Thursday, May 24, 2007

Making Money off Free Software Games?

(I decided to repost this article after I deleted it. Sorry for RSS readers who come to find it while missing)

For some of us, Free softwares are just nice things that they can do without. They only care about it if it is better than the alternative softwares either proprietary or Free. Some of these people promote Free softwares for only pragmatic reasons. But for some of us, we really do believe in the ideal of the four freedom that every software users should have.

The reality is, the ideal of Free softwares is something some of us live by. The pragmatic values of Free softwares are nice, but however they are only secondary. The morality and ethical concerns come first.

Sometime, when we're trying to make a living, we're forced to write proprietary softwares. To write proprietary softwares is to violate our ethical standard. To not write these softwares is to face starvation. It is a dilemma.

The solution to the dilemma is to try to make a living on Free softwares and make it viable by whatever mean. So we are no longer forced to write these type of softwares every again.

So How do You Make a Living Off Writing Free software Games?

The first thing that probably come into people's mind is RedHat and tech support. Some people might be asking "How can you do tech support with video games?"

Unless, you run MMORPG servers, you're out of luck with that business model.

Some people, who are skeptical of this idea, thinks this is not viable at all. There never been a single commercial Free software game that are Free softwares from the very beginning. This is true. However, it is because nobody even try to make a living off writing Free software games. Hackers are probably just not interested in games that much.

Just because nobody try doesn't mean that making money off Free software games for a living is impossible. It also doesn't mean that you will never get rich from writing Free softwares.

One usual way of making money from softwares is selling the softwares. This is the business model of many software vendors. Normally, these vendors use the intellectual monopoly granted by the government such as copyright to control others' abilities to distribute or modify their own copies of the software. This is usually backed by a threat of lawsuit and hefty payment. It also created artifical scarcity.

Free software programmers give up these right in exchange for the Four Freedom that users of their softwares will have(As defined by Richard Matthew Stallman). Many would have chosen license like GPL that will guarantee the four freedom(which is ironically using the same intellectual monopoly granting law). Due to our inability to control people's copies, it is harder for us to sell Free softwares. It force us to have to look at other business models.

For a business model based on entirely Free softwares to succeed in the long term, I believe you need two essential things. For the first ingredient, you need lot of good game(s) that people like to play. the second ingredient is web traffic(or customers). Without traffic, you're doomed to make no money at all.

Another essential attribute of a successful business model, is the capitalization of scarce resources. They don't try to monetize of plentiful, practically unlimited resources. Instead, it is better to encourage these resources to spread around. What might actually happen is make the scarce resources even scarcer. In that sense, instead of trying to sell Free softwares, you could encourage everyone to spread the softwares. This is much like the various SpreadFirefox marketing campaign. Then you could try to sell scarce resources at a price.

These scarce resources could be good multiplayer servers, t-shirts, or even ads space.

So how You Would Actually Do These Things in Practice?

Selling Ads on Your Website:

This is the business model of many websites. Website with a lot of traffic are scarce, so the higher traffic you receive mean that your website is more valuable. For example, if you have a website just like I do, but with higher traffic, your website would be sought after by a lot of people. The higher your traffic, the higher price you can set.

Selling Time:

You could ask your fans to donate a certain amount of money in exchange for the development of certain games. Another idea is the auction system. You could set up an auction and different options(Games to develop) that your fans can bid on. If you have rabid fans for several games and they each really want a new version of the game they would try to outbid each other. Since your time is limited, you can only do so many things at once. By fans doing the auction, they decided what games are the most important to develop and how much money they're willing to fork over.

First Sales:

This business model require you not to release the source code or the executable to the public until the sale is done. In this model, you ask for a certain amount of money in order for a game to be released. The public would then collectively donate the money that you asked for. The faster they donate, the sooner a new game will be released. If they are impatient, you'll gain all the profits pretty fast. However, slower donation means you have to wait. A spin on the idea is to increase the donation price periodically. They could be one dollars every five day. This way, fans will even have more incentive to donate in a shorter amount of time. Slower donation mean the price will be even higher, which cause a delay in the release of a video game. Fans don't like the idea of having their game delayed by several weeks. This is essentially royalty fees, just payment up front.

Selling Hosting:

For the business model, you will be selling multiplayer server hosting for your game. The idea is you'll be using your knowledge in the administration of game servers. Since you wrote the server codebase, you know how to use it more than anyone else. You could do better job of doing special additions and other features for your customers' server. Even if the server's license require every customers to release their source code, you still provide a very special service that nobody else can(Save for someone who also know every inch of the codebase) like fix new bugs. You can also offer bandwidth upgrade, space upgrade, and other various additions.

Run your own pay-to-play server:

To run your own pay-to-play server is probably one of the most lucrative business model of all. If you can get 500 people to pay you 240 dollars each year (20 dollars each month), you make 110,000 dollars each year minus expenses. This model is mostly assuming that you run an MMORPG server or something equivalent to it. A game of this type probably one of the most challenging and ambitious project, if not the most. The risk is high, but the reward could be huge.

Selling tangible items:

You might as well be selling a package of your softwares with assorted bonuses such as pretty cover art, a manual, and maybe a signature from you. Some fans, rather then donate, prefer to get something more tangible for their money. It work well for some webcomics such as Megatokyo's Megagear store. Some people sell T-shirt, others sell toys, and some sell hardware like the guys at Damn Small Linux.

Begging for Donation:

You could simply ask for donations and relies on the charity of your users. If you have a lot of traffic, such as a 500,000 people per day, it might be doable. The best way to do this method is to offer various subscription donation plans. In this way, people forget about it and continuously donate certain amount of money each month. If you can get 2,000 people to pay you 1 dollars each month, you get 24,000 dollars each year. However, if you can get them to pay you 2 dollars each, you can get 48,000 dollars each year. If you can get 500 people to pay you twenty dollars, you get 110,000 dollars each year. In this model, only maybe a few hundred or a few thousands are needed to donate to keep you going. It is really patronage on a large scale. They simply want you to produce lot and lot of good games, so they're willing to fork you some money.

Some of these business model are already tried by other people in various other area. These are not new, but they are possibilities.

Who Will Try?

Anybody who want to make a living off Free softwares instead of proprietary softwares will try.

As for an example , that would be me. I want to try. I believe strongly that you can make money off Free softwares. No proprietary softwares will be written. No contents will be left proprietary. They will all be Free.

My contents are already Free contents. So if I make a cent, I'll be one tiny step to reaching my goal(I am still waiting for an advertising service to approve my website). Beside, it would be great to be the first person on this planet who make money off writing only Free softwares games.

If there are already people who are trying to do this, I too, wish them the best luck in the world!

Happy hacking,

Kiba

9 comments:

anondeveloper said...

I'm actually working on a Commercial Straight-To-OpenSource game right now.

The plan is to release a fully functional demo version, then start a www.fundable.org fund raiser, since it is a proven, secure, uninterested 3rd Party website.

If the goal is achieved then all the artwork, engine and custom scripts are released as open source, if it doesn't the game is going to be released as commercial closed source.

I wouldn't go with any other methodology, they are not secure income and I will certainly not beg for being paid for my work.

anondeveloper said...

The fund raiser is going to be started AFTER the game is completed BTW.

Kiba said...

Good luck!

What is your website and the game you're making?

I would like to know!

Coz said...

I'm thinking of doing something similar, I want to make my first 2 commercial games as tests that you can profit from open source commercial games; I don't even expect to profit, just to prove if the model works(otherwise I'll be forced to go with closed binaries).

Let's see...

The fund raiser idea is what seems to have the most potential. Somewhat like anondevelopers, I plan to release a small game based on the source code/media that is very similar to the full game, but not actually the full game, this one would come with full source, thought it would only be a very small(less than 5%) subset of the source in the full game.

After that, I could publish videos or images of the full game, but not giving demos themselves; the idea is to use open source to build a commercial game, so if I released binaries I would be forced to give away the source.

Here is obviously where I'm stuck(obviously). I have already showed everybody what the game is like, and what they will be getting so this is not the issue. The problem now is how to get 'enough' profits? The most straightforward idea and probably what could work best is the idea of a fund raiser, since you know how much money you will get before you give the product away.

Also I think selling packages is a pretty good idea; just getting a well done cover , manual and CD, plus things like a poster, other art or even full length music(in case you cut the music for the game), player's guide and production notes could give some profits, thought I cannot estimate how much, and that's the issue.

I don't think that donations are a good idea when mixed with fund raisers.

But I want to get some new ideas; I'll have talk to some smart people to see their views.

Charlie said...

I think it is possible. Firstly, using Adsense on your website. If the game is good and your development open, you will get a lot of hits well before the game is finished. If you develop a community around the game you could generate a steady income stream from that alone although it won't be massive. But then you do things like offer a packaged version (fans will buy this) and sign up for cafepress and sell mugs and t-shirts etc.

Put it this way - UFO:AI gets a huge amount of daily hits because it's an excellent game and can sell a lot of merchandise.

The problem is people want instant income - that does not happen, you have to build it up over time, often many months before you see even a dime.

Charlie said...

I'll just add to that - if you keep producing quality open source games, you'll have several websites (& forums) and merchandise channels getting 1000s of hits a day, which could easily produce a living. The thing is, making games on your own is a daunting task and when it comes to community developed games, making money becomes a more contentious issue.

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