Archive for the ‘Sponsorship and Licensing’ tag

Business Model Activity: Conclusions

So after all the walls of text I just put up, what does this all mean? Let me start by saying that Vortix was not born to be a flash game development studio. It was born to be a game development studio. For the last two years we have focused on flash the same way we may focus on some other technology. We do what we have to do to develop games. That is what we want to do. But to be successful we need to be able to monetize it. It is pointless to create a commercial project if it isn’t to be commercial and no, you don’t have to sell your soul to do it.

To be successful we have made decisions. We developed our own activities:

1. Sponsorship and licensing because it is our current form of monetizing our core business and our core business is creating games.
2.  Collaboration projects as an low-risk extension of #1.
3. Contracts as a very-low-risk activity that would allow us quick and steady monetization.

Everything we did, was done with a purpose. There are a bunch of things you can do as a flash or game developer. Some devs operate portals, some devs create software that helps other devs, some devs have a day job, all is fair game, but doing things with a purpose allowed us to set goals and each goal that is achieved is a step forward into that purpose.

It boils down to this:

Do whatever you have to do to be able to do whatever you want to do.

Less than that it’s either a hobby or a bad model. What you need to ask yourself is:

1. What do you do best? Capitalize on that.
2. What do you want to do? Improve on that.

Never stop moving, choose what you have to do and choose what you want to. Be smart, create value, raise the bar, raise your worth.

To finish, keep in mind that you, like us, are probably small fish in a world of sharks. Here’s something worth reading: The Bootstrapper’s Bible. That should put it in a wonderful, motivating new perspective.

Posted: August 5th, 2010
at 10:55pm by Vlad

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Categories: Business

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Business Model Activity #3: Contracts

Last activity after Sponsoring and Licensing and Collaboration Projects in this Business Model series. Contracts were our last and most revenue generating activity. Our contract works went from small to huge (so huge that none of the bigger projects as yet been released) and from bad to great. Contracts start with a prospect client, someone that approaches us with a project. We analyse and present a price based on the following:

1. We determine cost, scope and time frame. Only once we were given a budget and it worked alright, but we prefer to determine the cost ourselves.
2. Cost to the prospect client is directly related with scope and time frame. If we assume we do the contract it is because we have the skill to do it and it is not our content, this is purely engineering/design work, nothing else. This means that any other related factor is irrelevant for us. We don’t care what is the content or entertaining value, we don’t care if we are considered cheap or expensive and we don’t care if anyone thinks we are having too much profit.
3. We care about the end result and will not charge extra if any requested change or additional feature is within scope and time frame.
4. Larger projects will be paid by milestone while smaller projects will be paid on delivery.
5. Payments on delivery are not dependent of anything, like developers getting their game sponsored. We delivered, if it is accepted we expect immediate payment.

Sounds a bit harsh doesn’t it? That’s because our core business is creating our own games. A client-centric company needs the clients to survive since they are dependent of contracts. A flash game developer creates (or should be able to create) its own content, therefor its own value. If we have an agreement, we will do the project as if it was our own, the client is not treated as a client (in a bad way), but as a partner, unless of course they treat us as supplier (in a bad way also). The problem with a couple of contracts or contract discussions was exactly this: some clients (or prospect clients) tend to consider flash game developers as a lesser entity, like they were amateurs. Our experience says that this is more evident in the flash game space where prospect clients started the discussion by saying “I don’t think you are good enough”. Great, find someone else that is…

Bottom line is that contracts, if not done with the right people are problematic. The right people are the ones that are don’t consider to be in a higher position because they pay but that consider hiring us as an added value to their project. These are the clients we want to deal with, the ones that the points raised above are “nothing special”.

Still the worst part of contracts is getting started. We feel that announcements (blog and forums mostly) served very little for getting new contracts. On the other hand, word of mouth was what brought us more contracts. I think I won’t be far from truth if I say that all contracts started by either our games being known which led to good collabs or by speaking with people directly thus creating network. I can recall a couple of emails we got from our forums, but those never left the proposal stage.

Now you know how the activities of our business model work to us. I’ll finish this series by wrapping it all up, drawing some conclusions and babbling on how you can adapt your own reality to your own business model.

Posted: August 3rd, 2010
at 12:38pm by Vlad

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Categories: Business

Comments: 1 comment

Business Model Activity #2: Collabs

Following the Business Model series that started some days ago and after rambling about Sponsorships and Licensing, it is now time to ramble how and why we see Collaborations as an activity separated from Sponsorship and Licensing.

Most flash game developers, be it coders or artists, usually lack the other side of the coin. Many coders don’t have design and/or artistic skills and many designers/artists don’t have coding skills. This gap became deeper with Actionscript 3 for well known reasons.

Collaborations the activity that we planned the most. The main goal was to monetize schedule holes. To do this we started by marketing it at FGL. First slowly and carefully, we were absolutely clear that we were not looking for “any game”, but rather targeting potentially high profile projects. We behaved a lot like a sponsor, checking every proposal we got by email, discussing the pros and cons of each. About a handful of projects never started, one was never sold (or put to sale as far as I know) and a couple did well.

Now it is important to determine what “doing well” exactly means. Maybe you are imagining that doing well is getting 5 million plays or we earning $5000 per game. It isn’t. We clearly defined the objectives we wanted from Collaborations:

1. Our collaboration must create enough value in the game so that the developer that proposed the game makes more money than he would if it wasn’t for us. All games that were sold achieved this.
2. Our percentage of the collaboration must cover our cost. I didn’t crunch numbers on this one, but I think we rarely achieved this. It is always a win situation for us since like I mentioned earlier, our initial motivation was to monetize schedule holes that would never make any money.

It was a bit disheartening that as soon as developers create a hit game with us they prefer to hire us. I admit that from a commercial point of view that is the right call and we say from the beginning that we don’t won the IP in any way so we really have no take on the subject. But from a personal point of view, I feel sad that our share of risk and support is left behind and given a lower priority against money… I don’t let these personal feelings get in the way and I share the same amount of respect and even friendship, but it’s a bit… sad…

Final thoughts on collabs and why we did it this way: we monetized, created value for ourselves and developers that worked with us which was exactly what we wanted to do. To achieve this we didn’t consider this activity as part of sponsoring and licensing since we never owned the process of production and sales. Collaborations are half sponsorship and half contacts. That was the only way to fit it into our business model.

Posted: August 2nd, 2010
at 12:26pm by Vlad

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Categories: Business

Comments: 3 comments

Business Model Activity #1: Sponsoring and Licensing

As promised a couple of days ago, I’ll address several activities from a business model point of view. This first activity is well known to most flash game developers, or at least the ones that (try to) monetize their games. The revenue streams are also well known and well documented in many sites and blogs.

And that is the main problem… the activity is documented, but usually on the upper end of it. Meaning that what developers find when they look around is the success stories, from slight success to major success. I wonder what is the success percentage in the whole Sponsoring and Licensing activity. I’m betting, lowish… developers get information from these sites and blogs and until they face the hard truth and get themselves into the statistics.

Flash Game License has promoted a lot of data sharing about their system. The data FGL provides is a very important tool but it needs to be put into context. For instance, we can look at a $2000 average sponsoring value and everyone jumps into the idea of making a game in a week and getting those $2000 average. By doing so most developers neglect several facts:

1. A small percentage of games sell for much more than the average
2. A high percentage of games sell for much less than the average

What percentages are we talking about? I don’t have enough data to know that, I do know that (again looking at FGL data) the 100th most successful developer at FGL (and that has paid commission) is now Market Level 4, so that developer made something between $5000 and $10000 and paid commissions for it.

That’s the 100th most successful… there are thousands of developers registered there. I spoke with many developers that say they don’t do what they expected from Sponsoring and Licensing. Most developers also say they slack and that they are not good enough and that they don’t care about improving.

So?… What is our take on it? What does our experience say? I’ve said many times that from the revenue point of view, sponsoring and licensing is potentially the highest paid type of activity we have. Like I also say keyword is “potentially”. The risk, as showed before, is huge, so some factors must be met:

1. All games must sell. We hope that all games are profitable but to lower the risk, all games must at least sell.
2. All games must have the highest possible quality for its cost. This is the hard part.
3. All games must be a step forward in terms of partnerships, visibility and IP value.

By doing this we try to position ourselves in the upper tier of developers. Until now we have been able to do that, except when we are not actively selling licenses. Right now… it’s been a year or more since the last one and I bet we are still in the mid-top tier in terms of revenue. So it’s not that bad as it seems. It’s a matter of understanding risk and cost.

What do we know about the revenue streams? Some stuff that boils down to this… the better the game, the higher the revenue! We need some indication about how good the game will be.

The higher offer is usually a good indication of how good the game will do. Our decisions are usually based on that and a lot of number crunching. For instance, we if we get a $100 bid on a game, we don’t expect much from it, so what’s the point in forcing a discussion around using advertising or not? If you have a $150 offer with no ads, it will probably be better to take it even if no ads are allowed.

On the other hand if a game is having $1000 offers, that usually means we will get at least 3 million plays. After that, it depends on the eCPM of the countries the game gets played the most.

So you can say that our business model activity based on Sponsorship and Licensing is all about:

1. Creating value for us (through our IPs) and for portals (through entertainment).
2. Creating strong relationships by being available to do everything that doesn’t mean loosing money.
3. Be consistent in our offer. All our games have sold, all our games have beat the 1 million mark by far. This is sort of our seal of quality.
4. Be visible, through our blog, our Twitter, our engine, our games, our contacts and so on.
5. Make every game the best game possible, make every game a stepping stone in terms of development, market and networking.

The weird part is that we learnt all this by not doing games to license. :) Talk to you all soon.

Posted: August 1st, 2010
at 9:03pm by Vlad

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Categories: Business

Comments: 3 comments

Business Model… the missing link…

I have to say I’m still doubtful if I should address this in our blog. I will not go into the details of what a business model is what it is not, how it influences strategy and all that stuff. For that a Wikipedia link to Business Model is more than enough.

As I think it notices in other posts in our blog, I still feel that developers are not fully aware of where they are positioned in the flash game market. I’m not 100% sure but I think that what I spoke most with other developers was about business. I admit I feel quite comfortable with the business side of things and I understand that with the average age and work experience of most flash game developers, business is not something they feel comfortable or knowledgeable.

On the other hand there’s the problem of developers that feel they have a life of experience because they sold one game for $100. They use the word “noob” like there were no mirrors left on Earth. I would add to these a significant number of developers that advice others not to do something that they haven’t tried.

And where does a business model fit into this? Well, most of what defines a business model is well known by developers. What is relevant to discuss, in my opinion, is what are the options available in terms of activities and revenue. Many developers ask me how did Vortix achieve this or achieve that. How do we do it? How much do we earn… stuff like that… I can only be theoretical about it because I’m not fully aware the most sensitive piece of information: THE DEVELOPER!

You need to know yourself, you need to understand, not business but your business and you need to neglect all opinions that are negative in nature to what models, activities and revenue streams that are available to you as a flash game developer.

In the next few days I’ll address Sponsorship and Licensing, Collaborative Projects and Contract Projects as activities and their revenues but I feel that what is important is how do these activities affected us at Vortix so you can relate to your own business model. Because there is no perfect or good business model, there’s only YOUR business model.

Posted: July 30th, 2010
at 6:43pm by Vlad

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Categories: Business

Comments: 4 comments

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