Via: GigaOM - Inside the YouTube of Games
Thursday, June 7, 2007
Written by Blake Snow
About Kongregate
Founded in 2006 and currently in a state of heavy development, Kongregate seeks to create the leading online hub for players and game developers to meet up, play games, and operate together as a community.
Kongregate operates with an understanding of how difficult it can be for talented game developers - from the aspiring gamesmith to the independent studio - to get the recognition and compensation that they deserve. That's why Kongregate shares microtransaction and advertising revenue with contributing developers, who retain the full rights to their games.
The Market
Casual Flash games generate monthly page views in the hundreds of millions, but the game industry has been painfully slow to capitalize on this massive audience.
Jim Greer, former Technical Director at Pogo, thinks that there is a big business to be made out of casual games, and raised a million dollars for his new start-up, Kongregate, which aims to be the YouTube of games, offering free, ad-supported Flash games and an online community to increase the site’s stickiness.
What’s so YouTube about Kongregate
‘YouTube for games’ is really just the attention-getter for people who don’t know that much about the space. Kongregate is a community for web gamers and developers.Kongregate by the numbers
Page views for March were 2.4 million. That’s up from 400K in February. Registered users are in the low five figures - until recently the only incentive to register was to socialize. Now that they have persistent rewards for playing games, they’re seeing much better registration rates. Right now they have 483 games, and they’re coming in at a rate of 40-50 per week. Those are from 224 developers.
Leveraging Ad Revenue
The participation rate for YouTube is somewhere around 2%. That means 98% of the users came there to view videos, not upload them. Good games are something you play for hours. A good viral video you watch for two minutes. So they can have a lot fewer games and have plenty of entertainment value…
By default, all developers receive 25% of the ad revenue generated from their games… [But] it’s possible for a game to earn 25%, 35%, 40%, or 50% of ad revenue (depending on performance).
Unlike YouTube, users can’t share games on other sites and blogs (yet), but this is something Greer believes is “less of a blockbuster strategy than it was for video.”
So what’s it going to take for Kongregate to become the number one online game destination? “Much better virality than we have right now,” says Greer. “I’m very happy with where we’ve come in the six months since we founded the company. I think we can do a lot in the next six to twelve.”