Gaming Guru Alex St. John on Amazon, Business Models, and the Future of Casual Games

2/6/09Follow @gthuang

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do a very good job, but we think we bring a lot of things,” said Greg Hart, Amazon’s vice president of video games and software, in an interview with Gamasutra. “Certainly trust, and the convenience aspects…are all elements of the shopping experience that will carry over to casual game downloads very well.”

But the question of the right business model is an interesting one. As St. John explains, the casual game business started with selling a game for $20. The average price has dropped to about $6 in the past five years, but the percentage of people who buy content has tripled. At the same time, he says, “Online you really don’t have to have such a crude business model…Now we give away free-trial games, we sell micro-currency. Another thing that’s big is advertising-sponsored free play. Even though there’s a recession going on, ads have moved to the Internet.”

And that’s where St. John sees casual games moving. WildTangent currently gets half its revenue from advertising, and half from customers paying for games—which makes the company different from other players. St. John says its sales are up 37 percent, year over year. The company’s gaming site had 13.3 million unique visitors in December 2008, a 74 percent increase over its 7.7 million unique visitors in December 2007, according to comScore Media Metrix.

“What you’re going to see in traditional casual games, the prices will get cheaper and cheaper,” St. John says. “Companies will have to learn advertising, or go out of business.”

In terms of the local scene, St. John says there was fiercer competition in the old days. Now some of the larger casual game companies—like PopCap, RealNetworks, Big Fish—are more established in their niches and tend to cooperate more than before. WildTangent sells advertising for PopCap, for example.

As for WildTangent itself, the company now has 85 employees and is focusing on growth. Some of the more popular games on its network are Fate, Dream Vacation Solitaire, Penguins!, and Cake Mania 2. During the current recession, says St. John, “A lot of noise and hubbub will go away, and we can just hunker down and do a great job on executing…We’re doing a lot of work in MMOs [massively multiplayer online games] and advertising models. We’ll grow a lot faster…Our business has grown during pretty harsh times.”

As we spoke, St. John said he was packing up his office—to move downstairs. He remains heavily involved with WildTangent, but adds, “I’m keeping my options open.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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