I frequently get asked what WarLight’s strategy is for generating revenue. So far, I’ve avoided giving an answer, mostly because I was still trying to figure it out.
While I love free things, it’s obvious that WarLight cannot continue forever in its current situation. WarLight costs almost $300 per month just in hosting fees, and (unfortunately) I’m not nearly rich enough to afford this for the rest of my life. There are several different strategies that could work, let’s examine them here.
Donations
One option is to rely strictly on donations to keep the site alive. This is similar to the Wikipedia model. Several people have already asked if they could donate to WarLight, but I’m not convinced this would work for WarLight long-term. Wikipedia barely gets by as it is, and WarLight has a significantly higher hosting cost per user than a site like Wikipedia, since most of Wikipedia’s traffic is static content which allows them to make heavy use of caching. WarLight has extremely high CPU and memory requirements compared to most sites, which is what makes it expensive to host.
I also really think the kind souls that donate should get something in return for their money. If a site starts giving a reward for donating, then they’re just kidding themselves calling it a donation. What they’re really doing is selling the reward along with the good feelings that come with donating.
Advertising
Another option is to put ads on the site and use that revenue to keep it going. Targeted ads work great, as shown by Google’s business model. Unfortunately, WarLight’s audience is far too diverse to get any sort of decent ad targeting to work.
Another form of advertising that works are the annoying ads. These are the ones that fly accross your screen, make noise, pop up, or force you to watch a video. These are all the rage these days in other Flash games, however I’m not a fan of these. Users hate them, and I would only consider this as a last resort. I really hope I never have to subject anyone to this.
Unfortunately if you can’t target and you aren’t willing to use annoying ads, you’re looking at an extremely low revenue-per-user from advertising. These ads can still work if you’re a high traffic site serving “easy” content (static pages), but unfortunately WarLight is not.
Micro-transactions
Some sites are set up to recieve small payments that enhance your gamimg experience. This is the Farmville and Evony model, where you can pay money to grow your farm/empire faster. Although WarLight could certainly sell things like additional armies, additional cards, more territories to pick or order priority, these would diminish the value and competitive spirit of the game. WarLight is fundamentally a competitive strategy game and I want players to win based on their strategy and not their wallet.
Freemium
Freemium is just the latest term for having a free service with a premium paid mode that offers more features or a better experience. In a freemium model, WarLight could offer premium features to paying players — things that the more hard-core WarLight players want. For example, WarLight could give premium users more control over their game settings or the ability to play in ladders, while still allowing free players to play the core game.
For WarLight, this model makes a lot of sense since the players that like WarLight tend to really like WarLight. This is the model I have ultimately chosen for WarLight, which will launch with 1.0.
Rest assured, WarLight will always be free to play. You can think of this as you would a retail game releasing a free demo, except “WarLight free” will never expire or limit how much you can play, it will only limit what features you can use.
Big news! I had a feeling this may be coming after the 1.0 announcement. I think you’ve made the right choice going to a freemium model, but I’m definitely curious to see how it is implemented. Are you thinking of implementing a one time fee, or will this be a subscription type purchase?
This will be covered in an upcoming blog post.
Hopefully it’s just a one-time fee
wouldn’t a 1-time fee be more of a micropayments type idea? in fact if your providing additional services, *settings/ladder/etc.* it could be a micropayments type deal where people could pick and choose what they want, rather then being forced to pay a premium fee for everything, when perhaps all they wanted was to be able to join ladder games.
I didn’t realize hosting Warlight is that expensive; I was thinking $300, but yearly. What exactly costs that much?
The bandwidth costs alone are more than double your estimate. The bulk of the cost is in CPU and Memory, though.
So why not at least give donations a try?
First, thanks for picking up the tab for three years all by yourself! Second, congrats on version 1. Third, great choice with the Freemium model. I would encourage you to lean towards monthly payments for premium features with the option of yearly payments at a slight discount. I hope you are able to find a billing system that does all of the work for you – I want you focused on smashing bugs and creating new content after all!
Last and probably not worth mentioning since you have already addressed it – keep game play pure! Thumbs down to selling armies/cards/luck etc!
This kind of incremental money from user fees is fine and should certainly exceed the very modest $300/mo., but your real potential payoff for WL is a licensing model. You’ve suggested that you can develop a client app that would work on IPad and cell phones. You should be talking with the phone companies about licensing WL for use on their networks. Higher bandwidth addictive apps are EXACTLY what they want because that’s how they make their money. You’ll no doubt sell it through app stores and it would be great if you could get some cross promotion from the storefronts (you have great press on the beta). Maybe you should consider putting a basic press kit together and doing some PR work around your launch. At the very least send emails to trade magazines, bloggers and app reviewing sites. Ideally you’d hire a freelance PR person (any WL users do PR and want to work on a success fee basis?) who would target mainstream media as well.
I don’t know whether you’d consider offering exclusivity to a phone company (with geographic and time constraints), but that could produce real money. Perhaps an agent who does media work (or a lawyer who does a lot of software deals) could find someone who could help you put that deal together. The fact that you have a huge and growing international presence lends itself to deals in smaller markets where they could offer an exclusive to their users (e.g. a Polish version in Polish featuring the Poland maps for the Polish phone company). Then repeat.
I also don’t know what you’ve done on the legal side, but hopefully you’ve addressed liability and tax issues (any lawyers on WL that want to work cheap or pro bono? — sorry but my lawfirm doesn’t allow it). Have you formed an LLC? Do you have an accountant? There’s also the IP ownership issue. You may want a strong user license if you intend to start selling this software (i.e. one that prohibits unlawful reproductions, reverse engineering, distribution, sales etc.). I believe you’ve been extra careful regarding treading on others IP (e.g. RISK is no doubt a defended copyright), but you should make certain you don’t cross that line now that you’re leaving beta.
Dare I ask if you’ve put together a business plan? Another route would be to raise capital to actually market WL. Before I was a lawyer I owned an interactive agency and wrote business plans for start-up and expanding dot com companies raising capital. I had about 55 employees and provided web development, advertising, marketing, consulting and PR services with a focus on start-ups. Several business plans I’ve written received first and second round VC funding. I have never seen a beta that’s been as thoroughly tested by the general public (because most need a faster return on investment). You should probably generate some nice charts showing how WL traffic and membership has grown strictly through word of mouth in beta (they’ll look nice in the press kit). You can write your own business plan, and it’s a good exercise even if you aren’t trying to raise capital immediately. Of course finding a consultant to help or write it for you would also be good. There are plenty of people who do that for a living on a freelance basis.
I’m a fan of WL and would hate to see it get lost as the one millionth downloadable free game app. A lot can be done with little to know budget. You can also compensate people on a success basis. You should definitely add reseller section to the homepage where other sites can add a link to download the premium app in return for a modest percentage of the fee. Similarly you should consider offering discounts and commissions to sites with user bases that would be interested.
As you pointed out game sites are some of the worst ad revenue producing sites (game players don’t stop to click on ads, they’re sticky and generate lots of page views but they lack focus). However you could take advantage of that by buying ads on game sites and search engines. Ideally you’d try for a pay per conversion deal as opposed to a pay per click since you have little capital, but the balance could change over time.
One more thing. You don’t own warlight.com. That’s a big issue. A lot of traffic is going to end up going to the wrong site. And all your ivnestment to build brand awareness will go to benefit them. Before you launch you might want to inquire about buying it. A quick whois search on netsol shows it’s owned by a tiny Canadian company that does software development. Maybe they’d be interested in trading it for some equity in your company (with a 5-10 year buyback right for a reasonable purchase price in case WL takes off). Nothing came up for me when I tried the address, so I’d start with a low ball offer.
http://www.manta.com/ic/mt6fy94/ca/warlight-industries-inc
Nothing in this message is legal advice. Just my musings as a fan.
I assume you’ve done far more research than I have, but couldn’t you target ads by integrating with facebook and friends?