What the NY Times can learn from online games | VentureBeat

What the NY Times can learn from online games VentureBeat

(Did you ever believe that Dave Madden would be lecturing to the NYT? Love it! Way to go Dave!!!)

What the NY Times can learn from online games

Dave Madden is executive vice president at game company WildTangent.

You’ve probably heard that the New York Times is planning to put up a pay wall next year that will shut off its content to all but paying subscribers. It’s a move the newspaper feels it has to make in order to stay in business. But it’s a move in the wrong direction. Instead the paper should abandon the notion of metering and instead look to the booming online video game business for its inspiration.

Online gaming companies learned long ago that the best way to make money is to shoot for the largest possible audience by eliminating subscription walls. You make the game completely free, get as many players hooked as possible, and then monetize those players through the sale of virtual goods and advertising revenues from brand advertisers. In Asia, game based virtual goods purchases surpassed $4 billion in 2009. In the US, where the business is more nascent, purchases are expected to hit $1.6 billion in 2010. Examples of runaway successes abound. In the month of January, there were 17 different games that all garnered audiences of over 10 million monthly active users on Facebook. The largest, Farmville, with 75 million, was launched just six months ago.

The huge difference between the NYT metered approach and the “Free to Play” gaming model is that, in gaming, users can decide how many virtual goods they want to buy and how they pay for them. No matter what the volume or the payment method, they’re never turned away. The NYT’s metered model is instead an all or nothing approach — you either pay the full subscription price, regardless of what parts of the site you want access to, or you don’t get in at all. The net result will be that the paper will lose readers it could have kept and monetized by other means.
In the short run, the NYT metering plan may mean an initial burst of subscription revenue. But, over time, its daily unique user count will dwindle as users seek out news from other sources with less friction, leading to a downward spiral in ad revenues that will more than offset the subscription gains. That means fewer resources to produce the paper and the website, rendering the online and print subscriptions less and less valuable over time.

Then again, perhaps the paper could take a lesson from online games and roll out a “Free to Read” model supported by digital currency.

A digital currency option – similar to the online games model — would allow the NYT to monetize the 95-99% of readers who are inevitably not willing or able to buy a monthly or annual online subscription. By deploying a digital currency model and creating a per visit and a per premium article price, the NYT can establish a perceived monetary value for its premium news content. Just like in online games, readers will be able to purchase that digital currency in a variety of ways, including virtual currency cards that are sold in retailers nationwide, along with online purchases via credit card. A digital currency approach would allow the Times to keep the a la carte price of a premium article or feature reasonable to the interested reader.

With the barrier to entry and risk level lower than an all-or-nothing subscription, the percent of readers using real currency would be larger. All told, a standard subscription model combined with a digital currency option would monetize approximately 15 to 20% of the total audience. So what about the remaining 80 to 85% of NYT readers who won’t buy a subscription or pay per article?

Because this currency solution would effectively establish a monetary value for NYT content, a value exchange advertising model could then flourish; just as it is doing now in the online games industry.

Readers would be presented with the option of paying for an individual visit or premium article using their digital currency, or they could choose to “earn” the same NYT content compliments of an advertising sponsor in return for viewing an ad on the way into the story. This perceived exchange of value between the NYT reader and the advertiser would create a means through which all NYT readers could be monetized.

In a digital currency world, the publisher is equally happy to have the user pay with coins or by viewing an ad from a sponsor. The revenue lines are about equal, and most importantly, the publisher is not turning anyone away. Advertisers love this model, as engagement levels are higher and consumers associate the brands with adding value to their media experience.

Dave Madden is executive vice president of games media company WildTangent, which operates a fast-growing online games service and the largest game ad network in the world. He also serves on the board of directors of the IAB and is its Games Committee co-chair. WildTangent is pioneering the move to value exchange advertising in the online games space through its unique BrandBoost™ platform for advertiser sponsored game sessions and virtual goods.

WildTangent Takes on Social Gaming via Madden

WildTangent Takes on Social Gaming

Hopefully the MediaWeek piece today on Dave Madden's employer (with a quote from our man) will link up -here's the text too - Nice work Dave!

WildTangent, which has built a sizable footprint in the casual game space, is making a push into the exploding world of social games with the introduction of BrandBoost, an ad offering via which advertisers can subsidize virtual goods.BrandBoost employs a tactic similar to what WildTangent has used for several years in casual games—where brands often provide free game play to users who are willing to watch a particular ad. In this case, the value exchange is for virtual items that are common to social games—i.e. weapons, power boosts or other virtual items designed to enhance game play. WildTangent has begun rolling out the BrandBoost ad placements on Sony Online Entertainment’s Free Realms games, as well as the sites Outspark.com, and OMGPOP.com. But the company is planning to announce an additional distribution deal with a major social gaming company in the coming weeks, according to Dave Madden, the firm's executive vp. Players, when visiting these games’ built-in virtual goods menus, have the option of paying for select items with real money and can select a "free” advertiser-sponsored item. In exchange, those users (who do not pay) must watch a video ad, such as the trailer for the upcoming adventure movie Percy Jackson & the Olympians: The Lightning Thief, a debut BrandBoost advertiser.Madden called WildTangent’s "ads in exchange for games/goods" tactic as “themost effective in-game ad model in the business,” because users understand up front that they are receiving something of value—and their gaming experience isn’t being interrupted.
And for developers, BrandBoost, this model helps them not only monetize their games, but also get people used to the idea of virtual good—and hopefully convert more players to paying customers. “This is an example of premium content being given out in small doses,” he said. “Game companies can dangle free stuff to get people to become buyers.”WildTangent’s core business remains distributing games on PCs (including 75 million sold globally last year) and on gaming Web properties. With BrandBoost, the hope is to conquer social gaming, which carries massive potential. “The scale of gaming on social sites is enormous,” Madden said.