Day 2 at the Games Development Conference, filled with lots of interesting meetings and forewarnings from some who believe that the casual games downloads business may be in trouble.

1. The coolest casual games I saw at GDC this year were not download games but casual MMO’s and social games.   According to Susan Chou, CEO of Outspark, there are over 900 casual MMO’s are are coming out this year (that is right, 900!).  There are three, however, I was given the opportunity to check out at GDC that impressed me, just because, they already have millions of users.  Outspark is a games company that provides both casual MMO’s games that are popular in Asia here in the US as well as the community around them.  Their tag line is play the games, stay for the community.  Last night, Lifetime TV premiered their new casual MMO celebrity-style dress up game from Korea, roiworld, where you can dress and make up celebrity avatars.  I played it had quite a fun time dressing up Brad Pitt and Angelina Jolie.  Finally, Derrick Morton showed me his casual MMO, ourWorld, which has attracted millions of users and lets you create an avatar and play casual games you are familiar with online, such as Diner Dash, 4 Elements, and a new multiplayer pool game to name a few.   I am going to see even more casual MMO’s this week (for example, CampFu, Smallworlds), and we plan to write reviews on all of them which we will post in our Casual MMO section of Gamezebo.

2.  On the download side, I saw screen shots of great download games coming out in the upcoming months.  I also heard a lot of concern from developers about the state of casual game downloads.  There are two big concerns that I heard from a wide variety of developers, who asked to remain anonymous for fears of being “punished” by distributors (I literally heard the word "punish" multiple times).

If a developer offers their game as an exclusive to one particular web site, they get the cash and/or marketing to help guarantee that they can make their money back in developing their game, but in the process they upset every other site and end up with lower revenue shares and making less money.  If they do not offer an exclusive, they do not get marketing from anyone and risk being loss in the crowd of games and not making any money.  When I asked members of my panel at the GamesBeat conference “why developers are so upset about downloads?” the reasons given were that it was no longer a good business.  Developers are seeing lower prices, at lower margins, and a shorter tail (which means less time that the game selling online).  The result is that a lot of casual game developers are creating less PC download games and instead creating more Facebook, iPhone, Nintendo, and flash games.

To be fair, there are many great game developers I have talked to in the past few days that think that a market shake up is a good thing and that less developers created download games will actually increase the quality of games.   It’ll be interesting to see how things shape up later this year.

3.  Finally, I spoke to various companies that sell advertising in casual games: Greystripe (mobile and iPhone ads), WildTangent, and NeoEdge.  What’s interesting is that all 3 companies boasted seling ads at high rates (between $25 – 125 CPM, which, trust me, is high).  Yet, every game developer who works with ad networks to sell casual games on the PC and iPhone told me they were earning only $.01 – .02 CPM.  That’s quite a difference!