NGS 2017 Kajaani Finland Talk - The business models of funding educational, learning and Serious games , October 2017

1. Greedy or Not?
Making a Living out of Serious games
By Tsahi Liberman
OR, how to change the world and live to tell the tale

2. HI! I’m TSAHI!

3. Let’s Start with a quick Head Count

5. Srsly?
A Serious Game is a game designed for a primary purpose other than
pure entertainment.
The "serious" adjective is generally prepended to refer to video
games used by industries like defense, education, scientific exploration,
health care, emergency management, city planning, engineering, and
politics.

6. History of Funding
• Given for FREE or for internal use
• Growing budgets -> growing demand for funding
• The predominant model :"work-for-hire“ & “single-use efforts”
• Problem #1: Didn’t leverage on economies of scale.
• Problem #2: Early adopters had focused heavily on advances in
design, pedagogy, and technology and sparingly on business
development models.

7. Serious Games are a Fast Growing Market
According to Ambient Insight LLC recent report "2013-2018 North
America Mobile Edugame Market,", the revenues for Mobile
Educational Serious Games in North America shall spike to 410.27M
USD by 2018, which translates into a five-year compound annual
growth rate (CAGR) of 12.5%

8. Transition from B2B -> B2C
• Serious games were mainly B2B oriented
• Now: Majority of buyers - Consumers
• Purchases divide into two (main):
• math and language learning for young children (targeting parents through a
B2C model)
• brain trainers and brain fitness apps for elders.
• capture kids’ free time rather than build games for the classroom

9. • Donations
• Grants
• Kickstarter / Fig / Patreon
• Pay as you consume content, Pay by Skill

10. • INITIAL FUNDING
• DURING & POST DEVELOPMENT FUNDING

12. INITIAL FUNDING

13. Venture Capital
• What's your Unique Edge?
• VC don’t understand the serious games market
• Do you have a patent? Probably not.
• VC wants an EXIT PLANNING
• Entrepreneurs and not a game focus
• Stars Team Wanted!

14. Angels
• Angels risk their own private money
• Strong business plan and good ROI
• On contrary to VCs, if they have a good connection with you or
your product they can decide to invest.

15. So?
Private investments are a minor way of funding due to game quality
fluctuation, lack of entertainment perspective and cultural differences
between the West and Asia.

16. Self Funded / Client Funding
• Work on other projects to fund the game
• Invest your own funds, loans
• Friends and Family
• Huge risk + divert you from concentrating in your game

17. DURING DEVELOPMENT FUNDING

18. EU FUNDING
For the first time, the Commission has introduced a specific topic,
Gaming and Gamification Technologies, dedicated only for games,
where 17M Euro is estimated to be made available for the developers
of Serious Games.

19. • Accelerating market introduction of ICT solutions for Health, Well-Being
and Ageing Well
50K EUR phase1, 0.5-2.5M EUR phase2
• How to tackle the childhood obesity epidemic?
Up to 10M EUR
• Personalized coaching for well-being and care of people as they age
3-4M EUR
EU FUNDING – Horizon2020

20. MacArthur Foundation
• Supports creative people, effective institutions, and influential
networks building a more just, verdant, and peaceful world.
• over-incarceration, global climate change, nuclear risk, and
significantly increasing financial capital for the social sector.
• The Foundation awards the majority of its grants to organizations
identified by its staff. Each year they also award grants to individuals
through the MacArthur Fellows program.
• https://www.macfound.org/info-grantseekers/

21. Supported Companies
• Institute of Play
• The Learning Games Network
• Game Changer Chicago Design Lab
• iCivics

22. Bill & Melinda Gates Foundation
• https://www.gatesfoundation.org/How-We-Work/General-
Information/Grant-Opportunities
“For each issue we work on, we fund innovative ideas that could help
remove these barriers: new techniques to help farmers in developing
countries grow more food and earn more money; new tools to prevent
and treat deadly diseases; new methods to help students and teachers
in the classroom”

23. Supported Companies
• 2018 Special Olympics USA Games (250K USD)
• Design without Borders Uganda Ltd. (100K USD)
• GameDesk Inc (500K USD)
• Learning Games Network (1M+ USD)
• Filament Games inc (25K USD)

24. Governmental Funding
• Tekes (Finland)
• Chief Scientist / Innovation Authority (Israel)
• Nasscom & Netherlands Government – Promote in India
• Korean Government Invest 63M USD into Serious games (2009)
• UKTI helps Serious Games set up in Singapore

25. Grants 101 – TIP #1
Many developers are small, and under-equipped to handle the
paperwork, the requirements, and the workload of many grants.
Use local partners who you can meet with regularly and develop strong
working relationships. These can be university professors, community
non-profits, hospital-based researchers, and more.
Mixture of Funding solutions – don’t depend only on grant money

26. TIP #2
Go to Events!
• Games for Health Conference
• Games for Change
• Serious Play
• Games, Learning & Society @ University of Wisconsin
Meet program managers, recipients of grants, educational funders,
governmental grants like NEH, NSF, NIH

27. TIP #3
Most grant programs are not interested in games per-se. They are
interested in solving problems in their portfolio, which they may be
convinced can be done with a game.
To win at this game, read the grant opportunity, start with a blank
paper, your experience, and ingenuity, and how you aim to solve the
problem.

28. TIP #4
Many grants are research-based and don't fund development to large
levels of funding. Increasingly the shift is to mobile-based games, cross-
platform solutions, and social-network capable games
Another strategy here is to look ahead as to the real edgier parts of the
industry where government interest/research interest is likely to be.

29. TIP #5
• Most grant applications are huge pieces of work requiring strong
writing and planning to achieve. They are often supported on spec
and include preparing specially designed bios, letters of support, and
well cited workups of the idea and solution.
• Around a month of work 1-3 people

30. TIP #6
• The people who succeed at winning grants are well read across a
number of domains. They're engaged in civic discussion and their
communities, and they're not just expert about their specific field.
• Play! and be aware of many types of games. Most grant work is not
about applying the mainstream genres of games but often is about
matching more obscure game design and production patterns to the
very specific problem presented in the grant.

32. Crowdfunding - Kickstarter
• All or Nothing funding model
• Failed to fund a game can effect future sales and interest
• Fee: 5% of the total funds raised, 3% for credit card processing.
• Campaign, rewards, videos, texts, recruiting celebs = $$$

33. Crowdfunding - IndieGogo
• You can access your pledged funding even if you haven't reached your
goal, though the associated fees are higher.
• Fee: 5% of the total funds raised
• Less Exposure - averages nearly 4 times less traffic per day.
• Campaign, rewards, videos, texts, recruiting celebs = $$$

34. Crowdfunding - Fig
The goal of Fig is to allow not only the traditional backing of a video game
as with normal crowdfunding, but to also enable those that can invest in a
game's development to receive a portion of the game's profits once it is
released, in addition to other typical rewards that crowdfunded projects
allow

35. Crowdfunding - Fundable
• Fundable offers the ability to choose between offering rewards or an
equity stake. The site offers excellent support in preparing and
launching a campaign, and it boasts a large network of accredited
investors.
• However, it's best used for serious efforts since there's a $179
monthly fee and a 3.5% processing fee for each transaction.

36. Summary
Crowdfunding doesn't eliminate financial risk. You may be less exposed
to up-front risk, but you'll still be responsible for repaying your backers,
paying the various taxes and fees incurred during the process and
covering the platform's fees as well.
If your product fails to bring in the revenue you expected, these fees
can very quickly put you in the red.

37. Gaming Accelerators / Incubators
• http://vsgi.gmu.edu/
• https://www.investutrecht.com/en/gaming
• http://www.executionlabs.com/
• Soon! Tiltan Game Accelerator (Israel)

38. POST DEVELOPMENT FUNDING

40. Humble Bundle
• Buy a game from a vast selection
• Many “bundles” included per theme, limited time
• Select your charity type
• You buy more -> you pay more -> you donate more
• Not a “Shady” charity donation
• After deductions for payment processor fees (typically around 5%)
the net revenue is split 3 ways: 75% to developers, 10% to charity and
15% to Humble Bundle

41. F2P Model
• The game is free
• Revenue from IAP, BUT – only 2% spend money
• Will people pay for serious games?
• Children : Be careful of ads and Rewarded Videos content (COPPA)
• Careful not to hurt your game “message” with aggressive IAP Strategy

42. Corporate Sponsorship (Brands)
• One of the trickiest of funding sources to use due to ethical concerns
about marketing to kids. Moreover, game developers need to obey
the Children’s Online Privacy Protection Act (COPPA)
• Product placement may be less intrusive but sharp-eyed parents may
still have complaints even if the educational content is unchanged.
• When approaching corporate sponsors, think about what would be
compatible with the game

43. Competitions and Awards
• Casual Connect Indie Prize http://indieprize.org/kyiv2017/
• IMGA mobile game awards http://www.imgawards.com/
• TIGA - https://tiga.org/awards
• https://thegdwc.com/ - The Game Developers World Championship
• Intel Level Up Competition
https://software.intel.com/sites/campaigns/levelup2017/
• Microsoft “Dream Build Play”
https://blogs.msdn.microsoft.com/uk_faculty_connection/2017/06/2
9/microsoft-dream-build-play-game-development-competition-
200000-in-prizes/

44. Universities & School Licensing
• The holy grail is the school-to-home connection.
• Its important to remember, that what a teacher needs is different
than what a parent wants.

45. SERIOUS GAMES EXAMPLES

46. Land of Venn

57. FAMOUS LAST WORDS?

58. “Distribution is often described as the problem, but it is not that, but
rather ‘discovery and differentiation’ that are the major problem plaguing
the app market.
Producers can easily sell games, but developing consumer loyalty and
finding ways to make their game different than others and worth
finding in a crowded marketplace is the real challenge.
We don’t want users. We don’t want customers. We want fans. People we
can interact with and people we can cater to.
Kids don’t go home and say, ‘I learned something, so I want to play again.’
It has to be the best game ever”
— Lauri Järvilehto, Lightneer CEO

59. ”….as the success of all
games, serious or not, is
clearly based on how
entertaining they are, we
hope that in the upcoming
calls artificial divisions
between ‘entertaining’ and
‘serious’ games will be
abandoned.”
The Chairman of The European Games
Developer Federation
(EGDF), Guillaume de Fondaumière

60. “…Quite often the
commercial exploitation of
research outcomes is a huge
challenge due to the high
barriers of entry to markets
and the lack of interest on
investing in new and
innovative solutions.”
Koopee Hiltunen, the
director of Neogames,
the hub Finnish
Games industry

62. STAY SCHWIFTY!
mr.liberman@gmail.com