Indie and casual game developers can sell their games through various portals. Unfortunately these portals offer very low royalty rates (about 25% to 35%). Some ‘developer friendly’ portals offer 40%. Remark that this percentage is not calculated on the game’s price, but on the ‘net revenue”, which means that when a game is sold, first some payment processing fees and other costs are deducted, and you will get the % of what’s left. And you know what, it doesn’t stop there. Portals make sure they stay in control by forcing following policies:
- You have to remove any links in your game that point to your website.
- You don’t receive customer details (most importantly their email).
- You can’t decide your game’s selling price.
So what do you get out of it? Well, some portals get a lot of traffic. And what you can get out of this is a lot of sales. A lot of sales on 25% means you get a nice amount of money. But does this theory make sense? I think not. See, for portals it costs the same whether they put a good or bad game onto their website. It makes sense that when they think a game is not going to sell, they take a bigger cut from the revenue, so they can recoup their costs. When they think a game is going to sell big time, they can take a smaller cut because the total revenue will be big enough. And in practice this also gets applied: popular games can negotiate for a bigger cut.
And now comes the real problem: when you get a small royalty rate, you expect to sell high volumes to get enough revenue. But as I explained above, a small cut probably means exactly the opposite: a low sales volume.
So making deals with portals is currently very bad for your long term business strategy. You offer them your game, they use it to gain extra customers, keep those customers for themselves, and keep the biggest revenue share. And what do you get out of it? The breadcrumbs that fall off the table.
The only thing portals can offer you is traffic, but remember that they will keep that traffic for themselves. They are in control, not you, and they make damn sure it stays that way.
So what can you do about it? Well, just refuse the kind of deals that will put you in dead end street. Use your games to build up your own business, not someone else’s. And when doing deals, make sure both parties get their fair share.
I want to know your opinion on this, so comment below and tell me what you think. How low will you go to sell your game?
2 Comments
Ron Zinn · August 25, 2009 at 09:04
Wow! This is quite the eye opener. Thanks for the great insight!
We’re getting close to releasing our first game and have been doing a lot of thinking on marketing. We’ve been possibly considering portals, but are unsure of some of their practices. You mentioned “You have to remove any links in your game that point to your website” and this would be a real killer for us.
So I was wondering if you know whether this is a frequent tactic of portals. Do you know of any that do not require you to remove your website links? This practice is akin to selling your eye for a pair of glasses. It just doesn’t make sense in the long run!
Thanks again!