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29 potential video game monetization methods

It turns out there are alot of ways to make money from video games

UPDATED JULY 6, 2008, 7:30pm PST

Due to a version control issue I accidentally deleted the pointer to this list of 29 potential video game monetization methods from Jeremy Liew at Lightspeed VP Blog. This list originally appeared as a guest post on Jeremy's blog. I didn't realize it got botched when I hit publish. Apologies.

David Perry, Chief Creative Officer of Acclaim Games has identified 29 possible ways to monetize video games.

Potential Video Game Monetization Methods.

List © 2008 David Perry.

1. Retail (bricks & mortar), selling boxed product at places like EBGames, Gamestop or Virgin Megastore. This also includes mom & pop stores, hardcore specialist gamer shops, and online retailers like that ship the product to your door. The gap in this market is "same day" physical delivery of games too big to download or 1st party titles (basically combining online & bricks and mortar in one solution.) The future of this space is pre-paid cards as the consoles will (in the future) go online only, distributing everything directly to the consumer, so retail (to make it worth selling the hardware) will need a cut of the software sales. Hence prepaid cards. The Gamestop tactic of re-selling USED games (to avoid paying for new product) will finally be over. To drive users to retail, the making of special "enhanced" versions just for their retail chain is a common practice.

2. Digital Distribution (direct download, direct to consumer), like the Steam service from Valve Software, the PlayStation Store or Xbox Live Arcade from Microsoft. This also technically includes "unlocking" access to a game already on a service, like the faux install process on Facebook (however the player would have to pay to do this unlock.)

3. In-Game Advertising (either obvious billboards or branded items in the game world, or subtle product placement (certain clothing, sunglasses or vehicles like Gaia Online), or built into story elements (like the hero's girlfriend works for a Neutrogena). Companies like IGA, Massive, Game Jacket, Mochi Media, Google, VideoEgg etc.

4. Around-Game Advertising (basically making money from banner & skyscraper adverts that circle the gameplay window), this is common on flash game aggregator sites, they use services like Google, Commission Junction, personal affiliate deals etc. The revenue comes from CPM (cost per thousand views), CPC (cost per click), CPA (cost per acquisition of a player), CPP (cost for a "real" player who really plays for a certain time, or to a certain level.)

5. Pay Finder's Fee from First Dollar. This allows you to pay much higher finders fees with no risk. Like offering (as the finder's fee), the first $25 that comes in from any player they find. You balance the fee to a sensible percentage of the average income you get from players. We [Acclaim] get around $70 per paying player, so this seems reasonable.

6. Advertgames (the whole experience is an advert), common on movie websites, can also be big like America's Army or the Burger King games on Xbox 360. I did one of the first of these called "Cool Spot" for 7-UP. The advertiser helps fund the game and depending on the deal, that determines who earns cash out of the revenue. Your reputation will impact this equation.

7. "Try Before you Buy" / Trialware / Shareware / Demoware / Timedware (this is letting you play crippled, shortened, or restricted time versions of a game for free, while trying to up-sell the full version.) This is a real balancing act as too much in the demo can kill any hope of future sales. Xbox Live has been experimenting with this concept, they seem to have hit the sweet spot by giving one playable level and then giving a big reveal (like there's a giant boss monster around the corner) then they say "Buy the full version to continue!". That's basically the 'cliff-hanger' trick, and just like TV it works.

8. Episodic Entertainment (borrowing from the TV model), you either buy the episodes in a serial fashion as they become available, you can pay for all episodes unlocked for a period of time, or they are sold as expansion packs.

9. Skill-Based Progressive Jackpots (where players buy a ticket to enter into a tournament) this generates a progressive jackpot and winner who reaches a certain (winner) status wins the jackpot. You keep a percentage of the jackpots. The game must be skill based.

10. Velvet Rope or Member's Club (where the user pays for VIP access), they get special privileges and access to special areas on your site or in your game. They sometimes get special access to new product before anyone else etc. (Basically the more interesting perks you give, the more likely people will want it.)

That's the first ten. For the rest, check out the post on Jeremy Liew's blog.