Google to charge game developers 20% for Google Games?

Last week, I speculated on what Google plans to do in terms of charging for distribution on Google Games which is coming out very shortly.

Today, I spread rumors. I have heard from 3 anonymous developers in the past week that Google plans to charge 20% for micro-transactions within Google Games.

This, of course, is 10% less than Facebook and their mandatory cut of 30% for Facebook Credits. If this is the case, Google is finally being smart about games and could be successful.

Here’s why I say this. In the past, Google’s game efforts have been varied but chaotic. Google’s tendency is: give it all for free, make money on ads, and have engineers in different parts of the company do game initiatives that do not connect with each other.

Not charging developers anything may sounds great for developers but in fact, it’s bad strategy and bad for developers. By giving away your distribution for free, the distributor has no incentive to invest in creating a viable ecosystem and channel for games. Short-sided game developers may like it, but the distributor treats it as an experiment and nothing is worse than having your sole means of making money be tied to someone else’s experiment.

That’s why its good that Apple charges 30% for iTunes and that Facebook is now charging 30% for Facebook Credits. Because Apple and Facebook have skin in the game, they will help grow their distribution channels with game developers.

If Google charges 20% its smart, because it’s 10% less than what Facebook is charging as of today. Facebook has much higher distribution now, but if Google can offer a better deal, game developers will migrate over and try out Google Games when it launches.

As mentioned in my article from last week, it’s doubly smart because by actually charging a distribution fee, now Google can offer special discounts to big developers to offer them limited time exclusivity for new games which could drive huge penetration among early adopting gamers.

The big surprise from Zynga’s S1 is that there is not a special deal or discount for Facebook Credits. Zynga has to pay Facebook 30% for Credits just like everyone else, in addition to the millions it spends on advertising (maybe that is where the special deal is?)

Anyway, by charging 20%, Google can then offer a 10% deal for the first 12 months if a developer launches its social game for the first month only on Google. The devil is in the details, since the first month with social games is often beta, but you get the idea. By charging instead of giving it for free, Google has the option to make it free for special deals. This is something that Facebook is likely not to do (though they can).

If this rumor of 20% is true, it means Google is taking Games seriously, and not as some pet project for its engineers, which is why its been so plagued with social and games in the past. Time will tell if this 20% cut is true or speculation.

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