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Think Big. Move Fast.

Yesterday I put up a post claiming that Web 2.0 has been driven by variablization:

    Variablized Development Costs
    Variablized Content Costs
    Variablized Marketing Costs
    Variablized Distribution Costs
    Variablized Monetization

It struck me that many of the same dynamics are now starting to apply to the game industry as well.

Variablized Development Costs

While development costs haven’t become variable across the board, web based games are definitely becoming cheaper and easier to build. As new rich media technologies improve (Flash, Silverlight etc), development tools improve (Flex, Laszlo, etc), and reusable game engines become more widespread, it gets easier to for people to build games.

Variablized Content Costs

Just as with the web, user generated content allows for models with dramatically lower and more variable content creation costs. Gaia, Habbo, Second Life and other casual immersive worlds, while not really games, let users create content for each other, and in fact let users BE content for each other. PvP games such as Scrabulous and the Campaign Game are another way that “content” costs are variablized – instead of having to create more levels, a game becomes replayable because against live opponents each game plays differently.

Variablized Marketing Costs

Again, just as with the web, search marketing has created a completely variable channel for player acquisition. Web games and downloadable PC games benefit from this; console games still need to rely on more traditional marketing means.

Variablized Distribution Costs

The two mechanisms that have enabled variable/free distribution online are social network platforms and virality. We’re starting to see games taking advantage of both of these mechanisms, including Attack!, Warbook and Kings of Chaos.

Variablized Monetization

Ad networks and contextual advertising have driven the variable monetization model for web 2.0 companies. We’re still very early in the game for in game advertising networks, but Google is making its first forays in in-game-advertising, and startups like Mochi and Neoedge are also taking up the challenge. Kongregate is building a destination for online casual games where they share ad revenue with independent game designers, a more centralized approach to making monetization variable for game designers.

The other interesting emerging direction for monetization has been free-to-play games with digital goods. Games like Three Ring‘s Puzzle Pirates and K2‘s Knight Online have demonstrated the viability of this model.

Conclusion

I think we’re going to see an explosion in gaming over the next few years comparable to the web 2.0 phenomena; I plan on exploring this topic further over the next few weeks.