Casual Games SIG/Whitepaper/Publishing

International Game Developers Association

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[edit] Introduction

The casual games market is one of the most dynamic and prospering segments of the computer game industry. This is due to the growth in a variety of critical factors that constitute the structure and marketability of the business including: customer variety, product design, platforms and availability. This growth is not only observable in the form of units sold or revenue generated, but also in the definition of the types of game products that are being produced, and what types of companies are involved in bringing them to market. The information presented in the earlier sections of this paper clearly demonstrate that a “casual” game now exists in a diverse number of ways, and that companies from a variety of traditional and developing game industry segments all include themselves (and justifiably so) as active participants in the growth. What used to be a straight line value chain from product maker to product seller to consumer has now taken on a much more diverse and distributed form where many types of companies are able to bring computer game products to market.

The casual games market has broken this traditional model of how computer game products are brought to market. The change was not immediate or profound, but despite a slow beginning it has evolved into a significant and undeniable influence on the entire industry.

Today, the function of bringing casual game products to the market is not confined to organizations performing the traditional roles of publisher or distributor. The variety of players in this market and their varied roles are explained in the business models section of the paper.

[edit] Surveying the Community

Given the diverse nature of players in the casual game value chain, a broad cross-section of players in the space were surveyed to learn more about how these various players bring products to market. The survey was open to all companies and individuals and was promoted through the casual games mailing list run by the Casual Games SIG, as well as through direct solicitation of previous respondents. The survey is ongoing and can be found here: http://www.igda.org/survey/index.php?sid=13

For this first round of data collection, more than fifty companies submitted their views of the publishing function in the Casual Game market, more than three times the amount of surveys that were collected from direct interviews of companies in previous white papers.

The survey gathered information ranging from business descriptions, to annual revenue, to product types produced to marketing strategies and royalty scenarios. No paper in any previous year has gathered so much data on the quantitative and qualitative matters of this growing market.

This data has been analyzed and is presented below to provide some insight into the publishing process for casual games today.

[edit] Casual Game Company Make-up

The following information presents statistics and responses that define the functions, size and market segments of the companies that participated in the survey.

[edit] Primary Business Functions

What is your company's primary business(es) in terms of importance?

While the majority of respondents to the survey were game developers, over fifty percent (50%) still indicated that being a Distributor, Publisher and Online Retailer were Somewhat or Very Important to their business. This reflects the varied roles casual game companies must play in today’s market.

[edit] Annual Revenue

What is the range of your annual revenues (in $US)?

The majority of companies who answered this question generate less than $250,000 in annual income. This shows that the casual game space is still comprised of numerous very small companies with presumably low overhead and small staff.

[edit] Geographic Regions Served

Which geographic region(s) does your company serve?

As expected, most companies target North America, with Europe not too far behind. Somewhat surprising was the strong showing of Asia and South America. This suggests that the casual game market is starting to expand into a truly international marketplace.

[edit] Platforms Supported by Games Produced

Which platforms do you support?

Not surprisingly most companies support the PC platform. Online and Mac also have a decent showing, but all other areas have low levels of support. XBox Live Arcade has received a relatively large response here, despite it’s new entrance to the space. This is probably a result of the success of the initial XBox Live Arcade titles.

[edit] Revenue and Performance

Survey respondents answered questions on revenue generation and product performance giving insight on how money is made, what types of products account for the most sales, and what types of revenue sharing structures they are involved in.

[edit] Revenue Generating Activities

What are your primary sources of revenue?

Most companies still see downloadable game sales as their primary source of revenue. The biggest point of interest however is that there is no other overwhelming method of revenue beyond the download. Many companies are trying numerous different things to varying levels of success, and this survey seems to suggest that most companies have a varied source of revenue.

[edit] Revenue Sharing Activities

Do share revenue in/on any of the following activities?

Again not surprisingly, most respondents reported the sharing of downloadable game revenue and affiliate programs. It also appears that a significant number of companies are sharing revenue from Web Banner Ads, suggesting that the trend towards sharing this revenue is becoming more prevalent across the industry.

[edit] Sales Performance by Game Category

How have different casual game genres performed for your business?

While Match-Three, Card/Board Games, Mah Jong and System Management all continue to be excellent performers, there are very few types of games that seem to perform very poorly. Only Casual Racing Games has more reports of poor performance than Average or Excellent. This suggests that casual gamers are still interested in a wide variety of game styles.

[edit] Royalty Rates

For each player in the casual games value chain, please indicate the typical royalty rates you see them getting when a casual game is brought to market.

The results from this question about typical royalty rates demonstrate how in-flux the publishing dynamic is today. According to the responses, Developers will typically see between twenty-one percent (21%) and forty percent (40%), Publishers between thirty-one percent (31%) and fifty percent (50%), Retailers between thirty-one percent (31%) and seventy percent (70%), and Aggregators/Distributors between eleven percent (11%) and fifty percent (50%).

[edit] Marketing

Respondents were asked to define their target markets and how they market their products to them.

[edit] Target markets

Most companies indicated that they target casual gamers. Several respondents further qualified that by age or gender, geographic location (i.e., Latin America), or platform (i.e., Mobile or XBox 360). A couple responses included all gamers within their target markets. Middleware, Tool and service companies also included ad agencies, publishers and developers among their target markets.

[edit] Marketing Mix

How do you market and promote your games, products and/or services?

As seen in previous questions, it appears that there is a wide variety of means currently being used to market and promote casual games. Email Newsletters and Search Engine Ads are the most widely used, but not by a great margin. Discounting Games and Print Media are utilized the least, but still appear to be relatively commonplace methods for promotion.

[edit] Marketing Philosophy, Approach or Strategy

While there are a wide variety of approaches to marketing games, and the philosophy and strategy behind it, several trends are seen in the responses. Numerous developers indicated that their marketing is based almost completely on developing strong solid titles, and then depending on word of mouth and growing consumer loyalty and brand recognition. Other developers rely completely on portals and publishers to sell their products, while they focus solely on developing new games. Others prefer to take a more active role and work to get the word out as widely as possible, and find cost effective ways to promote products themselves. One publisher’s response outlined the value of working delegating the roles of promotion and marketing to a company that is dedicated to it:

... Our approach is to let the customer drive what we do and get meticulous early in the cycle about the unique selling proposition of the game. Pre-launch activities include: consumer research and testing, market intelligence, naming, positioning, copywriting, trademark clearance, box art design, PR pre-pitching, and channel marketing/sell-in. Within consumer research we have many methods, such as 1:1 game panel testing, usability testing, focus groups, and a formal consumer beta program. The beta program allows consumers to give qualitative and quantitative (behavioral) feedback on a game for fine-tuning and polish. Launch/ongoing marketing activities include: PR, advertising, channel feedback, business model / price testing, customer service, and direct marketing.

Several responses also indicated the value of attending industry events and conferences to network with peers and make the business contacts necessary to successfully work with all companies in the value chain.

[edit] Business Development Tactics and Competitive Advantages

Respondents describe partnership strategies that are a significant part of the unique growth of the Casual Games space. They also explain in their own words the unique skills they possess to compete in the industry:

[edit] Partnerships

The majority of responses reflected the need for collaboration to be successful in the space. Developers will partner with publishers and distributor/aggregators. Publishers partner with developers and distributors, etc.

Beyond that there is also a significant number of responses that show the open and collaborative community that still exists in this space. Companies indicated that they share projects with other developers, as well as ideas, methodologies and common knowledge about the space. A typical response was seen from this developer.

We consistently exchange ideas with other developers in the industry. There is enough pie to go around.

[edit] Competitive Advantages

The differences in competitive advantages in this space are as varied as the companies and business models. Most responses related to an expertise or specialty in a niche area of the business, be that particular game styles (like word or solitaire), geographic location (Southern Hemisphere), or target market (corporate training or advergaming).

The wide variety of responses seen here shows once again that the casual game space is still a nascent industry with relatively little amounts of competition among the proven and established companies. Each seems to have their own specialty and expertise even though there is a large amount of apparent cross over in target audience.

[edit] Companies Surveyed

Listed below are the companies who had responded to our survey at the time the data was collected and analyzed. This is not intended to be an exhaustive or thorough list of casual game publishers. While we solicited responses from all of the top players in this space, not all of them were able to respond to the survey. However, we do feel that we achieved a broad enough cross section of companies for the data to be valid across the entire industry. Companies were asked to provide their company name, main website, and year of founding to get an idea of the approximate age of the players in this space.

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