Casual games need better revenue model, says Microsoft

Microsoft's Chris Early has told the audience at the Casual Connect conference in Amsterdam that the casual games sector has yet to find its optimum revenue model.

Early, who is studio manager for Microsoft Casual Games, said that numerous opportunities exist and that it will be a case of "trial and error and experimentation" before an optimal revenue avenue is discovered.

Speaking of his companyâs preferred Try Before You Buy model - widely implemented on Xbox Live Arcade - Early stated that Microsoft was keen to continue exploring advertising-based schemes, but that the company would also continue to search for new and innovative methods of revenue generation.

"So far this industry has been all about either free web games or downloadable games," he began. "We now have the opportunity to see what else is open to experiment.

"Might we have the trial download for a game modified for advertising, or change back catalogues of downloadable games that are no longer popular, into web-based games? Weâre going to experiment over the next six to twelve months and see what works best for us.

"I guess what Iâm saying is that we donât really know what [the best monetisation method] is yet," Early continued.

"We have the ability to look at the retail market but I donât know sitting here today whether a triple-A title will be better off being sold fully advertised or not. Thatâs going to come down to what type of traffic we can drive to it. Thatâs all going to be experimentation."

Early then went on to unveil Microsoftâs future plans, stating that as well as investigating new avenues, the software and hardware giant still favoured the Try Before You Buy model on Xbox Live Arcade due to one in five product trials ending in a purchase.

"I think casual games are better on 360," observed Early. "They have better sound and graphics. They may cost more to make, but we see that these games are more profitable due to our 21 per cent conversion rate on Xbox Live Arcade."

Early finished off by claiming that revenues generated by Xbox Live Arcadeâs high casual gaming uptake would be further bolstered by integrated advertising - but warned that the ad-based template must evolve to become both unobtrusive and relevant.

"You need to do [in-game advertising] in a way thatâs unobtrusive to the player. If we get to the point of getting like commercial television on cable channels, where ads are so intrusive of the experience, then people wonât play anymore," he argued.

"There are two elements of this. Firstly how do we, from a developer and publisher standpoint, incorporate in-game advertising that doesnât break the flow of the game? Itâs also incumbent on the advertiser to ensure they provide relevant content for the customer.

"The more we can use sophisticated advertising technologies to deliver relevant advertising, the less like advertising and more like a service it will be."

Despite numerous monetisation models currently employed by a wide range of publishers in the casual gaming sector, it appears that only time and experience will determine the best way of generating funds. But as Early concluded, the best result may yet prove to be, "a conglomeration of all of them" rather than one definitive method.