Riaz Karamali's Presentation on Mobile Games Revenue Models at LSI's Gamer Tach Law Conference in Seattle, October 2013

1. Pillsbury Winthrop Shaw Pittman LLP
Mobile Platforms and Business Models
Presented by:
Riaz Karamali, Partner
Palo Alto, California
riaz.karamali@pillsburylaw.com
Monday, October 07, 2013
Gamer Technology Law
New technologies, opportunities, regulations
and business models

2. Foundation: Common Revenue Models
 Show Me the Money!
 Advergames
 Advertisements
 Auctions – Player Trades
 Crowd-Funding
 Free Games
 In-App Purchases
 Real Product Sale
 Selling Games
 Subscriptions
1 Mobile Platforms and Game Revenue Models

3. Revenue Model: Advergames
 Game is made to a specific advertisement campaign of a company.
 Different types: above the line, below the line and through the line
 Pros
 Simple production
 Shared risk
 Cons
 Shared risk (brand and developer)
 Unlikely to be a hit – capped upside
2 | Mobile Platforms and Game Revenue Models

4. Revenue Model: Advertisements
 Using ads inside games.
 Different types: static, dynamic, product placement, others
 Pros
 Users aren't charged for this and allows apps to be free.
 Cons
 Less money per user, need great user base to make good money.
3 | Mobile Platforms and Game Revenue Models

5. Revenue Model: Auctions / Player Trades
 Create in game or parallel online economy around virtual goods.
 Pros
 Can be lucrative and engaging to users.
 Cons
 Best suited for virtual worlds and MMORPGs.
 Fraught with real world issues.
4 | Mobile Platforms and Game Revenue Models

6. Revenue Model: Crowd-Funding
 Use a crowd-funding platform to pre-sell the game
 Pros
 Cut out the publisher
 Validate demand prior to large investment in development
 Engage your community
 Cons
 The odds are stacked against lesser known developers
 Managing a successful kickstarter campaign is a full time job
5 | Mobile Platforms and Game Revenue Models

7. Revenue Model: Free Games
 Game devs use free version of games to promote the paid version, use free
games just to promote themselves or in combination with other revenue
model.
 In combination with free: shareware / paid upgrades or solicit domations
 Pros
 Lowers barrier to download
 Cons
 Cannibalization
 Can lower quality of user interactions with each other
6 | Mobile Platforms and Game Revenue Models

8. Revenue Model: In-App Purchases
 One of the most successful models for mobile games.
 Game is a free-to-play game that sells virtual goods to let users accelerate
things, get more money or buy special thing.
 Goods – functional, decorative or functional AND decorative
 Pros
 Users can decide how much to spend – hello whales!
 Cons
 Need strategy to engage users to pay for goods
without alienating them or skewing gameplay
7 | Mobile Platforms and Game Revenue Models

9. Revenue Model: Real Product Sale
 Sell products around your game and sell them to players within game setting
 Pros
 Source of revenue beyond game itself
 Cons
 Players must be fan of game outside of game setting
8 | Mobile Platforms and Game Revenue Models

10. Revenue Model: Selling Games
 This is the most common revenue model
 Pros
 Easy and straighforward
 Quick results
 Users are familiar with this model
 Ability to change pricing / have “sales”
 Cons
 Some players will not buy; so demand is reduced
 May invite free imitators
9 | Mobile Platforms and Game Revenue Models

11. Revenue Model: Subscription
 Players pay a periodic fee to play.
 Pros
 Recurring revenue
 Cons
 Frequent updates
 Difficult to manage
10 | Mobile Platforms and Game Revenue Models

12. Hybrid Approach: Using Multiple Models
Free Games + Ads
Selling Game
This is a good combination to earn money both ways,
using a limited free version to let people try your game
but still monetizing them with ads and if they like it sell
the game.
In-App Purchases
+
Ads
A nice combination to have a good number of users
and monetize them in two ways: Selling premium
options (ex. Virtual goods) and ads. This way you
monetize even the user that don't buy premium
options
Selling Games
+
In-App Purchases
This combination is selling game and using in-app
purchases to sell virtual goods to maximize the game
revenue.
11 | Mobile Platforms and Game Revenue Models
A few possible examples:

13. Changing Gears
12 | Mobile Platforms and Game Revenue Models
King Quits Advertising Since It Earns
So Much On Candy Crush Purchases
Game developers are using a number of different revenue models:
• Some game provide multiple revenue models within one games
• Other games are changing their revenue models as they build and engage a player
foundation

14. App Stores
13 | Mobile Platforms and Game Revenue Models
When in the initial
stages of game
development,
developers should
clearly outline
monetization strategy
and goals and align
those with legal and
regulatory guidelines

15. Mobile Operating Systems:
Competitors and Also-Rans
14 Mobile Platforms and Game Revenue Models
Operating System Units 2012 2012% 2011%
Android 136 million 75% 57%
Apple 26.9 million 14.9% 13.8%
Blackberry 7.7 million 4.3% 9.5%
Microsoft Windows 3.6 million 2.0% 1.2%
Symbian 4.1 million 2.3% 14.6%
Linux Mobile 2.8 million 1.5% 3.3%

16. Analysis of Key Terms and Conditions Governing
Software Application Development and Distribution
15 | Mobile Platforms and Game Revenue Models

17. Case Study: Crowd-Funding
 Typical Scenario – product pre-sales
 Android Terms
 Open distribution policy – no problem
 Apple Terms
 Apps must be sold through the AppStore
 50 promo codes per version
 Possible Solutions
 Brief free period
 Gifting
 Special donor version with unlock code
 Special deal with Apple (e.g. Amazon free apps)
16 Mobile Platforms and Game Revenue Models

18. Questions?
Riaz Karamali | Partner
Pillsbury Winthrop Shaw Pittman LLP
2550 Hanover Street | Palo Alto, CA 94304-1115
Dir 650.233.4052 | Fax 650.233.4545 | Cell 650.814.5597
Email: riaz.karamali@pillsburylaw.com
Bio: http://www.pillsburylaw.com/riaz.karamali
17 | Mobile Platforms and Game Revenue Models