Facebook, using a 3×3 grid, the development itself was not too complex. The development partner spent most of the time figuring out the Facebook SDK.
They built an interface that allows Fabien to manage parameters in the game. In addition, he has a data dashboard to track the behavior of players. From day 1 they could see e.g. where players would exit and how much time they would spend on each level.
But the MVP was also too complete and too complex. Too much time had been spent on design that in hindsight was maybe not so good. Not enough time was spent on A/B testing of designs and the game concept itself. When it went live Fabulous Games started learning from the data. Very early they realized that the game levels were getting too complex too early. Players would typically exit after level 3 or 4. But the way the game was developed, did not allow them to e.g. duplicate levels easily and make the duplicate level only slightly more challenging.
If they were to do this again, they would go for a very simple design and focus on game principles and complexity progress first.
#2 Things happen that you cannot anticipate
When Fabulous Games introduced Professor Brain Memory, their second game and an evolution of the first game, they had already decided to focus on games that help people to train their memory. With Professor Brain Memory they moved away from a name that was generally seen as targeted at the young, to a game that would be more of interest to grown-ups. But they didn’t anticipate that Popcake Legend was gathering high volumes of players. At its peak it had thousands of players monthly, with a low but constant retention rate. For reasons, they can only second guess right now, most of the audience comes from South America and the Philippines and is primarily female in the age group of 25 – 55 years of age. Apparently, the game has something to offer that is much appreciated and shared by this specific audience.
Professor Brain Memory and the 3rd game, AddX 1984, continue to appeal to the same audience. This has helped at least to shape up their Facebook advertising strategy. Judging from the data, it looks like the audience in Latin America and the Philippines still uses PCs to access Facebook, even though the market data tells them that mobile phones are used more frequently for internet access than laptops and PCs. If readers of this post can help explaining this is they can understand their small but remarkable success in this region, they would be happy to hear from you! Please reach out to Fabulous Games founder Fabien Chevillon or send me a LinkedIn message.
#3 Monetization is a bxxxx
Facebook has in-game purchase features for developers and publishers. It seems though that Facebook is not perceived as a platform where you do in-app purchase to gain new lives or access higher levels to advance in your game. In the experience of Fabulous Games, most users accept to play with the available points and lives till the moment they run out and then they move on to the next game or experience. Of course there are exceptions but in general monetization seems to sitting better with mobile apps and console apps.
In other words, although games are built on a freemium concept, they don’t see the level of monetization that they initially and conservatively had in mind. Of course, this might have something to do with the game concepts. But in general, establishing any form of significant monetization through direct in-app purchases is difficult on Facebook, which leads automatically to the exploration of creating revenue streams through advertising and sponsorships.
#4 Online games marketing is different
If you think you know a thing or two about online marketing, Fabulous Games can tell you that for online games marketing, you should accept that you know nothing. It starts with the fact that you are addressing a global audience, yet your game might appeal to a segment you had never thought of and for which your publishing platform in itself might not be the best marketing channel. The female audience from Latin America and the Philippines means that they must get under the skin of this segment, probably in their language while understanding the way they play, communicate about their results, if at all, and finally how they purchase in-game benefits, again if at all.
Fabien found it also difficult, if not impossible, to get players to visit the website and/or capture email addresses for a mailing list. Even when they captured their email through a Facebook login, the effectiveness of the EDM efforts were practically zero. They had a hard time not being blacklisted by email service providers.
Last but not least, they now strongly consider publishing the games in Spanish, but that said you come to another aspect of games development; your audience might disappear overnight because they can. The constant flow of new games coming to market means that your hard won spot in the charts or in the hears of players, can quickly fade. In their case, the high traffic they had for a while on Popcake Legend, slowly degraded and faded. They still have to figure out why.
#5 You find new ways of marketing
Real-life physical game conferences, specifically the ones that focus on the so called indie games, are very useful to find publishers and meet colleagues. They also discovered the power of Facebook push notifications and publishing on Instagram. They haven’t tried Snapchat and may never will but in short, they did go through several hoops and changes and learned a lot about online marketing and advertising for games.
A student project, excellently executed by students at the ESCP end of 2016 brought also new inspiration. Instead of focusing Alex Randolph, the original board game designer who came up with the concept on which AddX 1984 is based, did not really generate any revenue. The students recommended exploring communities that play Sudoku, Rubi Kube and Tric Trac. These communities seem to pick up on the concept better than board game players who know Alex Randolph.
Recently the idea sprung up to help players ‘cheat’ in the games because they tend to be difficult, specifically on higher levels. The assumption is that with a little help, i.e. knowing the solution and trying to replicate this while they play, this might create the necessary stickiness. But as I said before, Fabulous Games is still learning through the analysis of data around this initiative.
Train your brain
Fabulous Games has positioned itself very early on as a developer of seriously fun games. The serious fun is reflected in training of one’s memory and logical insights using through the memory and puzzle game concepts. That sets us apart from other developers. The segments they reach tend to be small but stable, which provides Fabulous Games at least with a steady stream of data to build insights on, which helps them to improve the games.
Fabien concluded e.g. that Facebook is a fantastic publishing platform with a mature SDK for game developers. But it has it its limitations. Fabulous Games is now working on the iOS version of AddX 1984, followed by Android. The learnings here presented are taken into account for this new launch. Once AddX 1984 for mobile is live, there will be a new wave of learnings.
Going back to the introduction of the article, tapping into the 100B global games industry requires relentless focus if you want to create a living out of it. Focusing on niches and untapped territories like real-life treasure hunts (Pokémon Go, anyone?) and Virtual Reality are one way of doing it. Occupying a niche is another strategy. The monetization might be small in this case but the fun of running it is huge.
AddX 1984 Promotion Video
This post is written by Matthieu Vermeulen, minority shareholder at Fabulous Games.
The braintertainment company
Unlock the power of your brain with seriously fun games. That is what Fabulous Games, the brainchild of Fabien Chevillon and co-founder Matthieu Vermeulen is all about. Discover games that are amusing and entertaining while they help you stay mentally fit. FG proudly present the first release of PopCake Legend, an online Facebook memory game that trains your memory with increasingly complex challenges.
We have recently gained the exclusive right to publish four digital versions of board games designed by Alex Randolph. He designed and published over 150 board games of which more than 10M copies were sold.
(image source: https://en.wikipedia.org/wiki/Alex_Randolph)
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