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Is games 2.0 just around the corner? November 27, 2007

Posted by jeremyliew in ad networks, business models, distribution, games, gaming.
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Yesterday I put up a post claiming that Web 2.0 has been driven by variablization:

    Variablized Development Costs
    Variablized Content Costs
    Variablized Marketing Costs
    Variablized Distribution Costs
    Variablized Monetization

It struck me that many of the same dynamics are now starting to apply to the game industry as well.

Variablized Development Costs

While development costs haven’t become variable across the board, web based games are definitely becoming cheaper and easier to build. As new rich media technologies improve (Flash, Silverlight etc), development tools improve (Flex, Laszlo, etc), and reusable game engines become more widespread, it gets easier to for people to build games.

Variablized Content Costs

Just as with the web, user generated content allows for models with dramatically lower and more variable content creation costs. Gaia, Habbo, Second Life and other casual immersive worlds, while not really games, let users create content for each other, and in fact let users BE content for each other. PvP games such as Scrabulous and the Campaign Game are another way that “content” costs are variablized – instead of having to create more levels, a game becomes replayable because against live opponents each game plays differently.

Variablized Marketing Costs

Again, just as with the web, search marketing has created a completely variable channel for player acquisition. Web games and downloadable PC games benefit from this; console games still need to rely on more traditional marketing means.

Variablized Distribution Costs

The two mechanisms that have enabled variable/free distribution online are social network platforms and virality. We’re starting to see games taking advantage of both of these mechanisms, including Attack!, Warbook and Kings of Chaos.

Variablized Monetization

Ad networks and contextual advertising have driven the variable monetization model for web 2.0 companies. We’re still very early in the game for in game advertising networks, but Google is making its first forays in in-game-advertising, and startups like Mochi and Neoedge are also taking up the challenge. Kongregate is building a destination for online casual games where they share ad revenue with independent game designers, a more centralized approach to making monetization variable for game designers.

The other interesting emerging direction for monetization has been free-to-play games with digital goods. Games like Three Ring‘s Puzzle Pirates and K2‘s Knight Online have demonstrated the viability of this model.

Conclusion

I think we’re going to see an explosion in gaming over the next few years comparable to the web 2.0 phenomena; I plan on exploring this topic further over the next few weeks.

Comments»

1. Games 2.0: User generated content in games « Lightspeed Venture Partners Blog - November 28, 2007

[...] business models, gaming, user generated content. trackback Following on from my last post about Games 2.0, I came across a great (old) post on Lost Garden about user generated content in games. Here are [...]

2. Games 2.0: Raph Koster at GDC Prime « Lightspeed Venture Partners Blog - December 11, 2007

[...] those of you interested in games 2.0, it is well worth reading the whole [...]

3. Games 2.0: Bringing games to non gamers « Lightspeed Venture Partners Blog - December 12, 2007

[...] After reading Raph’s presentation at GDC Prime, I’ve been thinking more about Games 2.0, and in particular how to bring games to people who wouldn’t typically identify themselves as [...]

4. Games 2.0: Social gaming on Facebook « Lightspeed Venture Partners Blog - December 20, 2007

[...] games 2.0, gaming, social gaming, social networks. trackback As I spend more time investigating games 2.0 and asynchronous gaming, I keep getting drawn into the area of asynchronous mutliplayer casual [...]

5. Eric Martindale - January 21, 2008

Wouldn’t you say that games 2.0 is already here, given the extensibility provided by games like EVE Online and their APIs? I run Role Playing Games by RolePlayGateway, and I think games 2.0 is already here.

6. Games 2.0: Lessons from Travian « Lightspeed Venture Partners Blog - February 14, 2008

[...] times and set off to expand your empire, raid others and form alliances. It has many of the games 2.0 characteristics that I’ve been blogging about and has been growing nicely, as Alexa [...]

7. One in seven video games downloaded rather than bought at retail « Lightspeed Venture Partners Blog - August 12, 2008

[...] Digital distribution, and hence the ability to variablize marketing and distribution costs is one of the key drivers of games 2.0. [...]

8. We’re excited to invest in Casual Collective « Lightspeed Venture Partners Blog - November 18, 2008

[...] a big believer in applying the principles of web 2.0 to gaming: fast development cycles, user generated content (ie multiplayer games) and a direct to consumer [...]

9. mikel - November 26, 2008

you say (I think we’re going to see an explosion in gaming over the next few years comparable to the web 2.0 phenomena) and i think that will done in the next years

10. capitanhook - June 19, 2010

well actually after 2000s most web 2.0 games are smilar i meant online roleplay ones. so what happen to more complex games …all they offer nice 3d graphics


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