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March 17, 2011

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Comments

Romain

Tanks for sharing those data with us Tomi. It makes perfect sense that advertising (especially if paid based on click through) is not the right to monetize a free game, because The ads simple get in The way Of The gameplay. However, it doesn't completely dismiss The case for free games, because there's still The in App purchase opportunity. Any hard Data on this subject, Tomi ?

Patrick

I'm in agreement here and on paid apps, but you really have to look into freemium games, in-app purchases, and break down the economics there. Here's a neat link on the NGMoco acquisition: http://dlr-law.com/blog111/Entries/2010/12/6_Valuing_ngmoco_-_Part_2__Revenue.html

That acquisition was probably overvalued (as have been most of the acquisitions in the social game space), however the non-trivial revenues are there.

Arun

Dear Tomi,

I would've liked it if you had considered the game angry birds as well for your analysis. This analysis, though solid it definitely is, can give the impression that you are picking on someone with a poor monetization strategy.

Bob

http://techcrunch.com/2010/12/03/angry-birds-android-1-million-advertising/

Angry birds is making 1 million dollars per month on android phones alone via advertising.

Elias Pietilä

Thanks for the mention Tomi! To lessen the pain of the ad model, I have to admit that there is a full version of WL3D that costs $2.99 which has been downloaded a solid 180 000 times. So fortunately, there was still money to be found in the game. It just has been painfully apparent that the AdMob/Mobclix advertising isn't paying the bills. A company I'm involved with - GameBook Inc. - is based partly on ad revenue as well, but these ads are sold straight to the brands. The quality of the ads, and the value to both parties is much higher in this case.

I should probably sell the ad space in Wooden Labyrinth 3D straight and solely to toy manufacturers ...

Trav

I like the strategy Tomi. First, spend 3 1/2 years saying that iPhone will fail and after having failed in that pursuit, now, turn your sights to the App Store.

Splendid. Good luck with that.

KDT

@Bob,

The techcrunch article states:

"we project earnings of over $1 million per month with the ad-supported version of Angry Birds,”"

There is a difference between a "projection" and how much they are really making.....

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Leebase

@KDT - the maker of Angry Birds has no reason to overstate their projections. On the other hand, Tomi writes a piece about how a top app is making peanuts with advertising -- only to have the very app maker reply that he's made a half million or so in paid downloads.

Tomi is all wet on this topic. He's never once actually answered the challenge "how does your analysis hold up to making money via the web or with software in general". The answer is obvious -- by his metric, the web is a horrible place to try and make money, in fact, software development on any platform is a horrible business.

Only texting.

Well, unless you happen to be an app developer from Finland -- then he'll pimp your "reality augmentation" app and how great that is. (And it is great). But it's still and app, and therefore there's no money to be made in making it.

Lee

MicroSourcing

Not just through ads, though; Apple's subscription model for iPhone applications takes cuts from the developers. Put the fact that they keep everything in-house on top of that.

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Without any real data, I just felt that free apps doesn't do much money. Now, we have the data.

Developers of Angry Birds makes their money from paid downloads, and that's a lesson to learn: If you want to see the cash, do a good app and charge real money for it.

Mulberry

It just has been painfully apparent that the AdMob/Mobclix advertising isn't paying the bills. A company I'm involved with - GameBook Inc. - is based partly on ad revenue as well, but these ads are sold straight to the brands.

Mulberry

This analysis, though solid it definitely is, can give the impression that you are picking on someone with a poor monetization strategy.

Tom Ross

So this game made $400.000 overall, despite the fact that it was only one of the more prominent me-toos of Spotify's original Labyrinth game and never topped any charts I can remember. Labyrinth surely must have made millions then, also on a paid model. A place in the AppStore Top 100 of free downloads will give you between 10.000 and 500.000 downloads per day. It's up to your business model if you can monetize that. The audience is there.

Tom Ross

Correction: The developer of Labyrinth is called Codify, not Spotify.

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It is proven that advertising could really attract customers. People were convinced to buy a product because of the advertisement brought by media services. And through this, companies were also encouraged to do such advertisements to promote their products.

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Available for Consulting and Speakerships

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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