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superpig

Sources of revenue

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superpig    1825
Hey all, I''m writing an essay on the game development industry (specifically, how it relates to software piracy), and I''m discussing possible sources of alternate revenue for a game company - that is, revenue aside from that generated by retail sales. So far I''ve got:
  • Subscription payments
  • Extra content
  • Product placement
  • Technology licensing
I realise, of course, that those methods aren''t suitable to every game/company, and that there are subtleties with each. I have, of course, talked about them in the essay. Can anyone think of any more?

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gwihlidal    1004
On the side consultation as well. A studio could offer generic software development for interested parties too, (depending on the state of the game dev studio, and whether they need constant cash flow).

~Graham

----
while (your_engine >= my_engine)
my_engine++;

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superpig    1825
Excellent, thanks guys. I'm also adding 'outsourced work' to the list (doing licensed ports and stuff).

If you have any more, keep them coming....

[edited by - Superpig on March 29, 2004 12:15:14 PM]

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Oluseyi    2103
quote:
Original post by capn_midnight
3rd party investment, i.e. taking the company public.
A nit, but capital investment isn''t revenue.

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OrangyTang    1298
Stratergy guides? How about in-game advertising (I assume EA and the like don''t put ads on their game stadiums out of the goodness of their hearts).

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superpig    1825
quote:
Original post by OrangyTang
Stratergy guides?
Good one - I'm not sure if it overlaps with 'IP Licensing' though (which is what I'm putting all the merchandising stuff under).

quote:
How about in-game advertising (I assume EA and the like don't put ads on their game stadiums out of the goodness of their hearts).
That's product placement. Well, it's kinda product placement. I'm considering it to be product placement.

[edited by - Superpig on March 29, 2004 12:47:32 PM]

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yspotua    122
quote:
Original post by OrangyTang
Stratergy guides? How about in-game advertising (I assume EA and the like don''t put ads on their game stadiums out of the goodness of their hearts).


That may have something to do with the license EA got from the owners to use the stadiums in game.

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Oluseyi    2103
quote:
Original post by OrangyTang
(I assume EA and the like don''t put ads on their game stadiums out of the goodness of their hearts).
No. Currently, they pay to do it.

Yep, that''s right - developers/publishers pay to recreate athlete likenesses, stadia and franchise insignia/identifiers. Fortunately, they only have to license from one or two bodies - the league and the Players'' Association. Unfortunately, some players don''t participate in such collective bargaining agreements, such as Michael Jordan (you may remember editions of NBA Live that had "player 24" for the Chicago Bulls) and now Barry Bonds (MVP Baseball 2004 will not feature Bonds).

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superpig    1825
quote:
Original post by Alpha_ProgDes
could companies rent server space or create server for other companies? and not just for MMORPGs, but websites, forums, and such.


In theory yes, but that''s not really game-company specific - it''s a hosting company thing. Any business can hire out its unused resources.

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Pyabo    124
Are you including online sales as "retail sales"? These are a completely different beasts... Valve for instance is attempting this through Steam, and of course this was how id got started.

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superpig    1825
quote:
Original post by Pyabo
Are you including online sales as "retail sales"? These are a completely different beasts... Valve for instance is attempting this through Steam, and of course this was how id got started.


Yes, I am - or at least, both of them don''t have the specific condition I''m looking for, which is that the burden of development costs isn''t put on the game''s market price. For online games to qualify, they''d have to cost just enough to cover the cost of the bandwidth used to download them, and no more.

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kressilac    110
There was an underlying theme at GDC with respect to online games charging for customer service. Offer a subscription that is cheap but offers no support, a subscription that is slightly more expensive offering 5 - 7 uses of customer support during some timeframe and then an unlimited customer support subscription. Add to this, the ability to pay on a per instance basis for customer support as you need it.

I''d add support revenue to the list as well because after you take a second to get over your player-centric-they''re-nickel-and-diming-me-to-death initial impression with what I just said (I had it too), it makes a hell of a lot of sense to implement.

Kressilac
ps There are people that call customer support because they are bored and their boredom costs you money. The current monthly subscription model does nothing to discourage this behavior.

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Trader    122
There was a time when 1-900 number "Hint Lines" were offered by some publishers. (I know Activision and Sierra, at least, had them for a few of their titles.) Haven''t seen any recently though. Probably replaced with strategy guides.

Anyway, that one is probably a stretch but it''s the only other thing I could think of that hasn''t already been mentioned.

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cbenoi1    484
Add VAR (Value-Added-Reseller) arrangements. Slightly different than your retail sales because you sell gaming computers or graphics cards with your game titles bundled or pre-installed on the hardware. Never heard of anyone doing this, but it is possible.

-cb

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Obscure    175
Question: Is the point of the essay to include any possible source or are you supposed to cover just the viable ones.

Development is a stressful process that requires focus. In fact most businesses require focus, which is why so many of them regularly sell off company divisions that are not part of their core business. The reason I raise this point is that some of these ideas being put forward are quite a long way away from "core business" for a developer.

If the objective is to blue sky as many possible revenue streams then this is fine. If the idea is to work out the realistic ones then items such as hardware sales aren''t really relevant.

Dan Marchant
Obscure Productions (www.obscure.co.uk)
Game Development & Design consultant

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superpig    1825
quote:
Original post by Obscure
Question: Is the point of the essay to include any possible source or are you supposed to cover just the viable ones.
It''s really to include any possible source. If a source isn''t viable then I get to explain that.

I''ll post the essay online when it''s finished, but the basic point I''m pushing is that piracy can only exist because the black market can provide pirate software at prices lower than the legit market. If the industry could provide games at the same price (the cost of a free download, or the cost of burning a CD and putting it in a case) instead of using the retail prices to pay for development, then piracy would cease. If that''s ever going to happen, it becomes necessary to find other sources of revenue.

Ultimately the best sources of revenue will be through things that can''t be pirated. That''s why things like extra content or strategy guides are not ideal; they can be copied (effectively making them non-excludable and non-rival, i.e. free goods). Subscriptions or IP licenses are better because they can''t be copied. (Subscriptions can be hacked, ok, but the cost to the hacker is immense compared to the cost of modifying a regular game to circumvent copy-protection).

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Evil Bachus    214
quote:
Original post by Oluseyi
Unfortunately, some players don''t participate in such collective bargaining agreements, such as Michael Jordan (you may remember editions of NBA Live that had "player 24" for the Chicago Bulls) and now Barry Bonds (MVP Baseball 2004 will not feature Bonds).


A nit, but Michael Jordan''s jersey number was "23".

Very minor, but you can get a couple bucks from web-site ad revenue. Though at the moment I can''t really think of a single major game developer or publisher that does that.

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cbenoi1    484
> If the idea is to work out the realistic ones then
> items such as hardware sales aren''t really relevant.

From a strict contract software developer case, hardware sales are indeed irrelevent. But you can have a The Simpsons or LOTR-themed cellphone with the corresponding game preloaded on it. I''ve seen a ''The Matrix'' phone at GDC last week. That depends on your definition of ''game company'', so yes I''m stretching that definition to include publishers as well.

-cb

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