Will advertising set mobile games free?

Last week we saw German mobile studio HandyGames prove it was equally handy at stirring up some buzz, when the developer of games like Townsmen revealed it was to provide free ad-supported mobile games, by partnering with the specialist ad agency Greystripe.

And why not? We're used to getting free stuff supported by ads in other media: TV, newspapers, radio and our favourite pocket game sites, after all. Letting people try something for nothing gets over even the relatively small barrier of the cost of a mobile game.

But is it a viable business strategy for the people who need to make a living from making us games?

Christopher Kassulke, HandyGames' managing director, says he decided to try free ad-supported games for two reasons. Firstly, he wants more people to play his games, and reasons making them free will help.

But Kassulke also sees it as a way of reaching gamers who haven't even been able to buy HandyGames' titles, due to the limited number of games offered by any particular phone operator, and the lack of awareness of so-called 'off-portal' game buying (the kind that happens here on Pocket Gamer if you click our "Buy It!" link).

"Mobile games are already cheap but they've not been free til now, so this will open up the 'Trial' market completely," Christopher Kassulke tells Pocket Gamer. "At the end the day, customers will be the winners."

Kassulke envisages new gamers initially putting up with adverts, but expects the more committed ones could go on to pay for games without ads. "The market will grow step by step," he says, adding that the "new kind of revenue stream will lead to better games, because the budgets of projects can go up again."

You get what you pay for

Not everyone is so sure that consumers believe in free lunches.

"In the current climate, ad-wrapped games will be pretty much limited to off-portal distribution, and while this is growing in strength daily, it's not a big audience yet," says Jim Blackhurst of Eidos, the home of Tomb Raider.

"Games such as Championship Manager are really successful for us off-portal because everyone knows that it's a premium quality game," he says. "If we wrapped it up in adverts and gave it away free, I'm not sure we would see such a profitable return from the ad revenues, plus it may damage the brand's reputation."

Blackhurst also thinks the price issue can be turned on its head. People are wary of downloading something free onto their phone, he argues, and as a result, charging for a game can be seen as indication of quality.

Is he worried that ad-supported games could damage his full-priced game download business?

"As long as off-portal distribution is in its infancy, I don't think this will have an impact," Blackhurst says. "As soon as you get the mass market buying off-portal we could see some effect, but I think that consumers will always be happy to pay for quality content – it's only five quid.

"The biggest opportunity for ad supported content is in emerging markets, but even then it could be too detrimental to perceived quality of the game to give it away free."

It ain't what you do, it's the way that you do it

Sitting somewhere in the middle of these two views is Thor Gunnarsson of ideaworks3D!, the BAFTA award winning studio behind cutting-edge games like The Sims 2 for the likes of Electronic Arts and Square Enix.

"Advertising supported gaming has of course been the critical enabler of the web-based casual gaming market, so it was only a matter of time until an equivalent model arrived for mobile games," Gunnarsson points out. "Whether this proves beneficial comes down to execution, and how advertising is presented with the game."

Such decisions include whether the in-game advertising is presented as an intro, between levels, or even alongside the gameplay. When you play a web-based game you can usually ignore the ad whilst playing, or quickly skip any pop-ups. Will the same be true for ad-supported mobile games?

"I suspect there may be hidden costs to the consumer," Gunnarsson continues, "if the advertising is dynamic– that is, pushed to the game – as the consumer would incur cost in the data download to receive the ad."

Like Jim Blackhurst, Gunnarsson doesn't think price is a big issue for gamers. The quality of the game they experience is more important: one bad game can easily put someone off downloading even a free one. (To save yourself this unhappy fate, check out our mobile Buyer's Guide – Ed).

But he also doubts that free games will impact on those publishers and phone operators selling games.

"I suspect we'll see some games offered on an ad-supported basis, with an option to receive the same game ad-free for a fee or a subscription," he says. "That model has worked well in web-based gaming, so the two should in theory co-exist well in the mobile domain."

It's up to us: the gamers and consumers

"Advertising-paid mobile games should become a valid element in the market, but they'll likely primarily be offered for second tier and more lightweight content," predicts Thor Gunnarsson.

"There may end up being two tiers to the market," agrees Blackhurst. "But the 'free' tier should always be smaller both in terms of downloads and in revenues, because people will always be happy to pay for good quality content."

'Quality Products Sell' is Blackhurst's mantra.

"You don't need to plaster ads around the game and give it away for free to make good revenue. If you do then there's something wrong with the game," he says.

But he suggests another way to boost the money recouped out of any particular game – product placement, where you see, say, a particular brand of handset used repeatedly by an in-game character.

"It's a much better approach to subsidise publishing costs – especially in the era of expensive 3D developments – with sympathetic product placement that does not devalue the game."

To conclude, it's important to note that HandyGames also sees a future in continuing to create full-priced mobile content. Some of its games, such as Townsmen 3, have after all been of the highest quality.

"It's like with the movie," says Christopher Kassulke. "You can go to the cinema to watch a movie, buy the DVD and have a nice evening at home, use your pay TV channel, or, if you wait long enough, you can see it for free on TV with advertisements."

"We think it will be another new market and they will perfectly work separately," Kassulke concludes. "In the long run, the customer will choose what they prefer.