Tuesday, October 26, 2010

The Dreary Business of Video Game Websites

This entry isn't going to be about video games, but it is going to be about running video game web sites. Feel free to skip this if you don't give a toss!

A few weeks back, Kieron Gillen announced he was leaving games journalism over at Rocks Paper Shotgun. His blog is a bit more bitter, and echoes many of the posts you've probably seen Sketcz make about the state of monetary compenstation - which is to say, bleak. The only part which sends up little ! marks is him saying about how games journalists are not valued because it's a crowded field and anyone can take their place, and therefore they are not paid a whole lot. That's absolutely not wrong, but the generally crappy pay for journalism is not limited to games writing. I know someone who used to work for a (now defunct) niche media magazine who made something like 22k a year. A friend of mine works as a report for a newspaper - an actual journalist, basically! - and makes barely more than a retail cashier.

Just last week, UGO announced more layoffs, including some fantastic writers at 1Up, including Scott Sharkey, Ray Barnholt and Richard Li. All were stand-up influences on the site, and the place will undoubtedly be worse off for it. But businesses are businesses, and sometimes things like this are necessary to keep afloat.

The written word is not nearly valued as much as it was - it's a rough field. I would love to be able to pay contributors for the site - hell, I'd love to quit my day job and do it full time - but as an ad-supported site it doesn't bring in remotely enough cash. This brings up Harlan Ellison's infamous "pay the writer" rant, which you can see below:

It's a fantastic point, which should be obvious (although a bit overblown, because this is Harlan Ellison we are talking about), but it's missing one incredibly crucial point - you can argue about paying the writer all you want, but who's going to pay the person who pays the writer?

In the old days, people bought newspapers and magazines - now people just browse the internet and expect everything for free. With that source of revenue gone, the only cash influx comes from advertising. Which sucks even more now, thanks to the way ads are tracked. Many affiliate ads are based around commission - that is, if a user clicks on an ad for a retail site and buys something from them, we get a fraction of the cut. If they visit and don't buy anything, we don't get anything. Never mind that it's still a blinking thing on our site, taking up screen real estate, promoting their brand...that doesn't count. This is one of the big differences between the old days. Magazines could sell ad space based on their circulation and demographics. When it got into the hands of the reader, it didn't matter if the ad actually affected them, because there was no way to actually track it. Now, there is, and thus the payouts to the media is far less.

Over the past few months, I tried putting up Gamefly and GameTap ads. They have brought in precisely nothing. Play Asia I've had for longer, and they are kind enough to pay approximately 28 cents per month to host banners, with payments occasionally spiking for the very few people that place orders through them. Our most succussful affiliates is with Good Old Games, who, if someone signs up for the service through one of our affiliate links, we get a small cut of each purchase they made for a year. The payout is not substantial, but it is also much larger than $0.00.

Google Adsense works a bit differently, in that will actually pay you, to an extent, based on views, like they should. Their actual formula is shrouded in mystery, because (A) it's a trade secret, and (B) they don't want unscrupulous webmasters exploting the system. When I first started using Adsense, the payouts were pretty phenomonal the first few months, but they quickly dived, and then hit the bottom over the past two years when the economy collapsed. They've been picking up all around the boards, for both myself and others.

Interestingly enough, I found this Google Adsense Revenue. For an experiment, I plugged in my site traffic in, used the default category of "technology", and my jaw dropped. The yearly result was in the low five figures, which the site sure has hell doesn't even come close to. Then I ran it again in the "gaming" category, and it was actually pretty close to what the sites make. Without getting into specifics, it was a tiny fraction of the total amount as the "technology" number. (It also overestimated my click-through rate at 1.5%, when the reality is closer to 0.5%. It doesn't seem to work at the moment, as it keeps mistaking "gaming" for "sports".)

So why is this, exactly? Why do ads for "technology" pay so much more than "games"? Whatever the exact reason, the basic is that some advertisers just don't pay nearly as much as others. Hence, it's much tougher for a video game oriented site to make money. Obviously, professional sites can exist to some capacity because they have actual ad deals that pay significantly more than Google ads. They are also specifically targeted and bought. Places like 1Up and IGN can do that, where I cannot. How much that actually is, who knows.

At any rate, I would love to be able to grow the site a bit by getting some more income and recruiting some more talent to work on a wider variety of topics, but it's clear so far that it can't be accomplished by advertisements alone. I drafted a redesign that displayed more ads, which you can see in the new Nanashi no Game article, but I'm not entirely happy with it and I'm not convinced the visual eyesore it creates is going to actually going to increase revenue, because, again, they'll all commission-based affiliates that haven't worked out well so far. I'm working on making some of the ads more relevent, in linking to Amazon or eBay ads, which should hopefully work better, and at least have some context.

I don't entirely know what the point of all of this was, but if you're working on your own video game site and are trying to monetize it, hopefully this will be of some use to you. If that's you, then I wish you luck!


  1. The Internet has made everything worthless.

  2. I also think having amazon & ebay ads is better than random ads.

  3. I thought this site was a labor of love.

  4. Most of the problems you mentioned have already lead to closures in gaming and non-gaming print magazines. If Newsweek is having trouble staying afloat, what chance do EGM and Gamefan have? Newspapers are consolidating as well. The 1UP firings are a sign that the woes of print journalism are not isolated.

    Some people have proposed that media might needed to be supported by government funding to stay afloat. NPR runs partially through membership costs and partially through government funding. Do you think the government would ever be willing to fund print or Internet publications? It seems unlikely to occur, especially for games journalism, but it might keep the industry from imploding further.

  5. Put a Donate tab on the main site and forum. I love this site, it is a treasure trove of obscure information for my favorite hobby outside of drinking. Keep up the good work, and I promise I will donate some funds if you implement this idea.

  6. If the site wasn't a labor of love, it would have been shut down about 6 years ago (if it even would have been created in the first place).

    Another thing with ads is that now more and more people use ad blockers. If I activate mine on this site, everything except GOG and ebay is gone (and it would be easy to make those disappear manually, too).

  7. It sounds to me like the ad model isn't going to last. What will replace it?

  8. Yeah the commission model is absurd and betrays a total lack of understanding of how advertising works. Someone could see an ad for Gametap on your site and think "yeah, that sounds good but I have to check my budget" That might put it in mind, and then if they come back and sign up for the service they may well visit the site directly without using your click-thru or coupon code or whatever. And the commission model also doesn't account for word of mouth... Someone could see an ad for Gametap and recommend it to someone else who they think might like it, and that person wouldn't likely use the click-thru. Not all advertising is about getting people to buy stuff right away, it's often more about planting seeds...

  9. Sites that get lots and lots of traffic can make money through ads, which accounts for the rise of yellow journalism through the likes of Kotaku and other Gawker Media sites. The lowest common denominator trash draws a lot of clicks and is great for business, though bad for...culture, I guess. Hopefully sites with more scruples will continue to exist, but who knows what kind of business model will actually work, because no one's really figured that out.

  10. People used to throw so much money at the internet. The value of ad impressions used to be ridiculous:

    My brother launched a website in the spring of 2000, his freshman year of college. He made a chatroom that required users to manually refresh the text by clicking a button. He included a banner ad that changed every time you refreshed the text, and he got paid a couple of cents for every single ad impression. (That's just for loading the ad, not clicking it!) By the summer, he was making a solid five figures and decided to drop out and focus on his website full-time. Early in the fall, the first big dot-com bubble burst. He spent the year struggling to make any substantial profit, and returned to college in 2001.