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In-app merchandising: a new way to monetise
This is a guest post from Matthieu Saint-Denis of Fabzat
Games monetization is based today on 2 major kinds of revenue; advertising and in-app purchases. We’d like to emphasise an almost untapped third source: merchandising. For many of us, it’s still (almost) zero but for some others, such as Rovio, it’s 45 % of their income… which means there is definitely room for improvement!
On a bigger scale, let’s look at how much revenue merchandising accounts for in the whole entertainment industry:
The most successful movie merchandiser, Star Wars, made $1.8 billion at the box office, while the total revenue including spin-off products exceeded an impressive $4.5 billion. In 2010, movie merchandising reached $147 billion in 2010 and in 2011 it has exceeded global box office revenue. In the US 25% of toys in are sold under a movie licence!
In the music industry, merchandising accounts for $2,2 Bn worldwide (total gross revenue is $16,6 Bn). At Vivendi Music major, their claim that their royalties out of merchandising are 5,4 % of their incomes.
On TV it’s more difficult to get figures, but a Japanese survey demonstrated recently that among the audience of the most popular TV series, it is common to have 5%+ of viewers buying physical goods related to the show.
In the video games industry, despite some shiny examples — Rovio of course but also Final Fantasy, Raving Rabbids, Moshi Monsters, etc. — we are still far from those figures. There are some obvious reasons for that and it is pretty much on the offer side: just remember your last visit to a museum or your last dinner at a “grand chef” restaurant. You’ve been delivered a great service. You’re happy. Then you’re offered some physical goods to buy as an additional indulgence. It is the museum shop, systematically placed at the end of the tour (where you can’t avoid visiting it) or it’s the books and videos of the “Chef” at the cash desk of the restaurant. They have captured the moment when you are most receptive towards their content, the moment that they have the best chance to sell you something.
We, game developers, have not yet understood this. We make t-shirts, but we only sell them on 3rd party websites, requiring users to leave the gaming experience to buy them. This is our first mistake. If we agree that gamers have more chance to buy merchandising from the game when they are proud and happy, then we should embed the shop within the game. It is the first obvious rule to apply… just like Jurassic Park merchandise madness started with street sellers on the pavement in front of theatres. That’s what we call IN-APP MERCHANDISING. It may be one of the next big things around monetization.
But it’s not enough. One of the biggest trends of our industry is the personalization of the gaming experience. It’s more than obvious that in many games, players can deeply customize their character, car, village, farm, city, etc. It makes gamers all unique and creates a deep link between the users and the game. This is now possible in merchandising too; new production technologies are able to produce fully unique products quickly and at reasonable cost:
3D printing Everybody knows about it. But few of us have realized that high-tier machines are able to print manufacture faithful reproductions of the players’ characters, in high definition and full colour. Additional elements such as nicknames, scores, trophies and medals etc. can be added on the fly. In RPGs and many other genres, that’s a wonderful thing: we can offer a player, who has invested time and emotion in her avatar, the chance to make that avatar real.
2D printing There are various machines able to print unique personalized t-shirts, posters, mugs, mobile case, caps, etc. at very decent costs. Rather than selling another game poster, doesn’t it seem smarter to sell a nice map view of the player’s village, built with care and love over hours, days and weeks?
It leads us to a straightforward conclusion: we believe that the combination of an embedded shopping experience and a personalized custom goods offer can easily generate from 5% to 10% of additional revenues for all kind of games and obviously even up to 40% when the game is well suited to merchandising (character driven, ready to print 3D, etc.)
At FabZat we offer a full service chain, starting with a plugin ready to be embedded in an iOS or Android code and taking care of production, billing, shipping and customer care. We do the 3D printing ourselves, so we can guarantee high quality. We deliver worldwide. We position ourselves as the first “in-app merchandising” service provider in the mobile game industry. We would be delighted to get your comments and questions at [email protected]