Are videogame websites profitable?

B

border

Member
Just curious how things are going in this sector. Back in 2000-2001, everything essentially fell apart....internet advertising was paying shit, and the more popular a site was the more likely it was to go under (amusingly enough) since they had to deal with very high hosting costs. Has the economy of running a game site shifted at all? Can sites actually support having a salaried staff and big bandwidth requirements?

It seems like IGN and Gamespot are on their feet again with their subscription programs and ad schemes that are heavy to the point of invasive. I'm not sure whether they are actually turning a profit at this point though; they churn out so much content and media that subscription money might be getting eaten pretty fast.

I'm actually the most curious about the many mid-level sites that have established themselves. Places like Gaming-Age, CVG, the old Core Magazine (forget what they became), Spong, Kikizo, GameTrailers, all the mid-range Euro sites, etc. Some of these places like Kikizo and GameTrailers must have huge bandwidth bills since they are mostly popular for high quality video downloads. There's also those weird under-the-radar sites like HappyPuppy that seem to have been around for-fucking-ever even though you never hear anything about them.

Are these 2nd tier sites turning enough money to produce pay for their writers and hand profit to their managers? Are they just a labor of love or a place for aspiring game journalists to paylessly toil while they wait to make the crossover to print? Some sites are presumably sending their staff around the world, putting them up in expensive Japanese hotels, etc...for the sake of a few interviews. So has something changed? Has bandwidth gotten cheaper and net advertising gotten more valuable Or is this just another bubble, where people are running in the red for as long as they can and hoping that profit will turn up eventually?

Ziff-Davis has re-invested in a web presence with 1UP. After they've been burned so many times I would think they might be pretty cautious. So if they're in the game then it should mean that it's possible to turn a nice dollar on the web. Or maybe they just want to use it as a "break-even" promotional tool for their print magazines?

I'm sure there are plenty of people involved with sites on the board, so I would like to hear some thoughts on everything. Don't give us your balance sheet or anything, but I'd like to know a little more about the general financial/business position of the game web media.....and perhaps where you think it is headed.
 
The short answer to your question is no.

And a rhetorical question is "why, are you thinking about wasting time, energy and money chasing the impossible dream?" :lol
 
Official game sites (like for the games themselves made by the publishers) obviously aren't profitable since they are rarely updated beyond what is put up on launch. -_-;
 
I don't remember Core all that well, but I know Xengamers formed from the remains of Cloudchaser, and before that the Dojo sites (Sega Dojo, Nintendojo..), I believe. Actually, if I remember right, it may have been both of them going in together. And then that resulted in a whole lot of nothing, a message board, and Polygon magazine, which, from the few pages I saw in PDF, was probably good, but must've had a subscription base of eleven people. I would imagine even GameGo had a larger audience.

Man, I am saddened that I know shit like this.
 
Cloudchaser was SegaDojo, TendoBox, and SonySource. Not Ndojo. But yeah it became Xengamers and eventually Polygon mag, which was FANTASTIC, by the way. I was one of the eight subcsribers :)

Anyway, as for the original question, yes mid-range editorial gaming sites can be profitable on the web. I can't speak for anyone else, other than who I'm involved with, but... yeah. Its very possible.
 
If they rely entirely on advertising - no. if they have other means to make money (subscriptions to exclusives, video, etc) - usually.
 
border said:
It seems like IGN and Gamespot are on their feet again with their subscription programs and ad schemes that are heavy to the point of invasive. I'm not sure whether they are actually turning a profit at this point though; they churn out so much content and media that subscription money might be getting eaten pretty fast.
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GameSpot is turning a profit, I'm almost certain.
 
I think it's usually a labor of love...I know I'm not seeing any of that cheese. I dont think most of the people that run the second tier sites couldn't possible make enough money to live just on that. I know some of them have to be retail jerks like me on the side to pay the bills, don't front fellow retail jerks.
 
border said:
Has bandwidth gotten cheaper and net advertising gotten more valuable
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Well, advertising seems to have gotten more expensive, while at the same time becoming less effective. Effectively it might be slightly more lucrative than it was in the past, but it's only going to be a factor at the biggest sites. Bandwidth now is a hundred times cheaper than it was three or four years ago.
 
Why should print be any more profitable or higher quality than web?
The delay on news for web sites is negligible, and as a result, leaked exclusives are giving the print magazines a run for their money. There's something satisfying about going to the newsagent every week and picking up the latest copy of Famitsu, but there's no reason why that feeling can't be replaced by something else that only a website can offer, like searchable content, movies, maybe even playable demos in the future.
 
GDJustin said:
Cloudchaser was SegaDojo, TendoBox, and SonySource. Not Ndojo. But yeah it became Xengamers and eventually Polygon mag, which was FANTASTIC, by the way. I was one of the eight subcsribers :)

Anyway, as for the original question, yes mid-range editorial gaming sites can be profitable on the web. I can't speak for anyone else, other than who I'm involved with, but... yeah. Its very possible.
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The official name of Cloudchaser now is Modojo -- I post on their forums, great group of guys there (the War Room is crazy!).

Anyway, I can't imagine IGN and GameSpot paying very well at all. Newspaper journalists barely get any money, I don't see how online videogame journalists would be much better off.
 
missAran said:
The official name of Cloudchaser now is Modojo -- I post on their forums, great group of guys there (the War Room is crazy!).

Anyway, I can't imagine IGN and GameSpot paying very well at all. Newspaper journalists barely get any money, I don't see how online videogame journalists would be much better off.
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Yeah, but a lot of the people behind Cloudchaser actually run GameDAILY now.
 
The bigger sites are still not profitable.

Many gaming sites are though incl. Spong and Kikizo.

Advertising is a 10x better market than it was 3-5 years ago.
Two revenue streams that work are advertising and content syndication.

The irony of subscription models is that you can only break even with huge audiences like IGN/Gamespot, at which stage your costs are high in other cost centers like payroll.

I think IGN is "getting there" because it is aggressive and acquisitive, eg. Rottentomatoes purchase was, as far as I can make out, an excellent move.

But I am pretty sure Cnet still runs Gamespot as a loss leader which is probably also sensible when you consider where the site has potential to go.
 
KyotoMecca said:
The bigger sites are still not profitable.

But I am pretty sure Cnet still runs Gamespot as a loss leader which is probably also sensible when you consider where the site has potential to go.
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And you would be incorrect.
 
- Eurogamer Networks makes a profit (eurogamer.net and gamesindustry.biz)
- I break even on one site and profit on the other; both about equal visitors/bandwidth, but the profitable one is geared to a broader audience

It's possible if you differentiate correctly, imo. Especially among all the various fan gaming websites that just clone each other in news posts and irrelevent, poorly written reviews of the top tier games. Constantly innovating to be different is challenging, but fun, so I like to keep that up. I don't know whether anything will improve, but as I'm not betting the bank on my online business, I don't foresee it becoming a problem either.
 
Did Snowball sell IGN to someone else? Or did they just go private? Since IGN is not publically traded anymore then we can't really keep up on their financial status I guess. They say they have 200,000 subscribers....which makes for roughly 4 million in revenue a year before ad revenue. It seems reasonable to think that they might be making a profit but I don't really know how much bandwidth is costing them.

Are the mid-level sites profitable with a paid full-time staff? Kikizo and Spong have like 10 staffers listed and even if they are getting paid peanuts (let's say $30K a year), that's $300,000 a year in salary overhead. What's a good advertising rate? 10 cents a click? That means they'd need roughly 3 million clicks a year....over 8000 clicks per day. Are Spong readers that excited over a site that sells cardboard cutouts (hell, can a site that sells cardboard cutouts afford to pay out 100K+ in ad costs)? 8000 new people at Kikizo curious about MechAssault 2 everyday?
Why should print be any more profitable or higher quality than web?
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Pretty obvious when you think about it. Not as much competition in print.....anybody can start a website so the potential audience is split in 100 different ways. Meanwhile there's only a handful of multiconsole magazines.
 
Border you're totally mixed up on this subject. Ads are sold per impression, not by click. At least on "real" sites. They might have a per-click deal or two for their footer, but not skyscraper banners or anything. They're all CPM ads.

And yes, "midlevel" sites pay their writers ;)

Its not as hard to be profitable as you think. If you aren't doing millions upon millions of pageviews ign-style, you can still run lean and mean and employ 12-18 people (total for all depts., including editorial, and everyone can get paid, and the company can be healthy.
 
border said:
It seems reasonable to think that (IGN) might be making a profit but I don't really know how much bandwidth is costing them.
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An absolute fortune!!

border said:
Are the mid-level sites profitable with a paid full-time staff? Kikizo and Spong have like 10 staffers listed and even if they are getting paid peanuts (let's say $30K a year), that's $300,000 a year in salary overhead. What's a good advertising rate? 10 cents a click? That means they'd need roughly 3 million clicks a year....over 8000 clicks per day. Are Spong readers that excited over a site that sells cardboard cutouts (hell, can a site that sells cardboard cutouts afford to pay out 100K+ in ad costs)? 8000 new people at Kikizo curious about MechAssault 2 everyday?
Pretty obvious when you think about it. Not as much competition in print.....anybody can start a website so the potential audience is split in 100 different ways. Meanwhile there's only a handful of multiconsole magazines.
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Hmmm. Sorry for the "triple post" here.

While I can't openly discuss Kikizo finances here (or further to an extent Spong's since I certainly cannot speak for them despite having some insight) I can say that, while you have a good guess, you are way off the mark with both revenue and overhead estimates -- and simply, website profitability is not (and never really 'was') measured on any kind of 'clicks' basis. Like I said in my earlier post, it is not just about advertising. :)

What it IS, is a pretty complex game these days which I think many people underestimate.

Oh and by the way, I think a good PLENTY pro games journos would have something to say about "$20k" being a salary!!
 
So what exactly is considered a mid-tiered site? My site is going on five years old now, pulls down around 700K visitors per month, and has a nice mix of articles. During the site's existence I've seen plenty of game sites come and go, some the hot flavor of the month, others just sort of trudging along trying to be a me-too of Gamespot, but I've never much bothered to gauge where everyone stands on the mountain, relatively speaking.
 
Okay, if I am getting it wrong that's fine. I was under the impression that after the advertising fallout a few years ago, most places would no longer pay-out for simply serving ads -- you had to show that people were actually seeing them and clicking on them. Has that changed; was it actually the case? Are sites actually getting paid just for every person that hits their main page?

If that is the case then I could definitely see how most of these places stay in business. Getting 10,000 visits everyday shouldn't be that hard. If it's the same 10K people that are regular visitors, do you get paid everytime they visit or only for the number of unique visitors within a certain period of time (like 1 month or something)? Is there a sliding scale for repeat visitors....like maybe 10 cents the first time they download an ad, and then 2 cents each additional time?

If advertising is so lucrative now, why is it that this forum seems to be struggling for ways to pay for itself? GAF probably gets thousands upon thousands of visitors every month. Aside from bandwidth and maintenance costs, it probably runs pretty lean -- certainly there is no $300,000 payroll. The way some of you make it sound, this place should be running a profit rather than having to become an Amazon affiliate.
Oh and by the way, I think a good PLENTY pro games journos would have something to say about "$20k" being a salary!!
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Reading this, I'm not sure if you think 20-30K is a high estimate or a low one.....? I really don't have much of an idea about how much a web-based game journalist should expect to make. I just figured the cost based on a subsistence-level sort of income.

I guess it's hard to ask about salary since some of you guys might be giving yourselves away, but I was under the impression that you couldn't really make a living working for a gaming site, unless it was one of the really really big ones. It's cool to hear though, that people outside the ultra-mainstream can be full-time game journalists on the web. I thought that most of them were just doing it on the side.
So what exactly is considered a mid-tiered site?
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In my mind, pretty much anything that isn't very high-profile, very high-traffic, and lacks a subscription service. After that I suppose you would rate based mostly around traffic and design.
 
border said:
If advertising is so lucrative now, why is it that this forum seems to be struggling for ways to pay for itself? GAF probably gets thousands upon thousands of visitors every month. Aside from bandwidth and maintenance costs, it probably runs pretty lean -- certainly there is no $300,000 payroll. The way some of you make it sound, this place should be running a profit rather than having to become an Amazon affiliate.
Reading this, I'm not sure if you think 20-30K is a high estimate or a low one.....? I really don't have much of an idea about how much a web-based game journalist should expect to make. I just figured the cost based on a subsistence-level sort of income.
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As far as advertising on forums are concerned, most companies don't like to do it. It's not just how many people are visiting a site that matters, but also the quality of visitor. In a lot of advertisers minds, people that visit forums are there to read the posts, and take part in the community, and usually ignore any advertising on the page. Many advertisers suspect that even if visitors to a forum are click on an ad, it's just so that the people running the bbs get a few cents to help keep the thing running, not out of a genuine interest in the ad. These days most advertisers have it specifically written into their contract that their ads cannot be displayed in forums, hence why a place like GAF is having trouble staying afloat (frankly I think GAF's best bet is to completely re-design their content pages, and update their ad model there to support the forum).
 
Is there a site that tracks traffic around the web? I would be kind of interested to see how many of the places already mentioned are doing, but I don't want any site owners in this thread to get into a dick-waving contest ;)
 
I wouldn't trust Alexa's rankings very much. It is very easy to manipulate their stats. All you need is to get all of your staff look at 10 or so pages on your site every day with the Alexa toolbar running and it is very possible to get a ranking of 25k-30k on it.
 
Alexa works on the same principle as Nielsen TV ratings, which is to say they are mostly bullshit. It's a sampling, and a quite poor one at that since it only samples people stupid enough to install the Alexa toolbar.
 
Mr Nash said:
I wouldn't trust Alexa's rankings very much. It is very easy to manipulate their stats. All you need is to get all of your staff look at 10 or so pages on your site every day with the Alexa toolbar running and it is very possible to get a ranking of 25k-30k on it.
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when i worked for DS Advanced and GCA they asked us alot to do that lol :lol
 
IGN started turning a profit in 2003. I recall they were one of the first Web content companies to do so.

I don't believe any of the other gaming sites releases financial info.
 
Mr Nash said:
It's not just how many people are visiting a site that matters, but also the quality of visitor.
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Post of topic.

This is ultimately what it boils down to from media buyers' POV. The end. :D
 
Firms that specialize in third party auditing are about the only ones I can trust, but then their findings are kept confidencial anyway. Most Alexa-esque places have skewed, unreliable results.
 
border said:
So are there any other sites that measure traffic accurately?
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Not that is free.

Ad agencies (good ones) use managed software that measures extremely accurately by collecting global ISP data but it costs tens of thousands per month for them to use. It is the only thing that snapsots everything and everyone - by contrast stuff like Nielsen and Media Metrix only audit those who go out to get an audit.
 
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