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If QuakeLive can’t survive on advertising alone, who can?
John Carmack has announced that in-game advertising was not remunerative enough to support id software’s web-based version of Quake and a premium service is on the way. Does this mean that the days are numbered for high-quality free web-games?
Quake Live launched in February 2009. Admittedly, it was based on an old game, but it was an entirely new model: free-to-play for an FPS targeted at hardcore gamers who prepared to spend hundreds of dollars a year on their hobby and expect the highest quality from their games.
I thought it was an important milestone, showing a potential new “TV” style business for the games industry.
So does this announcement from Carmack mean that the experiment is dead? That he is retrenching to the traditional world of either boxed products or subscription MMOs?
I don’t think so.
It can’t be great news for the advertising network IGA, which made a big deal about its partnership with id in February last year. Their modus operandi has in the past included making substantial minimum guarantees to their partners (although I understand these are no longer so common), so there is potential for them to be out-of-pocket from the failure of Quake Live to generated substantial advertising revenues.
But throughout this recession, it’s been clear that any business that is entirely dependent on advertising revenues is in trouble. (Successful tech blog TechCrunch, for example, makes 10-20% of its revenue from classic advertising; 50% comes from conferences.) Successful social games companies like Zynga and Playfish make most of their money from virtual items.
Additionally, Quake Live’s audience was fragmented. The site had only one title with maybe 800,000 registered users. (That’s registered, not active. Unique monthly users are likely to be much smaller). Further, as id CEO Todd Hollenshead said, Quake Live gets 30% of its players from the US then, in order, Germany, the UK and Poland. That’s a very fragmented audience. Advertisers look for websites with millions of unique users per month by territory. Quake Live looks like it never came close. But this argument is like saying that The Wire could never attract advertising because it’s only one TV show. Quake Live is just one game: to attract meaningful advertising revenues, it needs to be part of a bigger media destination: a channel, if you like, or a network.
But in the absence of this, Quake needs alternative sources of revenue (just like everyone else). And that’s exactly what John Carmack is proposing. He is reported as saying, in his QuakeCon keynote:
Which means that id is taking the classic web approach of offering the game for free to lots of players (a very powerful marketing device) and then monetizing those players who are really excited by the game.
It’s a natural evolution of the game, and not dissimilar to the approach taking by the new breed of successful browser-based games. It’s great to see id taking commercial risks with new business models, and being prepared to stand up and say what’s working and what isn’t.
Do you agree? Is this a sign of a company prepared to make changes, or simply evidence that browser-based games will never be revenue-generators in the way that boxed products are? Let me know.