The Funware Blog @ rmbr

About 2 months ago I was introduced to Sramana Mitra, a friend of John Welch’s and the publisher of an influential blog on business strategy (primarily focused on the web). Sramana asked me to write a series of articles for her audience all about the games industry.

Now, that’s a pretty big topic to bite off, but I did give it “the good old college try” and wrote a 6-part series for the site. You can read the first installment and follow the appropriate links to catch the rest of the series.

I hope you enjoy. Pay special attention to the discussion of the casual games sector. While it’s my favorite part of the business, my opinions on the topic are a smidge controversial - and I’ll be interested in reading your comments on Sramana’s site.

If the thanksgiving weekend didn’t set you into a perpetual, turkey induced coma - perhaps you’d enjoy reading an article that makes mention of the Funware concept and rmbr? It’s written by Matt Slagle for the AP and you can read it here. There’s lots of great information about social networks and games, the emerging category of Funware as seen by casual game developers.

To the whole rmbr team, our investors, advisors and alpha/beta testers, wherever you are: happy Thanksgiving. We’re thankful for your assistance and support.

Read/WriteWeb, a great blog, has it’s own take on rmbr, and it’s a great overview of what we’re doing.  Also, it’s an excellent blog and well worth reading/getting to know Josh Catone’s perspective on all things digital. He’s very insightful and has a rash of great things  to say about new products and trends in the business.

Dory Devlin, the Blogging Mom at Yahoo!, has written a great article about rmbr. She really enjoyed our perspective on Funware and photos, and asked some awesome questions. I’m actually super excited to get her on our beta and get some early feedback on what we’ve got in store.

Chris Anderson, in his generally interesting Long Tail blog, made an intriguing - if slightly uninformed - post today that I thought worth responding to.

Now, Chris is a smart guy, and he’s done lots of important things for the tech industry as a whole. This includes coining important phrases like Long Tail, and editing magazines like Wired. But when it comes to game distribution issues, he just doesn’t understand.

I helped found a company called Trymedia Systems, the first successful company in the digital game distribution space. At one time, Trymedia powered almost the entire universe of downloadable game options, and, working with our partners (Yahoo, AOL, BigFish, etc) helped provide the infrastructure that’s enabled downloadable games to flourish. We started at the height of the boom (1999) and sold in 2005 to Macrovision, enduring a lot of pushback (”Gamers want to feel the physical CD in their hands”), pain (a big chunk of time unpaid during the downturn) and progress (More people play games on the web than any other channel).

But Anderson really misses the point about digital distribution. The marginal cost of a disc-based game is already very small - <$2/box for most, on an MSRP of $50. That doesn’t equate to a ton of costs that can be repatriated to the consumer. And, let’s be clear about something very important: games that are free-to-play/item based make significantly *more* money than most of their disc-based counterparts - when you look at an overall ARPU basis. And while most MMOGs (including Funware apps like rmbr) have a baseline free version, our business is absolutely predicated on the idea that people will pay for various items, powerups and features that are locked without a monetary contribution. This is nothing like the business model employed by most Web startups, because we really don’t give the game away for free, even though it *looks* like we’re doing that to the uneducated observer. We finely tune our online MMO products to wring the maximum revenue from each user - and that’s something the games industry is positively expert at doing.

Take a look at this ARPU chart. This is average revenue per user for a string of MMOGs. Does any regular “free” website get this kind of revenue? Does any non-porn web property even come close? Remember, these are averages, and the normal distribution is that most people don’t pay.

The reality of downloadable games is that you’re lucky if 1% of the people who download your demo convert into paying users, and the distribution in MMOs - while better - still doesn’t suggest that 70% of lookers turn into buyers. So, we make due in all corners of the online business by getting some ad revenue where we can, selling subscriptions to those that will buy, and selling our product (be it virtual real estate or a CDRom) to those that are really passionate about what we make.

But let’s be honest. There are no free rides in games - and no partners/investors willing to pay $15Bn for a games company that doesn’t make money. So, until then, I guess we’ll just have to make do with our focus on revenue and engaging users.

This past year, a number of bloggers have covered a site called I’m In Like With You, a very interesting Funware app that is effectively a social network based on flirting. Many of these bloggers also made the connection between Amy Jo Kim’s work on bringing game design to the web and IILWY, which does some very cool stuff. A great article on the subject was written by Yi-Wyn Yen on the Startup Game Blog.

We’re hopefully going to talk to I’m In Like With You founder Charles Forman in the next little while and delve deeper into their approach to Funware.

This is an article about a talk that friend to Funware Amy Jo Kim gave last year at the ETech conference (or read some coverage of this year’s), but the subject matter is as relevant today as it’s ever been. Give it a quick read, and check out Amy Jo’s blog - an excellent resource for understanding Funware - though it hasn’t been updated in a while.

Turns out, TechCrunch is reporting that one of our favorite web2.0 services, and faithful assistant to rmbr, EchoSign, has raised a $6M round.

Let me say that EchoSign is one of the companies that is most helping rmbr reach it’s potential in a highly leveraged, green, and low-capital way. It’s a service that enables you to digitally sign all kinds of documents quickly and easily. Echosign is hosted cheap, straightforward and perfectly tuned to the way that we need to do business. It takes only a few minutes to get a contract signed, and there’s no printing, signing and faxing in our lives anymore.

In the past 4 months, the company hasn’t mailed a single physical check (except to the government, figures!) or signed a physical contract, despite having both paid and agreed to contracts. We’ve done it all electronically, saving time and paper! Echosign is truly a great service, and if you don’t use it, you should.

Today GameZebo posted their first look at rmbr - and it’s a super well-written article by Justin McElroy. (Disclosure: I periodically help GameZebo strategically) Justin and I spent a bunch of time together talking about rmbr, the Funware concept, and how photos belong at the center of a strong casual game offering. I’m glad that what we’re doing made as much sense to Justin as it does to us.

As a separate note, I realized that I haven’t had a chance to talk about GameZebo here - and I do want to point out the good work that they’re doing. Nobody does more to cover casual games in an honest, straightforward and relevant way than Joel and the GZ gang. If you’re in any way interested in casual games, you should be visiting GameZebo often. And yes, it does help that we share the same initials.