Facebook is working with a number of small mobile game developers to undertake publishing by offering distribution through mobile ads in exchange for a percentage of revenue. Facebook confirmed it’s working on tests for new mobile game distribution, but the company did not share any more details publicly.
The thinking is, that publishing is an old model that goes back to the world of console gaming, so it’s a structure that is already well familiar for gaming studios. Consider this; In the console era, a big gaming company would market and distribute games from smaller studios that lacked the resources to promote their products. At the same time, smaller developers are having a hard time finding audiences when they are competing against bigger companies like King, Kabam and Supercell, which now have the power to spend tens of millions of dollars per annum on marketing. The initial costs of producing and distributing a competitive mobile game have gone from the hundreds of thousands into the millions of dollars mark for titles that have a place in the top-25 grossing spots. So in this experiment, Facebook is partnering with smaller companies and independent developers. They are also primarily focusing on distribution. They are not concentrating on editing games for content or financing their production, which is what other (larger) publishers sometimes do. On the developer side, some of the feedback apparently, is the typical skepticism that comes with the publishing model in general. Today, since mobile developers can simply “self-publish” just by putting their apps in the store, there’s a longstanding debate about what value publishers can really add. When games are not successful, neither the developer or the publisher make money. But when games are hits like with the original Angry Birds, originally published by chillingo, there can be cause for concern when the original developer questions why they are paying a massive revenue share to another party. They can also go down other routes by releasing games that are similar to the original and coercing users to the new version of the game, where they won’t have to pay the original publisher.
While advertising has always been the mainstay of Facebook’s model on desktop PCs and mobile devices alike, there are many revenue possibilities on mobile devices that the company has yet to fully explore. Facebook may feel that it is not fully realizing the potential of the mobile app economy. Through mobile advertising, the company basically turned on a $1.5 billion-a-year business in about six months. Facebook has been earning a little over $200 million per quarter from payments and other fees, most of that revenue coming from virtual currency transactions from inside games. Facebook does also earn a large amount of revenue from mobile game developers through normal mobile advertising buying. But it hasn’t been able to replicate that business on mobile devices, because Google and Apple both control the market’s two major smartphone app stores.
[Image via: frenchweb]