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.

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.

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.

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.

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.

Saying you believe in your own potential and in the quality of what you do or create is a huge measure of your own success and value. The rest is proving it. This is true when you want to improve everyday of your professional life and it is damn difficult to prove it. Bottom line is that no one takes your word for it, you have to prove it by showing your potential and quality, therefor your success and value.

Nothing is more a reflection of this than it’s exact opposite. If you say you don’t believe your own quality and potential people around you will take that for granted! No one needs prove of the lack of value, quality or success of someone that says it! Everyone will take your word for it!

Now transpose this to a reality where money is involved, let’s say, for some reason, I’m talking about the flash game market reality. The portals want to buy content at the lowest possible cost, which is only natural. The developers want to sell that content for the highest possible margin.

Portals do their best to have a professional behavior. Portals excel at saying they are good and to prove it. Obviously if it’s proven, we all know they are or at least they do their best to be.

But I just read that developers are not professionals said by a developer and the context of this is unprofessional behavior. What I read (and it’s just my opinion) is that the developers as a whole have a low potential, low quality and that they do it for the love of games. A developer said it… no need to prove it.

Even if one developer thinks that his unprofessional behavior won’t affect him because he is not a professional, it will, hard but I’m not worried at all. What worries me is that it is extended to the whole flash developers present in that community as if it was cool not to be professional. The value of the whole community will lower if that mentality spreads, thus lowering the potential for margin. Professional developers will do their best to prove they are not part of the pack, and probably will manage to do so, but the idea that actions don’t affect hobbyist developers will at least affect all hobbyist developers, some of them amazingly talented.

Rant mode off…

Most of the post was about finding cheap games. I’m fine with that, if a portal wants to find cheap games, by all means, go for it. I found disturbing that developers sell their games WITH source code for $150-$200 and even more disturbing that portals (or at least Archbob) buys it with the intention of using the “engine” (gotta love the easy use of the word) to create more games. Here’s why you should not sell your code for that amount of money:

Source code is not content

When you license a game, you are licensing the use of content you created. That can have a varying value depending on the well known keywords fun, replayability and so on. The source code you used to do it has nothing to do with it. The value portals see is content based, not the time and the engineering expertise you’ve put in it.

That’s what people pay for code: the time and the knowledge. Is your time and knowledge really worth $150-$200?

Source code is as valuable as it is reusable

Archbob said it with a problem: he will use the source to create other games. If other games are created with the same “engine” then the value that was paid to you, the developer, should paid as many times as games created. It’s quite simple and follows the same logic: code is not content! I registered today at flashden… see how much you’ll have to pay for reusable bits of code.

Is it really worth it?

So you did a game that got no bids. Then you got a $150 bid and you’ll sell your game, your code and that’s it. Unfortunatelly, in the long run is much more than that. What will that do to you and all other developers in the long run? What’s the impact of those $150? Maybe you can get a nice thing for yourself and I’m sure you deserve it, but where will that take you in one, two or three years? You are being paid $150 to create competition for yourself and for me for free for the next games built with your game.

So… think about it…

If you are thinking about selling your source code for that amount of money, please do not do it! You are not doing anyone a favor, quite the opposite!

So all the hype is now in the flash microtransaction deals. It looks like it is the next big thing. Everyone wants to get in. Well, what will happen is one of two things: everyone will get in and it won’t work or some will get in and it will work.

I used the expression “triangle of trust” a couple of days ago while discussing microtransactions has a new possible model opposed to the current sponsorship model. That triangle is made of player, portal and developer.

The player

The player must trust the portal because to the player’s eyes, the one selling something is the portal, not the developer. A player that trusts the portal and enjoys the game will be the target of the deal.

The portal

The portal must trust the developer and the content the developer creates to allow their game to go into their service, thus generating revenue.

The developer

The developer must trust the player is loyal enough to the portal and willing enough to put money in his game.

If the trust crosses the triangle, microtransactions as a model are very doable if the provider has very strict quality control standards. Content must be of excellence, implementation of the system must be obvious, clear and trustworthy for the player. This means a lot of hard-work from everyone involved.

So we need to come forward and close this triangle of trust between the portals that work with us and the players that play games in these portals. An extra mile is needed by the developer to have something that is worth playing and worth spending money on.

I don’t believe that this is the next big thing. I do believe it’s a fantastic value added to our poll of monetization resources, one that is struggling for fresh air.

Vlad out!

A good and honest debate started sometime ago on a comment in FFG’s blog, moved later on to a FGL chat, then to a post here and the circle closed with The Ideal Flash Game Sponsorship.

I hope it does not end here, honestly. I’m a strong believer that developers, portals and services should be closer and agree that we must at least have a wider discussion about our industry.

Sponsorship

Sponsorship is a deal where the sponsor entity gets itself associated with a sponsored entity in return for some commercial value that it would not have if there was no association. Translated to our reality: sponsorship is a deal where a portal gets associated with a game in return for traffic generated by that game.

In other sponsorable property it is possible to have several sponsors. Think about F1 cars or TV shows. As you may know, a sponsorship in flash games is exclusive.

Licensing

A license is a permission. Licenses are issued by city halls, governments, software publishers and so on. Every time you buy a game you are being granted a license, same applies to a movie. All content on each TV channel is licensed to be aired by that channel. When you drive a car, you have a license to drive and a license issued so that the car can use the pavement in your country.

Same applies to flash games. When a developer sells a non-exclusive site-locked license he is not being sponsored. He is granting the portal a permission to use his game. What about primary licenses… well… a primary license is somewhere between the sponsorship model and a true licensing model. What separates a 100% licensing model from what we have now is the primary licenses. On the other hand this licenses are what makes traffic go up and down, so until something special happens, I think it’s a good thing for everyone that it still exists.

One interesting aspect about licensing is that it is widely accepted that site-locking a non-exclusive license is done to protect the interests of the primary license holder. As I see it, it is protecting the interest of the developer because the non-exclusive site-locked license could exist and the viral version be used for commercial and brand awareness of the developer. If every single developer worked his own brand awareness by not selling a primary license, making the viral version his own and then selling only site-locked licenses we would have a full licensing model, which we can only speculate if it would work or not.

Publishing

From AAA console games to casual download games, there are a lot of games where a publisher finances the game. This is the foundation of the publishing model: a publisher accepts a project from a developer, funds it, markets it and distributes it. The commercial catch is that the publisher controls everything except the production. For all that matters, the property of the end product belongs to the publisher.

Apart from some portals internal development, there’s no real publishing space in the flash market. I don’t think that it is doable though. Publishing usually involves financing the whole project. I’m a firm believer that most sponsorship deals don’t cover the development expenses if most developers took their time to see the costs they had. So it is possible to get the same performance by sponsoring with an amount of money that isn’t quite the same as if the same portal was publishing the same game.

Hope this helps to sort some ideas out. Stay tuned on Freelance Flash Games blog… I know he has something to say about this too.

Signing out…
Vlad