What is a flash game “sponsorship”?

A "sponsorship" can mean an almost unlimited number of things when you look at the actual licensing terms.

Click here for detailed descriptions of the terms and license types that are available

In the simplest form, a sponsorship/license means someone is paying you money to leverage your game in some way that will benefit them.

The ‘traditional sponsorship’ that was the norm throughout 2006 and 2007 was an exclusive license that covered your game anywhere it appeared on the internet. This  type of sponsorship has the following terms:

• The sponsor’s branding (logos, splash screen) is inserted into your game.
• A ‘More Games’ button is added that takes the player back to the sponsor's site.
• Often a ‘high score’ link will also take the player back to the sponsor’s site.
• You agree that ALL instances of the game that appear on the internet will contain these things (significantly limiting your ability to earn additional money from your game).
• In-game advertisements are not allowed
  (although some sponsors did allow this).

The sponsor will also want to be able to freely distribute the game to any web site. You still get credit for making the game and can submit it as *yours* to Newgrounds, Kongregate and others. Generally, you will also be able to create a link in the game credits (or menu page) that takes the person back to your personal website.

A few sites actually saw a ‘sponsorship’ as buying ALL rights to your game. Such as:
- getting your source fla and code to edit and change any way they want.
- taking credit for the game themselves.
- taking the rights to create sequels or their own derivative games from your source files.

What did you lose with a ‘traditional sponsorship’?

There is a general belief that ‘traditional’ sponsorships range in the $100 to $500 range  maybe hitting $1000. This is certainly true for many games (or for people that don't shop around) but a great game can easily get $5000-$7000 for an exclusive license.

With new ‘primary license’ sponsorships that FGL is pioneering we have gotten games with collective offers of over $20K, plus in-game ad revenue and the ability to sell future non-exclusive licenses.

 

Why would someone want to sponsor your game?  What do they get out of it?

Money of course. :)

There are certainly other motivations but this is the primary one. The traffic that a sponsored game brings to their site makes them a lot of money.  I assure you that if a sponsor offers you $X for your game they believe it will make them *considerably* more than that amount. To be fair, a sponsor has invested a lot of time in creating their site and distribution channels. They are often in a much better place to capitalize on a game than if you published it on your own website.

Should you get a sponsor for your game?

My answer to this question used to be maybe, it depends on X, Y and Z.  If you are being offered a ‘traditional sponsorship’ you have some tough choices.  Do you give up a lot of future opportunities for some guaranteed cash now? However, if you are being offered a ‘primary sponsorship’ it’s an easy decision and in almost all instances a ‘primary sponsorship’ is in your best interest.

First, it’s important to understand where money comes from in a game.  The majority of money in the flash game world comes from advertising dollars which are primarily based on traffic.

A game has four main paths to revenue.

Traffic Generation – Bringing people back to the sponsor’s (or your) website.  This is usually done by splash screens, ‘more games’ buttons and high scores.  The entire ‘traditional’ sponsorship model was based purely on this single aspect.

Direct Advertising Impressions – An in-game ad network displays ads to the player as your game loads.  This generates a direct CPM wherever the game is played.

Non-Exclusive Licenses – Developer sells site-locked versions of the game to various websites.  This can be anything from ad removal, api integration or customized versions of the game.  There are many startup companies with venture capital looking to build the next community based gaming site (club penguin, habbo hotel, etc.).  They are willing to pay good money for non-exclusive licenses where the original sponsors’ branding is removed, in-game ads are removed and an API is added to tie the game into their system.

Micro-transactions – This is still in its infancy, but many companies are working on ways where the developer can offer a ‘premium’ version of the game if the player parts with a few dollar.  Currently this isn’t publicly available but I expect it will be in the near future.  See Stormwinds 1.5 for one approach.

The ‘traditional sponsorship' model will give you a fixed sum of money and buy the Traffic Generation from your game.  The sponsor's goal is to make that money back and MORE by bringing people back to their website and showing them banner ads.  [Imagine making an investment of $2000 that earns you $75/week for the next two years.]

The main problem with this approach is it disallows the ‘Direct Advertising Impressions’ and ‘Non-Exclusive Licenses’ paths to revenue thereby significantly reducing the total value that the game is able to generate.  I imagine the Micro-Transactions would be allowed but that route doesn’t currently exist to the vast majority of developers.

FGL has pioneered a ‘primary license’ sponsorship.  This entails one sponsor buying the branding rights to your game semi-exclusively.  They basically get their branding on the general worldwide release of the game; however, you are free to sell non-exclusive licenses which remove the sponsor's branding.  All non-exclusive licenses you sell this way must be site locked to a single domain.  Basically, a successful flash game will spread to 1000s of websites (all on its own). Even if the developer sells 5-10 licenses where the branding is removed, the primary sponsor is still getting 90-95% of the total impressions.

A primary license will also allow the developer to include their own in-game ads.  This is an incredibly important direct revenue path but it also gives the developer leverage with portals that want to host the game without ads.  Many portals will pay a nominal fee simply to get the game ‘as is’ but with the ads removed.

So a primary license keeps all revenue paths open to the developer and still provides almost the same value to the sponsor that is purchasing the ‘Traffic Generation’ part of your game.  Additionally, it is possible to base the ‘Traffic Generation’ payment on the actual amount of traffic the game generates.  Typically the developer will get some guaranteed amount that is less than what the sponsor would pay as an up front lump sum for all of the traffic.  However, since the sponsor is risking less if the game fails, they are able to offer MUCH more if the game is successful.

With a ‘primary license’ there isn’t any reason to not seek sponsor(s) unless you own your own mini portal.  Note:  You might try something like Flipline did with Papa Louie , however I believe that a properly structured primary license would generate more money than the path they took.

In the past it was difficult for a developer to get these terms.  Most of the larger sponsors were not willing to change their successful (and lucrative) terms. However, with FGL it is now possible for you to easily get your game in front of a huge number of potential buyers.  As of March 20th, 2008 we have over 180 buyer accounts signed up on FGL.  If you have a great game, somebody will offer you the terms you want.  Finally, the developer is able to hold the cards in their hand!

Keep in mind that portals must also make money from these deals.  FGL works closely with the sponsors and developers to make sure that everyone wins.   A primary license enables a game to reach its full potential and actually increases the size of the ‘pie’ so that everybody can get a bigger piece.  ;)

Lastly, I wanted to quickly point out that we have several partners who are interested in purchasing non-exclusive licenses on nearly every great game.  This allows us to immediately add $500, 1000 or more on top of the primary sponsor’s offer.

Click here for advice on getting the best offers.