TriplePoints of Interest – Week of May 25

Clearly, the big news of this week came out of Google I/O, but that doesn’t mean there aren’t fun (indie) game sales happening that might catch your attention. Ladies and gentlemen, here is this week’s TriplePoints of Interest!

What intelligence does Android M have for us? (Cue spy music)

Google I/O shook up Silicon Valley this week! The Verge presented a roundup of the top news emerging from the conference. The first was “Android M,” successor of Lollipop, that will streamline apps more including faster map uploads in areas of low connectivity as well as Chrome integration into all apps. More details were given on Android Wear smartwatches and Android Pay. The keynote also touched on VR, including a new iPhone-compatible Google Cardboard.

Fun weekend activity: the Humble Nindie Bundle

Nintendo announced its first Humble Bundle, the “Humble Nindie Bundle” aimed at highlighting indies from the eShop. According to Polygon, this is the first in a series of initiatives from Nintendo to support indie games. Included in the bundle are games like Guacamelee! Super Turbo Championship edition and Woah Dave!

Higher security needed for truck full of games

Europe’s largest video game retailer, GAME UK, announced to consumers that pre-ordered Splatoon that its entire shipment of the game’s special edition, which includes the Squid Inkling amiibo, was stolen. According to IGN, no further details on the circumstances were provided other than that consumers will instead receive the game’s standard edition at a discounted price along with an Inkling Boy or Inkling Girl amiibo to make up for the losses.

This news is reminiscent of a similar incident where a truck containing 6,000 copies of Call of Duty: Modern Warfare 3 was hijacked in France in 2011.

More insight on how to improve the reputation of F2P

GamesIndustry International reported from the fourth annual Digital Dragons Conference in Kraków, Poland where a well-attended talk was given about the future of free-to-play and how to fight its bad reputation. Video game development veterans discussed the challenges the business model faces including stigma from the press, how PR must combat it, and how game designers can do better to model game mechanics to make the wait time between content availability more enjoyable. They concluded that F2P is overall a flexible system and can be tactfully tailored to suit each game and each audience.

Photo from Tech News Daily

TriplePoints of Interest – Week of April 6

Welcome to a new weekly feature here on the TriplePoint blog: TriplePoints of Interest, where we recap the biggest news from around the games and tech industry, plus subjects we just can’t stop talking about around the office!

Fixing the image of free-to-play

The image of free-to-play games has been a hot topic as of late. Steve Peterson of GamesIndustry International describes why free-to-play games have built a bad reputation and how it can be fixed. He first cites how quickly widespread the business model has become as reason for the extreme divide on opinions from within the games industry.

He then suggests that in-game merchandise must improve on the game, not be required to play the game, and that players shouldn’t have to feel they must make microtransactions to remove “annoyances” in the game or get to the fun. Developers and marketers also must be clear about the ways to spend money in the game. If a developer does not feel it is beneficial to “celebrate” the microtransactions, then the microtransactions are probably not ones that should be built in in the first place and will likely anger players.

The YouTubers versus Nintendo: the saga continues

Nintendo’s controversial YouTube policies have caused another YouTuber to cease reviewing Nintendo games. Joe Vargas of the Angry Joe Show stated in a video, according to Polygon, that he will no longer make videos relating to Nintendo games after his Mario Party 10 video was flagged for copyrighted material, keeping him from making ad revenue. Mr. Vargas has also been a staunch opponent of Nintendo’s Creators Program.

Heroes of the Storm collegiate league needs a GPA boost

The rise of collegiate competitive gaming, while growing exponentially, has not been without its share of snags. Blizzard’s Heroes of the Storm collegiate tournament, “Heroes of the Dorm,” has been marred with no-shows and website bugs, leading to a host of scheduling difficulties, according to Daily Dot. The $450,000 prize pool, and involvement of Blizzard and TeSPA (high-profile collegiate eSports organization) meant very high expectations for the tournament from fans and participants alike, begging the question of the effectiveness of allowing over 800 teams to participate.

Ads and Kids, like water and electricity, do not go together

Consumer advocacy groups are asking the FTC to investigate Google’s YouTube Kids app due to concerns that it aims advertising at young children on smartphone and tablets, according to San Jose Mercury News. The concerns cite laws on broadcast TV that prohibit TV stations from placing products around kids’ programming due to children having not developed cognitive skills to resist advertising.

An old dog returns to the doghouse: Mark Pincus is back!

Zynga announced that Don Mattrick, their CEO of less than 2 years, is leaving and will be replaced with former CEO, Mark Pincus. GamesIndustry International believes that the company’s great losses under his leadership caused the change, but credited Zynga’s sharp rise in mobile profits–from 27% to 60% of the company’s worth–over the last 2 years to Mr. Mattrick’s work.

Check back again next week for more of the top news from games and tech!
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Talking Virtual Goods and Emerging Revenue Recognition Models with Mick Bobroff of Ernst & Young LLP

As part of the TriplePoint speaker series, we hosted a private luncheon with Mick Bobroff, Audit Partner at Ernst & Young LLP, in which he presented general observations and principals on the accounting policies applied by companies using free-to-play/virtual goods-based business models. Additionally, Bobroff provided an overview on the different models that have recently emerged for recognizing revenue on the sale of virtual goods.

Bobroff brings to the table over 13 years of experience specifically focused in software and internet media industries, including social networking. Over the past several years, as the social gaming industry has rapidly expanded, Bobroff formed Ernst & Young’s positioning on how revenue should be recognized on the sale of virtual goods. Additionally, they recently released a white paper that gives an in-depth overview of the firm’s views on revenue recognition, and the presentation that Bobroff gave during our luncheon provides a summary of this white paper.

Here are some of the key findings from the presentation:

  • Currently, three models exist for recognizing revenue on the sale of virtual goods – Game-based, User-based, and Item-based revenue models – and publishers can determine which model is most appropriate for their business based on the extent of user behavior data that is available for each of their specific games
  • The sale of virtual currency itself does not initiate the earnings process for game publishers – it isn’t until the currency is redeemed for items such as virtual goods that the revenue must then be recognized
  • Revenue is recognized when all of the following criteria are met: evidence of an arrangement between the seller and purchaser, the fee for the virtual item is fixed or determinable, collection of the virtual item is reasonably assured and delivery has been met; it’s also important to note that publishers are obligated to continue displaying the purchased virtual goods over certain periods of time based on the characteristics of those virtual goods

For more information, visit the Ernst & Young website to download the full white paper:$FILE/Hot_Topic_Sale_of_virtual_goods.pdf.

Micro-transactions and MMOs: The New Capitalism

Micro-transactions have taken center stage lately as a hot-button controversy in social gaming, particularly on Facebook. But the debate over micro-transactions in other genres, particularly massively multiplayer online (MMO) titles, has been going on for quite some time, even prior to the advent of Facebook. The reaction to micro-transactions as elements of game play in MMOs has often been virulent, with proponents on both sides attempting to sway the other to their point of view.

Why such strong feelings toward one game element? For many MMO players, particularly those in subscription-based games, the use of micro-transactions comes down to a concern about fairness. For the hardcore “raiding guild” players, why put in so much effort and hours of play time into a game, only to have others succeed in the game by buying their way into it? For average MMO players, incorporating micro-transactions into core game play can also create an in-game society of “haves” and “have nots,” with some the players unwilling or unable spend the cash to be a viable part of the game universe.

Auction page from Audition 2, a F2P game from Redbana
Auction page from Audition, a F2P game from Redbana

One could posit the theory that—for Western gamers at least—the issue is really not about fairness, but that micro-transactions violate the virtually sacred principle of what we consider capitalism, or at least its idealized “American Dream” version: “work hard, and ye shall be rewarded.” To many MMO gamers, micro-transactions violate that principle by offering rewards to the user who merely pays extra cash. In some ways, it could be argued that this is a more pragmatic (or realistic) view of capitalism, i.e., “pay money, get what you want.”

It’s not just the players—the micro-transaction debate is an ongoing headache / concern for game designers, particularly those in the West, who have long struggled with the dilemma. In the past, Western designers have steered clear of incorporating micro-transactions into their mass market MMOs to avoid throwing off game play balance and risk losing their loyal customers. However, free-to-play games (F2P), which are supported through micro-transaction purchases such as enhanced character customization, special clothing and weapons, have long been popular in Eastern markets like Korea and China and are now rising in popularity in the Western world. With the increased success of the F2P model, game designers are taking a closer look at this model as a new means of monetization, customer retention and attraction of new users in order to survive in a new era of gaming.

The solution to this dilemma will most likely be a combination of the subscription-based model with a judicious use of micro-transactions, enabling both the idealized and pragmatic versions of in-game capitalism to coexist to the benefit of end users. Ultimately, all successful MMOs will need to include some content in the form of micro-transactions as an additional revenue stream as well as a method by which to obtain and retain users. As an example, one has only to look at Blizzard’s juggernaut World of Warcraft, which recently introduced two vanity pets for purchase (the first micro-transaction that has been offered in this game).

Capitalism in its ideal and real forms can indeed mesh in an MMO economy; by offering convenient and cosmetic enhancements that do not impact core game play on a micro-transaction basis, developers can give gamers the opportunity to purchase items that allow them to express their individuality and personality while still enjoying the fruits of their labor. This solution works for both gamers and game designers, as enhanced content can be added relatively quickly, provide entertainment and ultimately keep the player as a long-term customer.

Eliminate-ing Payment Norms – Eliminate Pro and the Hardcore Quandary

Eliminate Pro – Free – released 11/2/09 – developed by Ngmoco (Rolando)

  • Currently the second best selling app in the Free section of App Store (was the first yesterday).
  • Currently the 11th on the Top Grossing section of the App Store (was the third yesterday).
  • The ONLY free app in the Top Grossing section.

Eliminate Pro is free-to-download and is, in a sense, a free-to-play first-person shooter, ala Doom or Call of Duty. However, unlike f2p MMORPGs, users don’t pay for in-game content, but rather to recharge their ‘credits.’ Without credits, you’re limited to playing offline against bots, and cannot earn experience or gain rewards.


It’s essentially like popping another quarter into an arcade machine, but in this case, your credits regenerate over time. When you download the game, you’re given 12 to start with, which works out to three rounds of play. After a few hours, you’ll be granted another round – and it takes half a day for the full twelve credits to regenerate.

The real money-maker for Ngmoco, though, is that you can buy credits at a rate of 20 for 99 cents, 280 for $9.99, or 975 for $29.99.

The game itself is a fairly typical FPS, controlled with virtual onscreen joysticks – fun, yet far less interesting than its monetization method. These non-essential microtransactions are a bold new form of in-game payment. As DLC becomes increasingly commonplace and piracy runs rampant, publishers and developers are trying their hardest to move away from the classic front-loaded sales model.

In fact, Eliminate Pro’s growth reveals a great deal about the nature of iPhone gaming:

  • The game itself is built to play in short bursts.
  • It’s cheap, with a low barrier to entry – it’s free to start, 3 rounds is enough to get you addicted, and extra rounds are cheap, falling into impulse-buy territory.
  • The industry is rapidly expanding – such is its growth that they’re constantly re-writing and building new payment models.

The DS and PSP appeal to self-described gamers – people who most likely have a current-gen system at home. The iPhone, on the other hand, is in its relative infancy, and those who pick it up and start playing most likely didn’t buy it for the games.

This, however, makes Eliminate Pro an enigma. Many iPhone titles err on the side of simple controls, including Ngmoco’s own Rolando, while this game features twitch-gameplay and requires quick reactions. In fact, it’s somewhat console-ish in its skillset – awkwardness of the on-screen analog sticks aside. Its success is built upon the casual models – easy-to-pick-up, cheap and addictive, yet it is, at its heart, a deeply competitive and aggressive title.

Has Eliminate Pro converted casual players into new potential core gamers? Have the hardcore crowds flocked to the iPhone unexpectedly? Or does the game crack some bizarre middle-ground code for making iPhone users buy into micro-transactions?

Ultimately, it could be a combination of all of the above. Who knew that a cell-phone could cause such a hullabaloo?

[Eliminate Pro app store link]

Giving Away Games for Fun and Profit

DDO Unlimited

Since 2008, over 20 Eastern-developed, free-to-play MMO titles have launched in the US, and more will be released before this year is out. The list includes Atlantica Online, Deco Online, Florensia, LaTale, Runes of Magic, and many more. With these titles comes a new way of thinking: free-to-play.

While the Western MMO market has stuck largely with the monthly subscription model, Eastern MMO companies have been successfully giving their games away for years. Instead of relying on every user for payment, they offer in-game perks and items for a small fee (aka: microtransaction) and let users decide how much to spend.

The downside, obviously, is that the revenue stream is somewhat unpredictable. In an interview with Gamasutra, Daniel James of Three Rings revealed that only 10% of Puzzle Pirates players spend money on microtransactions. The upside? Users who do spend money spend an average of $50 per month, significantly more than the average monthly subscription fee. Combine that with reduced development costs, zero packaging costs, and lower barrier to entry for new players, and you have some serious potential.

Considering the number of F2P games that currently coexist in the Asian market, it’s hardly surprising that the microtransaction model can be profitable… but can it truly be competitive in North America?

Continue reading Giving Away Games for Fun and Profit

Subscription MMO Market Grew 22% in 2008, Free-to-Play Model Continues to Grow [Screen Digest]

Industry analysts Screen Digest announced today that subscription-based massively mulitplayer online games revenue grew by 22% in 2008 and reached consumer spending levels of $1.4 billion in North America and Europe. The premium subscription-based model, often used to generate revenue in “free-to-play” games, showed significant growth of 11%. According to Screen Digest:

  • Consumer spending growth on non-World of Warcraft subscription MMOs grew at a robust 27% in 2008.
  • By 2013, the subscription market will top $2 billion in consumer spending.
  • Much of 2008’s growth has come from games that employ premium subscription models, which rely on freely “distributed, downloaded and accessed games” where “players are encouraged to sign up to a subscription to access premium content”.
  • Consumer spending on premium subscriptions grew by 11% year-on-year, from 35% to 46%.