Get Noticed, Go Viral, Monetize: Virtual Goods at Engage Expo

The Engage Expo was a conference clearly targeted at those interested in connecting the online and offline pieces required to better monetize their games.  Its many lectures, sessions, and panel discussions provided a healthy amount of general information intertwined with personal stories of successes and failure while navigating the unpredictable world of online e-commerce.

"Monetization of social media" was the recurring theme presented during the Virtual Goods sessions of the Engage Expo. Taking place at the Javits Center in Manhattan on February 16th and 17th, 2010,  many statements of wisdom professing the path to success were uttered during the presentations, but the most eloquent that met my ears was "Get noticed, go viral, monetize", spoken during the final panel of the conference as part of the Virtual Goods track.  Of course, this is considerably easier said than done. Pieces of this puzzle were revealed throughout the course of the conference, and only through attending many sessions and listening to so many varied experiences did the details of the big picture begin to fill in.

The level of difficulty of each of the three levels (noticed, viral, monetize) presented by the phrase is uncertain - that depends on the powers available to each party seeking to monetize a product or service.  Typically, the solution to getting noticed is having a quality product and following it up with brute force advertising and distribution to news outlets.  The solution to going viral also depends on having a quality product that uniquely taps into a need or desire shared by many people, but that also guides users to further propagate the product by sharing with friends. The solution to monetization depends heavily on the nature of the product and where it lies on the continuum of virtual vs. physical, but the most common avenues include direct payment, advertising revenue, and micro-transactions.

In the following breakdown of the three steps, keep in mind that this review is provided from the perspective of those seeking to monetize games, not software applications or physical goods.  Typical situations include success with a game on a social network (of which Facebook is the dominant figure), or the Apple iPhone App Store.

Getting Noticed
Even if your product is fundamentally better than the competition, it may be romantic to think that everyone will simply line up to play it.  The truth is that due to the ease of creating a game and distributing it online, the average user is only exposed to a very small percentage of the total games released. The sheer quantity of games available to play online make it difficult for a new product to stand out in the crowd (to get noticed).

One particular statement that was spoken during the Expo (stating that being in the top 10 or 25 of any given category on the App Store was a good place to be) may at first seem uselessly obvious.  Upon further examination, the statement does underline the importance of getting noticed, because the sad truth is that those products that fail at this stage don't progress to stages two and three.  Unfortunately, there is only so much room in the top 25 of each category on the App Store, so for the individual developer the suggestion ultimately amounted to specifically targeting categories in which the quality of competition was not as strong if you're to have any hope of getting noticed.

The same idea can be applied to any service in which there is limited "virtual storefront shelf space", which typically showcases the newest and most hyped products, with no direct connection to whatever product you personally (as a game creator) would like to have displayed there. The challenge is to figure out ways to bridge that gap, which is often done through press releases, promotion through online news outlets, and personal connections with individuals within the companies themselves.  In the realm of social media, the storefront space extends to each user's profile page, where all the friends of that user are potential customers. While it may seem that this space offers infinite opportunity for expansion, it is unfortunately quickly becoming apparent that this space is also limited, and backlash to clutter is being felt from users of these services.

Going Viral
This is where the unpredictable nature of the online economy comes to the forefront. The requirement to "go viral", to be able to monetize a product, infuses the entire process with such a level of risk that without some sort of developed "feel" for what will or won't go viral, investing significant money up front begins to resemble a form of gambling more than anything else. As with most business ventures, experience is a very powerful way of learning what does and doesn't work. As the whole social media phenomenon is such a new innovation, no one has significantly more experience than even the newest newcomer, so the playing field is inherently leveled. This situation is what makes the social media space so exciting - as the possibility exists for a product or service that fulfills an untapped need of the community to overtake established players seemingly overnight.

Monetizing
This is where much of the real value of the conference was. For those that had existing products, and had already attained some level of success in getting noticed and going viral, to allow the product's business development team to determine what avenues were available and most appropriate to generate revenue from said product. The typical avenues of earning revenue include advertising, direct payment, and micro-transactions, with the reality of most situations often being a combination of the three. As for online advertising revenue generation, unsurprisingly the dominant player is Google with AdWords/AdSense.

In the game industry, the dominant form of micro-transaction monetization is in the form of "prepay aggregation", where the user buys points up front so the credit card is not hit every time a transaction is made. Many figures were presented, such as how, on typical online game services such as XBox Live, only 5-10% of gamers transact online. While on the other hand, Facebook and similar services may provide the "proverbial rising tide", someday bringing online transaction percentages into the 20%, 30%, and 40% range. Facebook Credits were mentioned as an example of a micro-transaction "currency solution", but not as a "payment solution" (eg. PayPal, credit cards). 

Final thoughts
Conferences such as the Engage Expo clearly highlight the position of games in the greater world of online e-commerce; as inseparably tied into the monetary factors that enable them to survive and proliferate. While many of the personal accounts told by the speakers were of business ventures made by multi-billion dollar companies (which provides little relevance to the plight of the lowly independent developer seeking to make a living selling his iPhone or Facebook app), the information presented at the conference helps provide a solid overview of the monetary factors driving the industry at large. The conference also provided an opportunity for those heading small yet established businesses and opportunity to get a glimpse of the global and socially diverse direction that the industry is headed.

Through my experiences attending conferences in NYC, I can't help but feel that the single-minded focus geared towards business pursuits of social and online games could and should be evenly balanced with equal attention on the issues that would enable local developers to be able to produce higher quality products. If the conference is to attract more of the established NYC game development community at large, it should also look to provide sessions that address the artistic and technology aspects of the game production business. Game conferences on the west coast, and now even the Triangle conference in Raleigh, NC and the upcoming PAX Expo in Boston, provide sessions that cover a balance of all sides of the game development process, including business. In short, many of the artists, designers, and programmers among us are still left yearning for the "east coast GDC", while the business community is well served.