Video Games

Mochi Media bets big on micro-transactions

There are many differences between the console games we all know and see commercials for, and online Flash games we all play for a bit when we're bored.

According to Mochi Media co-founder Jameson Hsu, the big difference between Flash and console games is quality--of graphics, service, and general game-play.

But as Flash games become more sophisticated and interactive, and business models emerge that take advantage of the low development costs of the platform, the line of delineation between the two mediums is beginning to close.

ComScore released a study a few weeks back that showed the U.S. audience for online games grew 22 percent since last year to 87 million visitors this past May. By comparison, console game sales plummeted 31 percent in June from the previous year.

This shows that there is a huge market there that has big numbers in terms of users and time spent that can now inject serious cash via micro-transactions.

Mochi Media is launching Mochi Coins on Tuesday, a micro-transaction platform that allows developers and game portals to make real money off quality Flash games. Mochi Coins lets gamers sign in through their Facebook accounts and buy game upgrades (weapons, level unlocks, etc.) directly through the game by PayPal, credit card, or marketing offer. … Read more

Mobile Internet: Final frontier for game vendors

Mobile services continue to mature, and the things you can do on a phone keep getting better even when we are forced to suffer with inconsistent and occasionally terrible quality from mobile carriers.

The vast majority of new services we see in the U.S. have some basis in the DoCoMo i-Mode service from NTT Japan. If you're looking for mobile opportunities, take a gander at Japan and Korea to see how mobile devices shape lives and society.

I spoke with Gerhard Fasol, head of Eurotechnology Japan about a recent report discussing Nintendo and Japan's gaming industry are effected by new devices like the iPhone and services like the App Store, as well as how Japanese electronics manufacturers are trying to make their console/device the center of user's lives.

Since DoCoMo's i-Mode started mobile phone games in 1999, "online and mobile phone games combined have outgrown the video game software sector and are certain to grow much more in coming years. The iPhone, for example, is not slowing mobile phone based gaming down...those who only count video game cassettes and consoles, certainly don't see the rapid mobile and online growth--and complain about shrinking markets."

But really what vendors are feeling is their shrinking control--game vendors and carriers have pushed their own walled gardens, which works fine as long as they can provide what people want--and sooner or later then can't. Think AOL versus the Internet if you need more explanation.

According to Fasol, games of all kinds used to be played in game parlors, and some of Japan's game giants were originally (and still are) game parlor machine makers (a round of Dance-Dance-Revolution anyone?)

These game vendors then moved on to consoles, cassettes and handhelds, taking the momentum out of game parlors, and establishing a pattern of growth by generations (today we are in the 7th generation). … Read more

MMPORGs, microtransactions, and user experience

Microtransactions within online games and social networks offer one possible way to place a value on services while enhancing the experience for users. In addition to online games like Maple Story, virtual goods are launching all over social-networking sites, including Thursday's launch of PlaySpan's marketplace on Facebook and MySpace.

Funding for virtual worlds has grown dramatically over the last year and companies need to find sustainable revenue models. Transactions of virtual goods allow for new cash flow into both subscription and nonsubscription sites.

But some users don't like the idea that you can simply buy something to affect the game in your favor. Accordingly, games need to be very clear about the purchased goods unfold into the game.

The team at Champions Online have outlined how microtransactions will surface in the game in their State of the Game blog post. … Read more

Funding for iPhone start-ups passes $100 million

Recent data from Chubby Brain identifies $102.49 million in total VC/angel investment divided among 17 iPhone application start-ups.

The iPhone is a great mini-computer and may be the next big gaming platform, but I'm still struggling to get the math to work in terms of what a typical VC expects as their return on investment.

Macworld's App Guide lists more than 58,000 apps available for download with more coming online every day, though it's not clear that downloads are equating to sustained revenue for developers.

But, developing an iPhone application still seems like a good business move, provided you can market effectively and not fall into the boom and bust cycle that many applications find themselves in. … Read more

Games overtake electrical sector in Japan

In a recent newsletter, Gerhard Fasol, head of Eurotechnology Japan, points out that the Japanese games sector is booming--with the combined net annual income of Japan's top nine game companies overtaking the combined net income of Japan's top 19 electrical giants.

Game companies such as Nintendo are thriving through the global recession while stalwarts such as Panasonic and Sony struggle (Sony's diversification and PlayStation sales haven't helped recently) with huge corporate hierarchies and a dearth of new "must have" products.

What's interesting about the growth of Japanese game play is that it'… Read more

'Freemium' beats advertising for online games

Danc at the Lost Garden blog has written up an excellent analysis of why Flash games are great, but represent "the ghetto of the game development industry" in terms of revenue generation.

Compared to the number of players it serves, the Flash game ecosystem makes little money, launches few careers, and sustains few developer owned businesses.

There is too much reliance on advertising and not enough on sustainable paid methods, or "offers" such as subscriptions, in-game consumables, and level un-locking to encourage people to pay--and create an actual business.

There is no need to limit yourself to any single one revenue stream. There are lots of different types of players and each player values something differently. Some players may be willing to buy a t-shirt. Others may want 5 stackable subscriptions. Others may just want a pretty new character with a panda head. When you restrict your game to a single revenue source, you miss out on gaining money from all the different types of customers that would have paid you if you had just given them the right offer.

… Read more

When gaming communities go wrong

The more time I spend looking at video games--especially online games and MMPORGs--the more and more strange information that comes out. As with any society, norms and oddities appear as individuals assert their place.

There's a fascinating (and somewhat terrifying) article about Loyola University media professor David Myers "unwelcome" behavior in the game City of Heroes, where he created a character that everyone hated.

Players tried everything they could to get rid of the pariah, but he kept at, apparently as research, but there had to be hint of satisfaction in his role as the most hated player--probably right until someone threatened to kill him for real.

Myers revealed his identity and his character's purpose in "Play and Punishment: The Sad and Curious Case of Twixt," an academic paper on his experiment published in 2008.

If we assume that games are their own communities and have some level of self-policing (just like open source projects) we can also assume that these things iron themselves out. In this case the community turned completely against the individual and game-maker NCSoft had to step in to moderate a bit. … Read more

Blizzard chooses cloud over LAN for new game

Blizzard Entertainment has decided to forgo LAN support for the next version of Starcraft II and instead require users to connect to the new Battle.net cloud-based service.

"We don't currently plan to support LAN play with Starcraft II, as we are building Battle.net to be the ideal destination for multiplayer gaming with Starcraft II and future Blizzard Entertainment games," a Blizzard representative said in a statement. "While this was a difficult decision for us, we felt that moving away from LAN play and directing players to our upgraded Battle.net service was the best … Read more

China bans online 'gold farming'

China has unveiled the first official rule on the use of virtual currency in the trade of real goods and services to limit possible impact on the real financial system. The Chinese government also spelled out the definition of "virtual currency" for the first time, which includes prepaid cards of cybergames, according to a joint announcement from the Ministry of Culture and the Ministry of Commerce Friday. It said:

The virtual currency, which is converted into real money at a certain exchange rate, will only be allowed to trade in virtual goods and services provided by its issuer, not real goods and services.

The ban is primarily aimed at "gold farming," an Internet-age phenomenon in which players in less developed countries collect and sell virtual gold (common to games like World of Warcraft) to wealthier gamers in the developed world. This enables gamers who have the means to buy virtual gold to get ahead in the games without actually having to accomplish the grunt work.

The trading of virtual currency for real cash generates between $200 million and $1 billion annually, according to a 2008 survey conducted by Richard Heeks at the University of Manchester. … Read more