Real posted quarterly earnings yesterday. Here's a little tidbit:

In 2003, RealNetworks also focused on growing the games business and saw revenue from that business, which includes subscriptions, game sales, and advertising on RealArcade®, grow 56% percent to $12.2 million, up from $7.8 million in 2002. Since launching in 2001, RealArcade has sold more than two million games and now offers more than 190 downloadable games and more than 60 web games.


Full report:
http://www.realnetworks.com/company/press/releases/2004/q403results.html

Pretty impressive though... certainly proves there is a lot of money in this market.

Pretty impressive though... certainly proves there is a lot of money in this market.

It does seem that someone's buying their wares. However, according to this article, RealNetworks' net loss was $21.5 million last year -- all told, they lost $9.3 million more than they made from games, subscriptions, and advertising, combined.

$12.2 million in subscriptions, game sales, and advertising on RealArcade in 2003... that's an absolutely stunning number.

It's stunning because it is so low.

Put this in context. In the buyout of GameHouse, they revealed that GameHouse made $10 million in revenue in 2003.

That means all of RealArcade barely made more revenue than GameHouse. And GameHouse is Real's biggest developer - meaning that some large part of that $12.2 million is counted twice, as revenue for Real and then passed through to become revenue for GameHouse.

Everybody has been talking about how important the portals are, and Real is the granddaddy of all the portals. And yet with all of its traffic, all of its subscriptions, all of its 190 games, they barely did more business than a single developer. It's $64,000 per game. For all their supposed marketing muscle, they only do $64,000 per game.

Given the games that they have, the traffic that they have, $12.2 million is... just awful. They should be doing much better than that.

not every RealArcade game is like Diamond Mine though, I have a strategy title on sale through them, and it sure doesn't make $64k a year (wish it did).

I think you're being a little hard on Real. They've been around for years struggling to turn a profit in Net businesses and then suddenly they jump into Shareware games and BAM they are making decent money.

And your revenue comparison is not very fair either... RealArcade has only been active for what, 1.5 years? $64K per game ON ALL 190 GAMES (!!) is an incredible amount of money to be making. Were YOU making that much after only a year and a half in the business? Have ALL your games sold that much?

I wish I knew how many employees worked in the RealArcade division. We know they are at least supporting all those people.

Part of the problem I see going on a Real is they appear to have a "pre-dotcom bust" business model. They are generating an incredible amount of revenue but are unable to turn a profit on that money because their first instinct seems to be to BLOAT whenever possible. Hence, going further into debt in order to acquire Game House. It's the same reason why Apple's new music service can generate a million song downloads (at .99 cents each) and still lose money. They haven't "right sized" their business model.

Were YOU making that much after only a year and a half in the business? Have ALL your games sold that much?

I'm not sure to whom you're directing this; I assume goodsol. Your question begs a point: Realnetworks received millions in investments; I would guess that goodsol has not.

I wish I knew how many employees worked in the RealArcade division.

About 696: http://www.nwfusion.com/nw200/2003/companyprofile.jsp?_tablename=nw2003&companyname='RealNetworks'

We know they are at least supporting all those people.

I don't think this necessarily equates to good business; after all, Worldcom and Enron employed thousands during their respective scandals(!)

That's 696 all up - not just the Real Arcade division!

Originally posted by KNau
It's the same reason why Apple's new music service can generate a million song downloads (at .99 cents each) and still lose money. They haven't "right sized" their business model.

Actually, what I've heard is that Apple doesn't make any money from the song downloads, but instead from the Ipod sales (their own portable music player). This seems to be working really well for them, since they use their own sound format (or at least a different one than everybody else). If somebody has purchased music from Itunes and wants to get it on a portable music player, he/she must buy the Ipod. A pretty clever business strategy.

Compare this to the other scenario: they charge a lot of money for the music to turn a profit. Do you think they would have been as succesful? I for one doubt that..

That's 696 all up - not just the Real Arcade division!

You're right, now that you mention it. I guess all I can say is that it's "probably less than the 696 employees Realnetworks had in 2002." :)

Heh, check out the 5 year chart on the stock - http://quote.money.cnn.com/quote/quote?symbols=RNWK&gt=5yr

Originally posted by goodsol


Given the games that they have, the traffic that they have, $12.2 million is... just awful. They should be doing much better than that.

Yeah,

That's a great observation. I do want to point out that 20% of their games probably make 80% of the money.

To me, Real's weakness stems on the requirement to install their arcade player. It's a piece of bloatware and most of us remember the horrible real audio/video player. So that stigma probably sits in the minds of potential consumers.

So....what those stats say is that a company that requires potential customers to install a virus on their cpu (their arcade player) still makes millions of dollars. With proper marketing and execution, an indie could probably compete.

Additionally...there is such a demand for these games, that folks will install their arcade player.

Time to take advantage.

Take care,
FinishIWannaBeA

I just have to think about the time when I installed Real Arcade and...

*shivers*

Never, ever again.

Do you guys feel that your customers (or other users that aren't programmers) feel the same about Real Arcade that you do or do you think you are more sensitive to the bloat and other problems because of your expertise?

I personally hate anything that requires typing in my email address. That's when I click on the X at the top right (or bottom left if you are on the other side of the world). :)

I think that it was BigFishGames that required me to type in my email address before I could download anything. I already get so many 'newsletters', that I rather not give it away anymore. Wam, bam thank you spam!

I was quite tempted to install RealArcade, but same thing here, who knows what that thing does on my computer and keeps track of for their 'private' market research.

Also downloading 5 Mb for something I don't even know what it does (wasn't directly clear to me on the RealArcade site) put me off immediately. It should be an option, with a clear explanation of the benefits, end of story.

There is another thing I don't like and that is games that try to connect to the Internet when you want to try it out (Platypus does this I think). I mean, how do I know *what* they are sending back to their server. (By the way, the amount of software (in general) that crashes when you press cancel is amazing).

I have already re-installed my computer several times this year, simply because I don't trust the aftermath of certain software. Call me paranoid, call me an ambulance, but that's just how I feel.

@DFG:
I quite like your site by the way, clear and trustworthy. I would buy games there. ;) Do you work on an affiliate basis or something, and out of curiosity, how do you decide what games you are going to sell and stuff?

(Platypus does this I think).

Does it?

Oh hi Anthony,

Ehhhmm, uh oh! :)

Seriously, I downloaded your game a while back ago from your website. When I ran it, it wanted to connect to the Internet, which I allowed it to do (I trusted your game, no worries). But then the second time, my girlfriend was on the phone, so I cancelled and then it crashed in "Launcher.exe" or something like that.

You tell me what's going on, I don't know...

Tell you what, just give me a yell if you want me to re-install it again and retry it. I should still have the zip file somewhere.

Just for the (official) record, I like your game, full stop, ... but it just didn't run very well on my P200, that's all! Even your game agreed, it said "slow" in the top-left corner. I did get past Level 1 though, which took 45 minutes! (I blame that entirely on my computer, by the way).

Perhaps Mike has put something in there that does that, then. Have to see what he says about it.

Hmm, yeah, I reckon a p200 would probably be pushing it! The logic shouldn't be too much of a strain - it would mostly come down to how well your graphics card can handle heaps and heaps of gimungous sprites everywhere. But even with a decent graphics card, a p200 might be pushing it... (I haven't tried it on any machine that, er, venerable)

Hmmm... Launcher.exe is a little app that checks directx versions and stuff to make sure the user has the required drivers and stuff to run the game. If they don't, it directs them to the directx site to download it.

It used to ask for an email address, and it did have a call to WinINet's InternetAttemptConnect(), but never actually sent anything. Since I stopped prompting for emails, I removed that call....

Originally posted by DFG
Do you guys feel that your customers (or other users that aren't programmers) feel the same about Real Arcade that you do or do you think you are more sensitive to the bloat and other problems because of your expertise?

I think it's getting that way. I just heard an ad on the radio this week by a local, popular computer store talking about how Spyware has become more of a problem than viruses, and how it's the leading cause of machines becoming "broken" now. And of course, the shop was offering to even take in their competors machines to clean the Spyware off them. Governments are beginning to address the issue of spyware (Utah just passed an anti-spyware law, for example) and the media following suit, this is gaining public attention.

Combine this with spam, which is rapidly becoming such a high-profile nuisance that it is threatening to ruin email COMPLETELY. I think this is starting to become a noticeable problem for consumers. I know some people who have shut off their email entirely because of spam.

Right *NOW* I think the average Joe doesn't understand how malware and spam finds them. As that understanding hits, you are going to see consumers get a bit more paranoid in the future. Right now spyware and various other bits of crap that and cruft that are "sticking" to the machine and remain running long after the original application is done (or deleted) is choking people's machines to death. Even if they don't care that all these programs can spy on their behavior - it's slowing their machines, causing crashes and errors and loss of connectivity to the Internet, and is acting as infection vectors for more malignant programs (Spyware has already been used as a worm's infection vector at least once).

I think right now places like GameSpy, Real, and the rest are going to have to work very hard and divert some serious bucks in the future to maintaining consumer confidence. They'll have to convince customers that they are "nice guys" and are somehow worthy of squatting on a portion of everybody's computer resources indefinitely.

Originally posted by KoekTromL
I think that it was BigFishGames that required me to type in my email address before I could download anything. I already get so many 'newsletters', that I rather not give it away anymore. Wam, bam thank you spam!
http://www.mailinator.com :)

Originally posted by Pyabo
I wish I knew how many employees worked in the RealArcade division. We know they are at least supporting all those people.

The Games devision at Real has less than 100 employees

Originally posted by Mike Boeh
Hmmm... Launcher.exe is a little app that checks directx versions and stuff to make sure the user has the required drivers and stuff to run the game. If they don't, it directs them to the directx site to download it.

It used to ask for an email address, and it did have a call to WinINet's InternetAttemptConnect(), but never actually sent anything. Since I stopped prompting for emails, I removed that call....

Ah, is that what it is (or could be anyway). I think it is well meant, but for me gave the wrong impression, because I couldn't see what was going on. Maybe put some sort of message on the screen asking for internet access. Also, at the time I would have been running DX 9.0b.

Norton Anti Virus does something like this too, when all the services start. Even before I get the windows login box, it already comes up with the "Connect" dialogs. Pressing cancel for about 2 minutes (it just keeps popping back up), I once even got the blue screen of death. I had no idea *what* it was doing and needed the Internet for (updates I am sure, but still).

By the way, in Z-Ball there was another thing about DirectX, it said I needed a newer version (had just re-formatted my computer, so was bang on there) and just as I was reaching for my DirectX CD-Rom it said "Press OK to go to microsoft.com/directx" or something like that. Maybe it is possible to change that into a "Yes/No" box, in case my girlfriend is on the phone again. :)

Having said all that, I am probably the only person in the world, that would have encountered that. But I personally like to stay in charge when it involves Internet access.

To extend a bit on this thread and the use of Internet and RealArcade: Generally anything that demands my email address doesn't get downloaded unless I know who it is from (but mailinator sounds *really* good). I have several email accounts already and I generally discard them if I start getting too much spam (thank god for hotmail). RealArcade looks too much like SpyWare to me, so that's another no.

Also, and this is a bit of a side issue, I generally do not download large games (say over 10 Mb) because of the time involved and the risk if it doesn't start. For instance, I downloaded a recent game from this website for a laugh and after 3 hrs and 39 minutes all I got was a message box saying "D3D_NODEVICE" (which it didn't say in the requirements). Great! Must be some amazing 2D alpha blending...

And oh yeah, anything that does a pop under or above, gets killed immediately. And, if I ever see those smiley adds again... Grrr!

So for me:
< 2.5 Mb, yep I'll give it a try
2.5 Mb - 5 Mb, if it looks really good or interesting
> 10 Mb, no unless it is Ricochet Lost Worlds and everybody keeps talking about it

Please take this message with a bit of salt (and pepper), it's just years of frustration working with a 14k4, that's all! It is also a reminder for developers to test, test and test on all platforms. The amount of crashes I get from games during init, let alone the poor handling (if any) of alt-tabs...

To Anthony: I have ordered a P4 now so I can play your game. Enough is enough! ;)

P200's are great for development though, because you IMMEDIATELY become aware of performance problems. Compiling, on the other hand, is not so good. :( Fortunately, the VI editor works quite well for me... :)

Originally posted by goodsol
And yet with all of its traffic, all of its subscriptions, all of its 190 games, they barely did more business than a single developer. It's $64,000 per game.

Originally posted by FinishIWannaBeA
I do want to point out that 20% of their games probably make 80% of the money.

It may be more like 5% or 10% of the games make 80% or 90% of the money.

I love it when people post hard numbers. Thanks for the info James. And congrats on a successful product.

Anyway congrats on your successful game.
Just a question: why you aren't trying to selling it yourself since you have such a high quality game? it wouldn't be better in the long run?

Originally posted by Jack_Norton
Just a question: why you aren't trying to selling it yourself since you have such a high quality game? it wouldn't be better in the long run?

I think he is (http://arcade.reflexive.com/gamelist.aspx).

I was speaking of sales on Real Networks/Real Arcade. The game is also available through other affiliates/portals and we do sell it direct as well.

James, I'm wondering how Reflexive Arcade is doing in comparison with Real of BFG...

I was speaking of sales on Real Networks/Real Arcade. The game is also available through other affiliates/portals and we do sell it direct as well.
Ha ok, sorry :D

James, I'm wondering how Reflexive Arcade is doing in comparison with Real of BFG...
lol, you guys want to know everything about him? ;)

It is too early to tell how many copies of Ricochet Lost Worlds have sold on most of the other web sites. I am amazed at the poor or non existent real time sales reporting system available from most “publishers”/ “retailers” (or whatever you want to call the web sites that sell my game using their own purchasing/DRM system.) I have no idea how many copies are sold on most sites (including Big Fish Games) until I get the royalty report a month after the end of the month. It will be the end of June or beginning of July before I find your how many sold in early May. If I ask them for an update on how sales are doing they usually reply within a day with an estimate. So far I don’t have any such estimates.

Originally posted by Jack_Norton
lol, you guys want to know everything about him? ;)

Yeah, the fact James gave out those numbers is encouraging :D

Thank you James sooo much.

Originally posted by James C. Smith
It may be more like 5% or 10% of the games make 80% or 90% of the money.

Good ole 80/20 rule, or perhaps even 90/10. Just about how it works here.

its always refreshing and inspiring to see figures like this. Its great to know that a game like rebound can be so successfull, and presumably highly profitable (no idea what the development costs would have been). Its sales figures like that that make me relaise that agonising over spending $2-300 on art here and there is kinda silly. Not that spending == quality of course.
The ting about rebound is, a lot of people recognise the gameplay and know how to play before they even downlaod it (at least the basic idea). With my games that isn't the case, but I'm not sure whether my problem is getting the initial exposure and download, or converting that download to a sale.
For the record I still have starlines INC on real and I sell on average maybe 4 or 5 a week. Im one of the lowly 95% ;)

Hey James,

What percentage of buyers are women? I have a hypothesis....

Originally posted by DFG
What percentage of buyers are women? I have a hypothesis....

Are we still talking about Real Networks? Do you mean what percent of all of Real’s customers are women, or what percent of the people who purchased RLW from Real, or what percent of the people who purchased RLW from all distributors?

I guess it hardly matters which question you had since the only answer I have is I mostly don’t know. But I do know that Real Networks said back in Febuary of 2002 that 57% of their gamers appear to be are WOMEN.

For Ricochet Lost Worlds in general (including other distributors) I would assume that at least half the customers are women.

Sorry about the vagueness - I was talking about Ricochet in general.

I was wondering how much creative elements influence gender of players (Was comparing Lost Worlds to Magic Ball for instance). My assumption is that it does, just wondering how much.

I am sure the graphics and sounds in Ricochet appeal to men more than women. We are often accused of making “boy” art. What can I say... we are a bunch of boys. I am sure Magic Ball has a higher percentage of woman players than Ricochet does. But I don’t want to force my artists to make a style of art that is not natural for them. How will they know if it is any good if they are trying to make it appeal to someone else? (attempting to bring the threat back to the original point) Even tough real has made a lot of money off of many casual female gamers, they still sell plenty of copies of the male oriented style of Ricochet/Rebound.

Heh, probably more of a discussion for another thread, it was just a curiousity actually.


An associate of mine tested a creative change to a website (all content remained the same) and conversion rate improved by 30%. Just an interesting study in how much a look can influence. Yet I know some webmasters that swear that ugly sells

You guys do very fine art, no matter who you are catering to.

This thread has gone seriously astray and we won't let you take it back! ;)

Originally posted by cliffski
its always refreshing and inspiring to see figures like this. Its great to know that a game like rebound can be so successful

I am glad you find that inspirational. My point was not how successful Rebound was, I was just trying to give people an idea of how big (or small) Real Arcade is. I don’t think it is uncommon for them to sell one thousand units per day of a single game when one of their best selling games is first released. I don’t really know how that compares to other distributes because I have never had prominent placement of any of my games on other sites. And I don’t know how common this truly is for Real Arcade. Most people are not willing to share any real numbers. (no pun intended)