What Adobe’s new pricing for Flash means for social game developers

My jaw dropped this morning when I read the news: Adobe will begin charging a 9% revenue share on revenue above $50k for using some “premium features” in Flash Player. The new pricing goes into effect for apps launched after August 1st that use both of the following features:

  • ApplicationDomain.domainMemory
  • Stage3D.request3DContext, when using hardware acceleration

These features are used together by the Unity and Unreal engines and allow console-quality games to be played in the browser. They could also be used together inadvertently by developers rolling their own optimizations; for example, using domainMemory for code optimizations and Stage3D for rendering would also fall under the new terms.

Up until today, developers like me have assumed that, like everything else in Flash Player, these features would always be free.

So, what exactly does “9% of net revenue” mean for social game developers? In the cutthroat, thinning-margin social games business, it probably means that no one will be able to afford to use the new features. Dropping your effective LTV from $3 to $2.73, when you’re paying $2.50 to acquire that user, means you now have 54% less money to cover both marginal costs (hosting and support) and fixed costs (initial and ongoing development). That’s huge.

I suspect we’ll see a few developers give it a shot, but in the longer run this is going to push more people to HTML5 / WebGL and contribute to the eventual abandonment of Flash as a platform for social games.

I can only assume that the Flash Player team is doing this because they’ve been told they have to figure out a way to pay for themselves. But I hope they figure out a different way–perhaps taking a revshare on tools like Unity instead of games themselves–so that the Flash gaming ecosystem can continue to live and grow.

Thanks to Justin Rosenthal for reading drafts of this.

34 thoughts on “What Adobe’s new pricing for Flash means for social game developers

  1. Does this mean everyone who’s making considerable profit AND using 3d frameworks such as away3D would have to pay Adobe???

    Reply
  2. Have you even read it? You should try really. You only pay if you use BOTH memory domain AND stage3D, some pretty advanced features that they would never have implemented without some kind of business model. So without this business model, these features would not exist. Features that will bring large studio’s millions of revenue.

    Also, you ONLY PAY if you make more than $50.000. This is per application. Do many of your application make that much revenue? Also, you DO NOT PAY for mobile application. So please, read the press release and re-write your article.

    Reply
  3. Sounds like Adobe is jealous of the licensing bacon being made by the Unity and Unreal engines, and want’s to get in on the business through the backdoor rather than having to engineer a competing product.

    Reply
  4. “Up until today, developers like me have assumed that, like everything else in Flash Player, these features would always be free.”

    I used to think this way too until the whole HTML5 debacle, Flash is on shaky ground in a lot of peoples minds. Keeping these advanced features free is not a very smart business model for Adobe if they want to keep paying the people developing Flash Player and the Flash IDE, which is only going to get more complicated.

    “So, what exactly does “9% of net revenue” mean for social game developers?”

    I feel your pain, but it really means that maybe Adobe will make enough money to keep developing Flash Player for games and video, so social and non-social game developers can keep making games and Flash can keep being relevant. As you mentioned, would you rather the Flash Player team be let go? If they were let go, you’d have an article titled “Noooooooooooo! How Adobe ruined my life!” instead.

    I see a lot of knee jerk reactions from small devs / companies on this issue, it’s understandable, but what about big players like Rovio and Zynga? Doesn’t Adobe deserve a cut of what they make using Adobes technologies? As someone who uses Adobes technologies don’t you WANT Adobe to have all that money to put back into further developing Flash?

    Adobe is providing the online gaming console that everyone is about to start using to present and monetize high quality 3d games online. If you made a game for a console I’m pretty sure you’d be paying a lot more for the dev kit / licenses along with having restrictions on the content you can create. No? Isn’t PS3 dev kit around $10,000? Why shouldn’t Adobe charge something in the same ballpark?

    I really don’t see why everyone’s freaking out here, it doesn’t even apply to everyone… The terms aren’t engraved in stone and so far I think it’s a good move for the future of Flash in general. People keep saying everyone will go to HTML5 and WebGL… Can we just stop that already? WebGL = Not on IE. No matter how much we hate IE it’s a non-starter. Why do you think the HTML5 version of Angry Birds is a Chrome tech demo, while the actual new Angry Birds is made using Flash 11 + Stage3d?

    I don’t even get the logic of people “being pushed to HTML5″ because of this move by Adobe… If you are making something with HTML5 (in it’s current state) then you OBVIOUSLY don’t need the premium features Adobe is offering for Flash… http://tinyurl.com/7ofdrn3 Lol, sry I had to. :)

    Reply
  5. I can’t believe the ridiculous arguments in the comments. One guy even suggested you rewrite your article! Preposterous!

    First he says you’re a failure, you don’t make 50,000. Then he says even if you are successful, you have a business model, make it work. Clearly he doesn’t understand what a business model is, or the point that Adobe doesn’t have to develop anything. It’s already a dinosaur and just needs security updates. Also the same comment above saying something about mobile Flash? That’s been abandoned!

    Condescending and nonsensical arguments. The point is: Adobe will just lose developers now. This is their way to get money from Zynga, etc, the top 1%, that’s fine. But it’s also now prohibitively expensive, and nothing but RESENTMENT from developers for Adobe to do this.

    We’ll just embrace the competition. Vote with dollars. And install Flash Blocker.

    Reply
  6. Brian, it’s net revenue, so I guess Adobe will take 9% after you subtract user acquisition costs. 9% of (LTV – CPU).

    Lukasz

    Reply
    • Will have to see what the final langauge is, and of course this will be negotiable, but the language on the page I linked says the following:

      >>> Net revenue is calculated as revenue after taxes, payment processing fees, and social network platform fees are subtracted.

      … which doesn’t mention anything about marketing. It’d be pretty difficult accounting-wise to subtract out marketing costs, as they’re paid up front and the revenue that results from them is somewhat indirect comes in over a long period of time. It’d be easier to just charge a substantially lower revshare (i.e. 1%), or charge for tools instead.

      Reply
      • I hope that it’s just a poor wording.

        BTW I have no clue how Adobe is going to measure how much you should pay them.

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  14. “it probably means that no one will be able to afford to use the new features”

    Nonsense. If you can’t afford it then you aren’t earning over the threshold needed to have to pay it.

    Reply
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  22. Lee Brimelow says that “There is NO licensing needed when deploying to mobile.” and i say sory dude i dont trust Adobe about Flash anymore. Developers dont trust flash’s performance on mobile and they just tryin to make developors use flash on mobile too. After developer used to use Flash, we will see an announce with a header Premium Features on Mobile. İf Adobe wants to earn money from gaming, they should use their effort for marketing too.

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  26. HTML5 FTW. Works on any browser, any platform and no Adobe tax for “premium” features which everyone knows is just bullshit.

    Reply
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