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The Casual Games Industry in 2009: Developments, Trends and Forecasts
Alexander LyskovskyPresident of Alawar Entertainment
Topics for discussion:
• 2008 in review• Casual 1.0• Casual 2.0• Trends• The financial crisis: price wars, knowing how to economize,
new conditions• New level of performance• Successes of our Eastern European developers and
publishers• New data for the casual games audience on Runet
2009 in review: From Kiev to Kiev
October '08• Amazon purchases Reflexive.• Playfish receives $17 million for a Facebook game.November '08:• EA shuts down its EA Casual label, transferring development to The Sims division and renaming it The Sims Casual label.• WildTangent closes internal development studio, cuts jobs.December '08:• SEGA launches PlaySEGA, a free online gaming site.• IGG receives $10 million to develop casual ММО.• Investments in the gaming industry and virtual worlds in 2008 total about $937 million.
February '09:• Alawar Entertainment and "Farm Frenzy" developer Melesta create Alawar Melesta Studios.• Amazon launches a casual games section.• PopCap purchases Gastronaut Studios to develop XBLA games.April '09: • BigFish Games opens its European headquarters in Ireland.May '09: • BigFish Games purchases developer studio Grubby Games.July '09: • GameStop launches a section with RealArcade casual games.October '09• PopCap receives an investment of $22.5 million for Facebook games.
Casual Games 1.0
Main feature: downloadable PC gamesBusiness models: try-before-you-buy and buy-and-downloadPrice: $19.99Target market: women aged 45+Scope: more than 250 million users worldwideMain distributors: Real Networks, Oberon Media, Metaboli, BigFish
Games, AOL, Reflexive, TryMedia and Wild TangentMain developers and publishers: PopCap, Reflexive, BigFish
Games, Alawar, iWin, PlayFirst, NevoSoft and RealoreMain sales market: North AmericaDevelopment model: expand distribution partners in current
markets, cultivate home territories and obtain exclusive rights to games
Casual Games 2.0
Main feature: downloadable games for the PC and other platforms, including online play
Business model: try-before-you-buy as well as freemium, micro-transactions, gaming clubs and "All You Can Eat"
Price: depending on model, from $.25 up to $19.99Target market: age 13+Scale: 500 million usersMain distributors: same as above plus AppStore, PSN, XBLA, Facebook,
MySpace and VKontakteMain developers and publishers: same as above plus Zynga, Playdom
and PlayfishMain sales markets: North America, Asia and EuropeDevelopment model: same as above plus new platforms and markets
Casual Games 3.0
?
Trends: conquering new platforms
Casual publishers are conquering new platforms:Oberon - 17 iPhone, 1 socialReal Arcade - 15 iPhoneBigFish Games - 7 iPhone, 1 browser-basedPlayFirst - 6 iPhoneAlawar - 6 iPhone, 1 client-based, 2 PSN, 1 NDS, 1 Android, 1 Nokia OVIIntenium - 5 iPhone, 1 browser-based, 1 NDSG5 - 5 iPhone, 1 PSPPopCap - 3 iPhone, 1 social, 3 PSN, 1 XBLAReflexive - 2 iPhonePlayrix - 1 iPhone, 2 NDS, 2 Mac
Trends: changes in the downloadable games market
Price wars: the price for downloadable PC games decreases, with $6.99 becoming the new industry standard
New platforms and prices: $0.99 for a casual iPhone gameMergers: penetration of distributors on the marketUnstable currency: with dollar conversion taken into account, the
speed of growth decreases (on Runet, losses total $8 million)New markets: game content appears in local languages and
currencies
Trends: price wars
February 2009
Amazon.com launches a casual games portal with $9.99 games.
April 2009
RealArcade releases "The Count of Monte Cristo" for $19.99;
BigFish Games reduces the price of "The Count of Monte Cristo" to $0.99.
May 2009
BigFish Games Club reduces the
price for one game to $6.99.
GameHouse Club reduces the
price for one game to $5.99.
July 2009 - Return of the minimum price per copy; game suppliers demand a minimum price per copy guarantee.
Casual Game =
Game Live Cycle Management
Game Live Cycle Management - the management of the price of a game while it's being sold.
The main idea:• During the first three months, the price of a game shouldn't be
lower than the price assigned by the publisher or developer.• The terms are secured in the distribution agreement.
Supported by: Alawar Entertainment, iWin, PopCap, NevoSoft and Playrix
Join us!
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How to sell more games:
The majority of major distributors now have their own game club featuring special prices. This is the consumer's primary means of getting the best price.
Other paths:• RealArcade is building a syndicate with more than 600 distribution partners (sales
increased 224% this past year).• Alawar is developing regional markets such as Poland and Finland.• Intenium this year began distributing PopCap, MumboJumbo, Sandlot and GoGii
Games.• Yahoo! Games is distributing 400 games via the advertising model.• iWin is selling 17 games through Steam at $19.99.• All-You-Can-Eat (Fun Pass on Game House, Shockwave Unlimited)
Prices and channels:
Prices and countries:
Germany (Intenium) - $21.90 ($8.50 through GameClub)Finland (Alawar): $20US (RealArcade): $19.99 ($9.99 through GamePass)US (BigFish Games, Amazon): $6.99Poland (Alawar): $6.60Russia (Alawar): $6
Developing market in Eastern Europe:
• A demand for higher quality games• Increase in average development budget ($50,000)• Decrease in deductibles to developers (royalties go from $8 to
$2.40)• Personnel dilemma (artists, game designers)• More difficult to enter the market• No new publishers
Genres:
What have we done in the past? • Tetris• First casual quest • First 3D arcade game • First music-based casual game for the PC
What now?• No new genres• Old tried-and-true brands used• Serial format leaves no room for new one-off products
Distribution on Runet:
Size of sales market on Runet:
1,810
26
32
4240
50
0
10
20
30
40
50
60
2006 2007 2008 2009 2010
Mln
. $
Current exchange rate Fall 2008 forecast
Payments on Runet:
What's required?• To have the option of receiving payments for content services, with the commission not
exceeding 10%.• To have the option of making periodic charges to a subscriber's account if they, for
example, sign up for a catalog of games.• To have the option of receiving payments for services up to a maximum of 1,500 RUB.
Payments on Runet:
Outcome: Paying advances to partner program participants (NevoSoft, Alawar)
In connection with the tightening of credit, mobile operators are searching for new means of business development. The delay in payments has doubled.
Increase of piracy on Runet:
Yandex: number of searches for "Alawar cracks" has increased five-fold in one year.
Number of searches for "Alawar games" has increased four-fold in one year.
Partner programs on Runet:
Reasons for growth:• Automatic registration on the Alawar partner program.• Development of NevoSoft partner program (Gameboss).• Appearance of new partner networks from Realore (IgroMoney) and Turbogames.
New paths:
• Diversification of sales channels• Reducing the dominance of the North American market• Distribution on new markets (Central and Eastern Europe, India,
Japan, China, Southeast Asia, Middle East, North Africa, countries of the CIS, Baltic States)
• Search for new platforms (iPhone, Sony PlayStation 3, PSP Minis, Nintendo DS, Microsoft Xbox 360, Google Android)
• Web-based application ($1 billion in 2009)
Hailing from the USSR:
Big Fish Games № 1:• Adventures of Robinson Crusoe (32 days) - MagicIndie Softworks• The Treasures of Mystery Island (14 days) - Alawar Five-BN• Strange Cases: The Tarot Card Mystery (13 days) - Sulus Games• Treasure Seekers: The Enchanted Canvases (12 days) - Artogon• Magic Encyclopedia: Moon Light (10 days) - V-games• Haunted Hotel II: Believe the Lies (5 days) - Specialbit Studio• Veronica Rivers: Portals to the Unknown (4 days) - Vogat Interactive• Vampire Saga: Pandora's Box (4 days) - GO!games • PuppetShow: Mystery of Joyville (9 days) - ERS G-Studio
2008: 8 games, 41 days2009: 9 games, 103 days
Oct. 14, 2009 - ...
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Hailing from the USSR:
Real Games №1:• The Treasures of Mystery Island (10 days) - Alawar Five-BN• Annabel (7 days) - JetDogs• Virtual Farm (6 days) - Alawar Melesta• Fishdom H2O: Hidden Odyssey (5 days) - Playrix Entertainment• 3 Days: Zoo Mystery (4 days) - Realore• Alabama Smith: Escape from Pompeii (3 days) - Alawar Stargaze• National Geographic Games: Herod's Lost Tomb (3 days) - Media Art• My Kingdom for the Princess (2 days) - NevoSoft• Call of Atlantis (2 days) - Playrix Entertainment• Farm Frenzy: Pizza Party! (2 days) - Alawar Melesta
2008: 9 games, 45 days2009: 10 games, 44 days
Hailing from the USSR:
AppStore• StoneLoops! of Jurassica (PlayCreek for iPhone)
- 51 days in Top 10 iPhone Paid Apps in the US- Best result:2nd place in iPhone Paid Apps in the US
• Farm Frenzy (Alawar Friday's Games for iPhone)- 26 days in Тop 10 iPhone Paid Apps in the United Kingdom- Best result: 3rd place in iPhone Paid Apps in the United Kingdom
Casual Connect Seattle 2009 Awards:• TOP MATCH-3: Around the World in 80 Days (Playrix Entertainment)• UP-AND-COMING DEVELOPER: The Mystery of the Crystal Portal (Artogon)
The target casual games market in Russia
TOY-Opinion research (conducted February and March 2009):• 612 telephone survey respondents• 4 focus groups• 2 cities: Moscow and St. Petersburg (60% of sales)
Core target audience in Russia:• Married women, age 20–40, with an income of approximately 20,000 RUB ($670) per
month.Consumers want:• To relax and forget about their problems.• Casual games to be labeled "regular", "simple" or "mini-game".• To play at home, not at work.Consumers do NOT want:• To get sucked into games.• To have to remember the names of games.• Games to become more complicated.
Players of casual games:
• Top their phone up only when the balance reaches zero. They top up 500 RUR.
• Buy 1–3 games a month.• Select games according to genre (69%) and the description on the
Web site (33%).• Like puzzles and logic games most of all and arcade games the
least.• Do not know the price of a game (believe it to be 150 RUB)• Are prepared to buy old games with a 50% discount.• Want a special button to minimize a game to the taskbar.
