Are Games Paving The Future For News Profits?

August 25, 2012

There are two games played more than anything on my iPhone right now: Angry Birds and Jetpack Joyride. They are both simple relatively non-complex games created for eating up the time in between doing more important things. And yet, the ways they are sold and create profit for their makers are two completely different paradigms that may demonstrate a better way for news to make money.

To play the classic version of Angry Birds, one must pony up 99-cents. Once you do that, the player enjoys an ad-free, full gaming experience. To play Jetpack Joyride, the player must pay nothing. It is a fully functional, free game. Download it and play away to your heart’s content!

Surprisingly, the game is not designed like some Soviet version of Mario Brothers, and it actually has hidden gems of wonder that keep you playing long after you’ve mostly mastered play. So how do the game’s designers make money?

The answer is through in-app purchases. The player, using their already installed Apple ID, is able to purchase additional game functionality. Explaining the business strategy, Trey Smith, a game designer and publisher, says:

A very small percentage of people buy stuff in games.  Of this small percentage you have people who will spend a LOT.  These are your die hard fans. I know, because I am one of them and won’t bat an eye spending $50 in a game I like….

This is because there are only a small percentage of users out there who spend money in games (like me).  Even though the percentage is small, typically those customers are interested in spending a LOT if they like the game (again, like myself).

Of course, this only works if you provide VALUE and things they are interested.

And Jetpack Joyride is far from the biggest grosser in this area. Back to Trey Smith:

CSR Racing (currently ranked #9 on the grossing charts) just released some data on their top grossing numbers.

In the last month, this single game generated over $12,000,000 on iOS alone.  They have not ported the game to Android yet.

That is $400,000 PER DAY and they aren’t even in the top spot anymore.  Pretty awesome.

Smith also notes in his post that the most successful (e.g. profitable) games have lots of in-app purchase options and have clear calls to action.

Now calls to subscribe are not enough. As I discovered through my work on Early And Often, the 2011 Chicago elections news site I built with the now-defunct Chicago News Cooperative, merely inviting people to subscribe is not enough. Like with iOS games, I think there need to be lots of things you can buy, at varying levels, with clear value for the reader. “Buy this list of contacts.” “Get a PDF version of today’s crime reports.” “Get text alerts this week.” “Get paper delivery this week.”

There needs to be clear value, frictionless purchases, lot of levels of choice and bold calls to action. Where we now see advertiser messages, we need to replace them invitations to get more content and reader value.