GDC 2010: How Backflip generates $500k/month via 400 million ad impressions
Why free games are vital to build a business
At GDC 2009, Julian Farrior and the two co-founders of Backflip Studios thought they might be too late to the App Store party.
In 2010, Farrior was back to talk about how Backflip Studios has generated $2.5 million in revenue and had over 22 million game downloads within 9 and a half months.
The company launched with $145,000 in funding and now has seven full time and eight contractors
"We didn't have a ton of games experience but we had a ton of start up experience," Farrior said. "That's why we diversified in terms of revenue streams very early."
Cash from paid and free
Backflip has generated around $1 million from in-app advertising in six months, mainly thanks to the success of Paper Toss; a free game with almost 17 million downloads.
Why this number is vital for Backflip is that it generates around 400 million impressions per month.
It splits this between advertising networks such as AdMob and Quattro, and cross-promoting its paid games.
For example, in December 2009, 381,000 impressions were split with the vast majority going to external advertisers. This raised $468,000 in total revenue of which $379,000 came from ad sales, and $89,000 from the sales of paid games on the App Store.
In January however, the balance was reversed. Total sales were $336,000 split $217,000 via App Store sales and $199,000 from ad sales, because Backflip pushed more of the ads into cross-platform promotion because external yields dropped after Christmas.
"Free impressions give you a lot of flexibility in terms of how you run your business," Farrior explained.
The tasks ahead
It's not all been plain sailing however.
The company hasn't been successful in terms of using in-app purchases yet. Also its most ambitious game Harbor Havoc 3D flopped. It's been turned into a free app.
Farrior's also looking to aggressively expand the studio in terms of volume and staff numbers, with 5 - 10 games planned for quarter in 2010.
Backflip is also looking at other mobile platforms, as well as exploring the potential of social turn-based gaming on iPhone, and licensing other brands, citing Freeverse's Skee-Ball as an example.
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