Where's The Cash For Flash?

Flash games are hugely popular, and they're cheap to make. But is there money to be made as a Flash developer?

That depends, say the people interviewed for this article, not only on the quality of your games, of course, but more importantly, on how clever you are at marketing them. It's all about having multiple revenue streams, they say; single sources of income used to cut it, but no longer.

Once upon a time, the standard operating procedure for an independent Flash developer was to create a game and then shop it around to the various portals and sponsors to see who -- if anyone -- would bite, says former Flash developer Chris Hughes in Sacramento, CA.

He and his partner Adam Schroeder soon became weary of the process and launched FlashGameLicense.com, a broker site where developers can display their wares and sponsors can bid on them.

"We've had a huge impact on what developers get for their games," claims Hughes, the site's co-owner. "We only allow legitimate sponsors to bid, and the process not only helps to increase the monetary value of the games but also can improve the terms of the agreements, which can sometimes be more important than the upfront money."

The Web site claims to have over 960 sponsors -- including CareerBuilder.com, Cartoon Network, and Simon & Schuster -- of which 200 view the site daily. There are currently about 2,000 games on display, created by the 4,400 developers now enrolled. Since the site was launched in April, 2008, it has brokered over 830 deals totaling almost $956,000 -- an average of just over $1,000 per deal. Sponsors pay no fees to become sponsors; the site takes 10% of each transaction.

How much is the typical transaction?

According to Hughes, of the 20 games submitted daily to FlashGameLicense.com, "99.9% of the good-to-great games get sold while 25% of all the games we've ever had on our site have been sold. At a minimum, developers selling their first game ever -- if it falls into the 'good-to-great' category -- make about $500-and-up."

At "the high end," a not-so-typical example of how lucrative Flash development can get is Auckland, New Zealand-based studio NinjaKiwi, the developer of the Bloons games, says Hughes.

"They have created an entire game-specific site -- Bloonsworld," he notes, "which enables them to make $30,000 a month or more by leveraging their IP in various ways, including creating an online community around their games, in-game ads, banner ads on their site, and various licenses on their games. And that, in fact, is what developers need to do to make their work lucrative -- maximize the number of revenue streams they create."

For instance, developers can allow specific branding in their games for a fee through sponsorships and licenses, sell items or premium content through microtransactions, and allow ad networks like MochiAds and CPMstar to keep ad inventory flowing through their games and to share the revenue with the developer.

In addition, developers can license or sell their IP, enter competitions that generate revenue, and urge gamers to buy full and/or downloadable versions of their games.

Take, for example, developer Colin Northway, whose first Flash game was Fantastic Contraption. Northway sold "premium content" in the game -- a level editor and the ability to view other peoples' contraptions -- for a one-time $10 fee payable through PayPal.

"The game ended up making Colin an amount in the low six figures in only four months," recalls Hughes, "and then he sold the rights to inXile. He still retains a percentage of the revenue share on the game and any version of the game released. That's what I call maximizing revenue streams."

If ever there was a Flash developer whose business model depends on multiple revenue streams, it's indie studio PixelJam Games, the brainchild of co-owners Miles Tilmann in Seattle and Rich Grillotti in Eugene, OR.

But that wasn't the duo's original strategy when, at the end of 2004, they launched their first game in the retro, low-res, big-pixel style of the Atari 2600 and Super Nintendo that would become their signature look.

"Our plan had been to quit our jobs as illustrators and designers, spend six months making a game, and live off the donations that we hoped gamers would send us because they liked our game so much," recalls Tilmann. "I guess you could call our plan 'Hope For The Best.' In retrospect, I'd say we were kind of naïve."

When money didn't start pouring in, the pair tried a different tack, this time securing an exclusive sponsorship for their second game, Rat Maze 2, which took them a month to build.

"We got $5,000 in upfront money which we thought was great at first," says Tilmann, "until we realized that that was all the money we were ever going to see from the game. And that $5,000 for two people working a month wasn't going to keep the business going."

The two quickly recognized their business model needed modifying. The resultant strategy of using multiple revenue streams was what made their game Dino Run their most successful, even though it took them seven months to build.

"We went from zero advertising and all donations to sponsorships to our present strategy," explains Tilmann, "which incorporates three separate revenue streams, none of which we could get by on alone. But, together, they support our business quite nicely."

PixelJam Games' Dino Run

Stream one involved micro-transactions. While Dino Run is free to play, a small donation gives gamers a code that enables them to customize their dinosaur, perhaps change his color or put a hat on him. Some gamers send a penny, others have sent as much as $100. "We let people decide what the game is worth to them," comments Tilmann. Micro-transaction donations generated about $4,000, lifetime to date all told.

Step two involved advertising -- a combination of Google ads on the PixelJam pages (generating about $4,000 in total thus far) plus pre-load ads from MochiAds (generating about $1,500) and revenue shares with other sites (generating about $6,000).

The third -- and most successful -- revenue generator involved licensing, which brought in about $22,000.

"For games the size of Dino Run, licensing is the best way to go," notes Tilmann. "They are paying you for the right to put your game on their site and you have the ability to sell as many licenses as you'd like. In fact, we got two really good deals through FlashGameLicense.com."

Bottom line: The three revenue streams have brought in approximately $40,000 for seven months' work with more still trickling in.

"We chose not to go the proprietary sponsorship route," says Tilmann, "because we couldn't secure one that would cover the seven months it took us to build the game.

Sponsorships tend to make more sense when a game only takes two or three weeks to make."

The icing on the cake was that, possibly due to the success of Dino Run, PixelJam accepted two "for hire" jobs -- one for Comedy Central's The Sarah Silverman Program and another for Cartoon Network's Adult Swim. Tilmann would only reveal that each commissioned project generated slightly less than what PixelJam earned from Dino Run -- but they took considerably less time to build.

"I guess you could say that, on paper, our business would flourish more if we just did work for hire," he adds. "But we'd be very, very miserable. We're just not happy working for other people."

That is, in fact, how Sean T. Cooper got started as a Flash developer. In 1987, he began his career at UK-based Bullfrog Productions where he led, designed, and programmed many hit titles until 1995 when Electronic Arts bought the studio. He spent 11 more years at EA until 2006 when, on a whim, he built a little Flash game. It took him eight days and a sponsor paid him $1,500 for it.

"I said to myself, 'that's not quite enough to keep me going, but it's a good start,'" recalls Cooper who, at that moment, decided to go indie.

The next step was to create more games, many of them incorporating what would become his signature Boxhead brand, which he describes as "a collection of fast-paced, zombie-killing games full of action, guns, and loads of blood." In all, his Web site now contains five Boxhead games plus three under his Wone Games brand, and the first in his newest Shadez series brand.

"The brand is the key thing for me; it's number one," he explains. "If gamers like the first game in a series, they'll come back for more when you release the sequels. It's just like the cinema business. That's what drives the revenue."

Much of that revenue now comes from sponsorships -- which Cooper says currently go for about $20,000 per game -- and from load-in ad revenue produced by the 1,009 web domains that carry his titles.

There's also the online store on his web site that sells Boxhead and Shadez shirts, buttons, and mouse pads. His plan is to add a fourth revenue stream shortly -- in-game advertising.

For a game like his highly successful Boxhead: Zombie Wars, that adds up to approximately $53,000 which the game has generated since March 2008. The title took him six weeks to build.

What then can a good Flash developer make in a year?

"Let's say I can write 10 games in a year," calculates Cooper, "perhaps three or four Boxhead games, one Shadez game, and a few others. The new starts can bring in, say, $18,000 each, the less-well-known Shadez series games can bring in, say, $25,000 each, and the four top-end Boxhead games can generate, say, $50,000 each. Which means that one person can -- with a lot of hard work, meaning every day of the year -- expect to bring in close to $400,000 a year, I think."

In addition, Cooper -- whose game quality is, of course, one of the best in the Flash game business, one of the reasons he can do so well -- intends to allow other companies to develop Boxhead games which will entitle him to 50% of the revenue for the privilege of using his brand's name.

"But remember," warns Cooper. "That first game generated just $1,500. The bigger money doesn't come until you've become popular and built up your brand. It took me four other Boxhead games before I produced one as popular as Boxhead: Zombie Wars. Until then, you just have to be highly motivated. What motivates me? I live every day wondering how I'm going to eat that night."