App Advice from Flurry, Mobclix, Getjar

Yesterday I attended a panel discussion about marketing mobile apps, which included some interesting data from Flurry and Mobclix. ONe thing all the panelists agreed upon is that there is no one strategy that works for all apps; companies are trying different things, and no one has a magic formula that always works. SOmething that was clear to them, though was that the first month was a very good indicator (usually) of how an app would perform over time. If you didn't become a hit then, your chance of becoming a hit was much less later on. Not impossible, just much less likely. So your marketing should be planned for maximum effect in that time frame, or else it may not have as much impact.

Also interesting were the numbers on Android. The iPhone is still the big dog, but Android seems to be growing well also... both are eating share from Windows and Blackberry. Nokia who? Microsoft is anticipating sales of 11 million units of Windows 7 Mobile by the end of 2011... there must be something in the water in Redmond. Android's problem is the multiple versions, which make it difficult to support with one app. One thing I found most interesting is that most developers seem to be developing for one platform only; there's only a 5% overlap between iPhone and Android apps. Really? Seems like a missed play to me.

Finally, since 87% of app downloads are of free apps, that seems like a powerful marketing tool. You are left with the difficulty of monetizing your app, which needs to be considered from the beginning of the design process to really be effective. Advertising may work well, but for games the freemium model seems to be really popular.

Creating Story Lines for Marketing

The handy tools of social marketing make it inexpensive to put a message out there, but problems remain. First, social marketing needs messages that are interesting; the message won't be passed along unless it has some interest to readers, and the more interesting it is the greater the reach will be. Second, you have to maintain the message over time; one single tweet will soon be forgotten, even if it reaches a large audience. The implication is that you have to develop a story line for your product in order to create visibility through social marketing.

In this context, your "story line" is merely the series of messages that you want to transmit and how they connect to your product. The story line may be inherent in the product, or it may be about things external to the product, such as the company, the creators, the creation process, or the impact of the product on some users.

Examples: Let's say you have a simple arcade game about a squirrel gathering nuts and evading various hazards. Rather plain, nothing terribly interesting here, right? Here's where the creativity comes into play. Perhaps you can create a more interesting back story for the squirrel... something humorous, perhaps linked to current events... maybe he's on his way to American Idol tryouts, or he's auditioning for a job with the CIA in order to infiltrate Iran . Then you can create a series of posts about this, and point back to the game. (Ideally the game itself would have some connection, visual or otherwise, with this narrative you're crafting.) For external narratives, perhaps you might talk about endangered squirrel populations and how you will use this game to raise awareness, or perhaps donate some of the proceeds of the game to a wildlife preservation group. Maybe you connect the game to different fictional squirrels, or other wildlife used in gaming, or a popular cartoon. A different tack entirely might be your personal story about how you came to create the game, or your company's narrative about how it arose in a kitchen to be the #1 squirrel arcade game creators worldwide.

You may even decide to use multiple narratives over time, in order to keep awareness up and help spread the message in different directions. As you can see, developing such marketing narratives is a creative endeavor in itself. (The astute reader will also see that developing the marketing narratives in connection with developing the game itself can lead to better interaction between the game and the marketing, with better results for both.) Once you've developed a narrative, you then have to determine how to break it down into useful chunks for social media, connect the different social media together, graft in some sales incentives into the narrative, plan how this will proceed over time, and then alter your plans in response to the feedback you get...Is it a lot of work? Yes. What's the alternative? Waiting around for your game to be "discovered" among hundreds of thousands of other things... not a great alternative, is it?

Digital Publishing Makes Progress

Now Barnes and Noble is offering digital self-publishing, joining Amazon. It's one more sign of the sea change in publishing, and the opening of new options for authors. I expect midlist authors to be taking up these opportunities, like J.A. Konrath is doing with Amazon (check out his blog here). The biggest barrier now is marketing, because the authors will have to figure out their own marketing plans and execute them.

It's true that authors who already have a fan base may not do much more than announce their new book and they'll sell enough to make it worthwhile. Most authors, though, would certainly be able to increase sales by expanding their user base through marketing efforts. Unfortunately, most authors aren't familiar with marketing and may not want to have much to do with it, even though they appreciate the results. I predict more services being offered (by publishers and others) to help authors with a variety of tasks. Essentially, the classic publisher role will be split into its component parts and offered by third-parties. Some companies may offer multiple services.

Let's say you're an author who has a completed novel, and you want to make some money from it. Previously, your options were to try and get a publishing deal, or to go to a vanity press, print a  bunch of copies, and then try to sell them yourself. Now, you'll be able to self-publish through Amazon or B&N or even your own web site. Soon (maybe even now) you'll be able to get a professionally designed cover, and some help with the interior layout. You can already get your book professionally reviewed, and have the reviews posted widely. Arranging bookstore appearances, social marketing, other promotions... all the marketing tools are either available to authors or via third parties who will provide them to authors.

Yes, it's more work for an author... but in return the author gets a much greater percentage of the revenue, and can possibly make far more than on a traditional publishing deal. On the down side, the author loses the number one reason (the publisher) why their books don't sell...

XBox Live Arcade Analysis, and some PSN

In a world where speculation is often passed along as truth, it's nice to get a dose of data now and then. Here's some from XBox Live Arcade: April's numbers. It's interesting to note some comparisons between XBox Live and PSN; the number of players for Capcom's Final Fight was actually higher for PSN. Seems like the price drop for the PS3 has now made the unit quite competitive. It doesn't hurt that you get a Blu-Ray player in your PS3, either. (Now there's some upcoming news about PSN debuting a premium network soon, to compete even more with XBox Live... cross-game chatting, free games, downloads of full games, and best of all, cloud-based game saves. Yum.)

As you can see from the list, the top games can hit over 1 million players... and then there are many games in the low thousands. Still, it's a wide range, and there's plenty of room for moving up in the numbers if you can do some effective marketing. Major Nelson promoted one game as a 33% off sale for one day, and that boosted numbers by about 6,000 over what would have been expected.

The marketplace for downloads continues to evolve, and the marketing tools tend to lag behind. It's really necessary to put some creativity into the marketing efforts, not just the game development.

FanFic as Social Marketing

Fan fiction is something that's been around for decades, but with the advent of the internet it's become much more popular. Essentially, fanfic is written by fans of a particular story; the quintessential example is Star Trek, but the concept goes back before then. And, of course, the Internet made the whole thing much more popular. If you're not familiar with it, this article will get you started... head over to George R.R. Martin's post to get the other side of things. The comments in both are pretty interesting.

I can understand the annoyance of authors who find fans playing around with characters the author created, and often doing things the author would never contemplate (there's a whole subset of Star Trek fiction about Kirk and Spock...). I do think it's better to look at it as a marketing tool. If you're lucky enough to have an audience enthusiastic enough and large enough to write fiction about your creations, you're getting additional value from their spreading of your ideas. Yes, you must make sure users know the difference between fanfic and the real, authorized (so to speak) fiction. Really, though, having an enthusiastic army of fans helping to push your IP is a benefit.

Make a clear statement about how you feel about fans using your IP (this is true of game publishers as well as authors). Perhaps use some of the Creative Commons licenses; you can modify them to suit your needs. Establish the ground rules and what fans can and cannot do, then encourage them. Use their enthusiasm to help drive more people to your sites where they can buy your products (you did put in the ground rules that all fanfic needs to contain a link to your web site, right? Even better, a trackable (unique) link so you can count how many people the fanfic brings in).

Social media marketing is time-consuming and labor intensive... if you can get fans to help you with it, and they enjoy the process, that sounds like a win all around.

Hard Data on App Sales

TechCrunch has an excellent article on sales of iPhone apps. They were able to get actual sales numbers for a variety of apps, with a wide range of prices. The article is a a nice source of hard data in an area that's all too often filled with rumor and speculation. They got info on 124 different titles, and the results were interesting. Once you took off the top 10% of the most successful apps (likely to skew the results), you get average sales of about 44 units per day (totals of 11,625 for the titles studied), and 23% of apps sold less than 1,000 units from launch, with 56% of the apps selling less than 10,000 units, and 90% sold less than 100,000 units. On average developers made 15 times their development costs... but obviously things can go poorly more easily than well.

 Some apps had sales measuring in dozens or low hundreds. With 200,000 apps in the App Store, the odds of getting lost are pretty good. So you have to figure out some way out of the wilderness, which means marketing (unless you just get really lucky, or have an app that's so compelling and unusual the world will beat a path to your door).

My feeling is that the app market will continue to grow, both in users and in number of apps. Don't forget the already large app market for Android (50,000 apps), and how they are selling plenty of those devices these days; most iPhone apps should be easy to implement on Android as well. The difficulty lies in marketing, and in gauging your development effort to your expected sales. If you can put together an app in a few days, then there's almost no downside. But if it takes a teams several months to create, and costs $200,000 to build, then you'd certainly want to see significant sales in order to get a return on your investment. Bottom line: before you embark on your development effort, consider the expected sales and how you're going to market your app. Check out the competition. Don't even start unless you have a good expectation your app is sufficiently useful or fun, different or interesting, and you can market it well enough to pay back your development effort. Unless, that is, your app is itself a marketing tool for some other way in which you make money, like your magazine or your bank or some such. Or maybe just a way to get players into your MMO or other game... apps can be marketing tools in and of themselves.

Social Marketing Tips

Social Media Marketing is the latest hotness, and so this article on Gamasutra.com is a useful primer on social marketing for games. It's important to note, though, that these tips are geared towards established companies and brands. Still, it gives you some ideas of where to start.

Some key takeaways from the article, with my own spin on them:

1. Set goals for your marketing efforts. I'd like to think this is obvious, but all too often it gets ignored. Before you embark on any marketing effort, you really need to understand what you want to achieve, and how your going to measure your progress. This is very important if you're going to be spending precious resources like money or time... and you want to make sure you're getting the most out of those expenditures.
2. Listen to what customers are saying. If you've already got products out there, what are your customers telling you? If you don't have a product out there yet, what are customers saying about similar products? There are tools to help you figure this out, as the article mentions. Use this info to refine your own product development and marketing efforts. You may find a different reason for people to buy your product that you hadn't thought of, or a different audience to reach.
3. Check out the competition. Whether the competition is in the future or is already stealing your market share, you need to figure out what they're doing and how it affects what you should be doing.

There are so many social media outlets these days, it's important to study them and focus your efforts where they will do you the most good.

Facebook and Zynga Reach a Deal

It seems as though the fight over Facebucks is over, at least between Facebook and Zynga... and at least for 5 years. (By which time, who knows where Facebook might be... or Zynga, for that matter.) As you might expect no details were released as to the nature of the deal. My guess (completely speculative) is that Zynga got Facebook to reduce the 30% charge by some amount. That makes sense to me; Zynga's 244 million Monthly Average Users (MAU) are a significant chunk of market, and certainly Facebook wouldn't want that to go away, or even any significant part of it. At the same time, it's not at all clear how many of Zynga's users would move from Facebook to Farmville.com or other game sites. Zynga could have lost a significant number of users.

The obvious result of all this hullabaloo is that neither Zynga nor any other game company with Facebook games will be putting all their eggs into the Facebook basket in the future. Efforts are already underway to diversify the user base, as Farmville.com would indicate. You don't want your entire business tied to a platform you have no control over, one that could arbitrarily start charging any sort of fee or placing any restrictions they like on your business.

At the same time, Facebook should be concerned about the future of its platform. If they make life too difficult or expensive for companies like Zynga, users could start moving away, or spending less time on Facebook. Which could leave an opening for some friendlier competitor to create a better alternative. You're only a click away from another web site; the past of social networking is littered with companies that were once market leaders.

It will be interesting to see how this issue progresses over time.

That's a $10 Penalty For Used

No more free passes... EA Sports is tired of used gamers getting to play online without some payment to EA, so that's going to change. Your used sports game won't allow you to play online unless you pay $10 for an online pass. I can hear the griping already, but this actually sounds reasonable to me. Someone's got to pay for the servers, after all. Though this might go over better if EA dropped the price of the game to $49.99 and made the new users who wanted to pay $10 for online play... though then a larger number of people would probably be annoyed.

In any case, the used price of EA Sports games will probably drop to reflect this added charge, so at the end of the day there may not be much effect on anyone by this move.

Now, when EA changes to a subscription model for their sports games rather than a packaged disc, that may result in a bigger change in customer behavior. They are already experimenting with social game versions of FIFA, which will be interesting to watch unfold.

Used Game Wars

Used games are a key component of GameStop's strategy... in fact, they are responsible for most of GameStop's profits. You might have thought that, with GameCrazy folding up, that GameStop was in a more solid position. Well, don't hold a party just yet, because Walmart is testing out used game sales (again).

The company they're working with, Game Trader, is the same one that's testing out used game sales in 7-11 stores. If these guys can get some traction with used games, it could spell big trouble for GameStop. Of course, GameStop already has plenty to worry about, with digital distribution eating into its business, continuing annoyance at publishers over the very concept of used game sales, and now EA taking solid steps to make used sports game sales even more problematic with their new Online Pass. (If you buy a used EA Sports game, you won't be able to play online unless you pay $10 for an Online Pass.)

Hey, maybe GameStop could sell more miniatures and card games.... maybe add some board games and RPGs... maybe some clever rack jobber could make some inroads there.

E-Games Down 26% in April

The latest NPD numbers are in, and any hopes that this year would see a recovery in the game industry seem very far away... at least as far as the classic console business is concerned. Overall sales for hardware and software were down 26%. Note that this is for consoles and handhelds, as sold through retail stores. So we're not talking about Apple's devices, or social games, virtual products, DLC, digital distribution, or mobile games.

Still, console hardware tanked by 37% over last April, and software was down 22%. The industry was down 11% for the first four months of the year. That's not good at all, considering how crappy last year was, with sales down 8% overall even after significant price cuts on console hardware.

This does not bode well for the rest of the year. True, Microsoft will come out with Natal for the 360, and Sony will ship Move for the PS3, and everybody will attempt to drum up enthusiasm for 3D. All of this activity does not address the fundamental issues behind the slowdown in sales. Here's reality: Consumers have an ever-growing array of less expensive options, and they're becoming aware of them. Why buy a DS when you can get thousands of games for a fraction of the cost (or free) on an iPod Touch, which also plays music and videos and has many other functions, too? There's a terrific array of free-to-play games on computers that everyone already has, and most of those don't require any high-end hardware to run. New business models and new technologies are pulling gamers into different places, and the traditional $50 or $60 game doesn't look like that much of a deal any more... especially not when you get to read all of the reviews online ahead of time and can readily identify the real clunkers before you lay out hard-earned cash.

Traditional console games are having a tough time, but gaming as a whole is doing great. Publishers need to examine their business models and see if they're positioned to start taking advantage of trends, rather than being run over by them.

News: Print Isn't Dead

... it's feeling much better? Well, maybe a little better. Seems that Best Buy is starting up a game magazine... you know, articles about games on a special type of unpowered screen made from dead trees. I'm not really sure why Best Buy is jumping into this, at a time when magazines have been disappearing. Still, it'll be a place where game companies can buy ads, so perhaps costs will be offset to some extent. Maybe Best Buy envisions hordes of eager game buyers coming into the store to grab the magazine, eager for the information they can find nowhere else... except all over the internet. Wait, maybe they hope to differentiate themselves from GameStop by having a magazine of their own, since Game Informer doesn't count?

I guess I just can't figure this out. Wouldn't the time, money and effort be better spent promoting the store online, where the customers already are?

The Game Market In Numbers, 2009

Some interesting numbers from this report on gamers in different countries. Of course, it only covers electronic games, but since the non-electronic sort represents a rounding error in the total, it's a reasonable thing. Key figures from the report:

• US gamers spent over $25 billion on games in 2009.
• There were an estimated 183 million players in the US who spent money on games.
• Consoles grabbed 60% of the total, PCs 16%, game portals 11%, MMO's 8%, and mobile 4%.

Some interesting data that wasn't in the free report, but which they shared with Gamasutra: 46% of US revenue comes from used games or online transactions (which includes subscriptions, virtual currency, and digital downloads). That number surprised me; it signals just how difficult it is to be a traditional publisher specializing in console games these days. Used game sales don't bring you a dime... you have to make your profit on the initial sale, and it's tougher than ever.

The whole report (with detailed breakdowns by platform, and with some crosstabs) is available for 300 euros. Might be worth it if you're trying to evaluate the market size for your products.

Facebook: Threat or Menace?

It looks like the Facebook Credits are hitting the windmill.  I could see this one coming for a while; once I heard that Facebook was planning to implement Facebook Credits, where Facebook would offer a universal currency for virtual products offered on Facebook games, I could see the trouble brewing. Facebook Credits (or Facebucks, as some have dubbed them) give a sweet 30% rakeoff to Facebook. Of course, they do make it easier for players to spread their virtual spending around to a variety of games, particularly to less well-known games from smaller companies. So they will probably result in some more sales for the obscure games, perhaps enough extra to compensate for the loss of 30% of the profits.
That situation doesn't describe Farmville, however, since it's the most popular game on Facebook (78 million users!). The Facebook Credits represent a straight loss of 30% of Farmville revenue; it's pretty clear that few new users will be attracted to the leading game (by far) just by offering Facebook Credits. Now, when Facebook announced this, they didn't say in so many words that Facebook Credits would be the ONLY way games on Facebook could take your money. But that was pretty obviously the way things were heading.

And now it appears the shoe is dropping, at least from the rumors hitting the intertubes. TechCrunch says Zynga is lawyering up and getting ready for battle as negotiations head south; the scuttlebutt is that Zynga will leave Facebook entirely in a few weeks. Zynga's talking about how they are diversifying away from Facebook (here and here and here).

This follows on the heels of a drop in users because of Facebook's change in the way they handle notifications; Farmville lost 4.4 million users in one month because of it.

It's a difficult transition for Zynga, but a necessary one. Right now they're at the mercy of Facebook; it's hard to deal with a sudden 30% loss of revenue. And who's to say next month Facebook won't decide that, hey, maybe 40% is a better deal? Now, Facebook should be careful about losing 80 million players, too. With Facebook's recent privacy shenanigans, they are certainly causing more negative publicity. Ultimately, I guess that Zynga and other companies will still have games on Facebook, but they'll be sure to have plenty of alternatives... and try to push users towards alternatives where the game company makes more money. Facebook may think "Hey, Apple can take 30% of all app sales, and nobody complains about that, so we can do it too!" But the difference is that Apple sells hardware that makes it possible... if you don't own Apple hardware you don't buy apps. With Facebook, there's no real need to conduct the game through Facebook when with one click you can be on somebody else's web site. One where the game publisher doesn't have to pay a 30% tax.

Which all means Facebook will become more of a marketing vehicle and less of a platform, and by making the platform more annoying they are making competition a little more possible. They may look invincible now, but Myspace looked that way once...

Arrrh! Sell Me That Game, Matey!

An interesting study conducted on Dutch file-sharers, as detailed in this Ars Technica article, shows that "file-sharers" (known to most publishers as "pirates") have pretty much the same buying tendencies as non-file-sharers. Except, when it comes to games, file-sharers tend to buy somewhat more games than non-file-sharers.

This is interesting, if for no other reason than it's hard data in an area usually devoid of data and filled with guesses (disguised as "industry estimates"). We don't know if Dutch file-sharers act the same as file-sharers in other countries, or if they are anomalous. The real interesting part of this study is where they surveyed people on what they felt were reasonable prices. Their perceptions of music and video "reasonable prices" were about equal to what videos and music are priced at, but their view of "reasonable price" for games was quite different from what's actually in stores. Those interviewed thought that a reasonable price for a game was (translating from the Euro) about $10, while games in stores cost about $60 to $70 (game prices are a bit higher in Europe).

Perhaps the most dangerous part of the success of the iPhone/iPod Touch has been its contribution to a perception of games as much lower priced commodities... along with the free-to-play business model that's been so successful. Especially when so many $60 games do not deliver that much entertainment value. We saw how the music industry suffered by maintaining their high CD prices for so long, and choosing to try and battle piracy rather than find new ways to deliver their products to customers. Let's hope the game industry doesn't make the same mistake, or at least not for so long.

As marketers, it's part of our job to see these sorts of shifts coming, and help invent and promote new business models that can revitalize the industry. It's a tough job, but it's vitally important.

E-Books Rising

Looks like the e-book revolution is happening swiftly. Simon & Schuster is reporting that while overall sales are down 6 per cent, digital sales grew 233%. That is, from $3 million to $12 million in the first quarter of 2010. Digital sales now represent 7.9% of total S&S revenue. At that sort of growth rate, it won't take very long before digital sales are the majority of S&S sales. While S&S didn't say, I'd bet that digital sales represent an even greater share of S&S profits.

The interesting part to note is this is occurring before truly widespread acceptance of e-readers, and while e-book pricing is still based on print book prices. And while S&S, along with other old-line publishers, still would like to pull the covers over their heads and hope the nasty e-book monster disappears.

Sorry, while pulling the covers up may have worked when you were a kid, it is not effective against real-world monsters.

Some BioShock 2 Marketing

This interview with Bioshock marketers provides some insight into approaching marketing a sequel to a very successful title. Part of the difficulty they faced was that some of their market were already familiar with the first game, but they also wanted to reach beyond them to new customers. Adding to the difficulty is that it's a difficult sort of game to describe.

They worked with the developers to produce videos and other information that helped explain what the game is, while staying within the fictional context. Videos are a great way to transmit a lot of information in a readily digestible form, and with Youtube and Vimeo and other places, it no longer costs an arm and a leg to get videos in front of consumers.

The key then becomes informing your potential audience of the video, and getting them to watch. A compelling enough video generates its own viral momentum, but you still have to kickstart it with your social media efforts. You can get your friends to watch, but the video has to be interesting enough that they get all of their friends to watch it, too, and then pass it along.

Of course, the underlying assumption here is that you have a game that can create an interesting video, and is worthy of the time and effort. Try to verify that assumption before you put a lot of time and money into making your video.

Apple's Fixing Things

Apple is trying to clean up its act a little bit, apparently. First off, they've fixed the way they screwed up the App Store for iPads. Now you can actually find all the games for the iPad. Though the fundamental difficulties with the App Store still remain. There are too many products for the interface; unless you already know what you're looking for, you won't find it unless you get lucky. And let's not even talk about the categories and how the games in them don't belong there...

Meanwhile, having come under fire for blocking third-party development tools from being used on items for the App Store, Apple is quietly looking into altering their developer agreements. But this may be too late to stave off an anti-trust investigation. Oh, and questions are being asked about iAds and whether that may be an anti-trust violation because of its restrictions on data sharing.

All of this in the shadow of Apple's announcement that they've already sold 1 million iPads in less than half the time it took them to sell 1 million iPhones.

It's a tough market, but a growing one. Having now played with an iPad for a while (my wife got one for work), I do believe it has a bright future. I guess HP and Microsoft agree, since they've canned their slates that were originally looked at for this year. Back to the drawing board... Apple's changed the battlefield.

Three Keys to an Effective Flier

With all of the emphasis these days on social marketing, online this and that, sometimes we forget about the lowly flier. This is vital to help attract new customers at venues like conventions, retail stores, special events, and related events or venues (for instance, at a race track when you have a racing game). It's worthwhile to review some basic elements of an effective flier.

1. The Audience. Who's this flier going after? Is it the same demographic that your game usually hits, or somewhat different? You may need to alter your standard marketing message if you're trying to bring in a different audience. Keep the audience in mind when you write your copy, and then edit the copy trying to think like one of your targets. Does this flier really attract your interest?
2. The Goal. You should have a clear goal in mind for this flier, and a direct call to action in support of that. Perhaps you want to get the reader to your booth... you should put in some mechanism to help with that (see The Hook, below). Maybe you're trying to bring the reader to your web site; make sure the web address is easy to spot, and try to put a specific landing page so you can track how well your flier has done.
3. The Hook. The effective flier has a great hook, or perhaps more than one. It may be a killer piece of art that's also the cover of your game, or maybe it's a perplexing visual that needs to be explained... and the customer will come looking for the answer. It may just be a great headline that makes the reader stop and think about coming to your booth or finding out more. Maybe it's a plain old coupon offer... "FREE Game!" is always a good one, though you can use "Buy One, get One FREE" or "50% OFF With This Coupon".

Finally, make sure the quality of the flier is no more and no less than it needs to be. Don't pay for a 4-color slick flier on glossy paper if there's no artwork and no need for the extra cost. On the other hand, if you're counting on the impact of your fabulous artwork to attract attention, a muddy black& white photocopy won't do it.

Free-to-Play Makes Serious Money

I talked about League of Legends before, as an example of how the free-to-play business model can succeed. Gamasutra has this interview with Riot Games' Marc Merrill about how the game is progressing. In short, it's growing very strongly... they are up to 90 employees now. All of their revenue comes from the sale of virtual goods; they don't charge for subscriptions, or have advertising, or anything else. Just virtual goods.

This model is working well for League of Legends, which is a real-time strategy (RTS) style game. It also seems to be working well for social gaming and MMORPGs (the free-to-play segment is the fastest growing part of the MMO market, and there's no need to talk about just how amazing Zynga's growth curve has been). I'll note here that Blizzard made a couple of million dollars in an hour just by selling a virtual steed for World of Warcraft. So even the classic subscription model is getting a boost from virtual goods.

How far can this model go? Will it replace traditional retail games? Possibly... I suspect that some of the erosion in average sales of retail games is due to customers finding more value in all the free or low-cost content available online. The free-to-play model even has implications for the traditional paper game industry. What if you gave away the rules, but sold downloadable adventures? Well, that already happens to some extent. I think that the adventure game industry would be well-advised to look into new business models... that's where more growth opportunity lies, rather than in game design innovations. I think Magic: The Gathering's most important innovation was really in the business model, rather than the game design... collectability was key, and then the whole idea of regular releases is still going strong.