Making money off a web game is quite doable if you put your mind to it. With a Flash game, there are clear, established ways to make money, and for certain kinds of games, you can generate more revenue than going through a mobile App Store.
Besides creating games to make money whether it be for a living or for profit, it forces you to put more effort into what you’re doing.Creating a finished product and shipping it - the “last 10%” is something that can only be taught by doing it.
You’ll learn how to market your game, how to roll it out to testers, how to think from the user’s perspective, how to negotiate and get that sense of independence from knowing what you’re doing, which opens the doors to bigger and better opportunities.
Ads are a default way to make money, but unless your game is wildly popular or has already been sponsored, you aren’t going to see very much.
The amount you get from your game can be measured either in CPM (how much you get for every 1000 views of the ad) or in CPC (how much you get from a clickthrough). CPM varies depending on the quality of the ad, which in turn is dictated by the quality and size of the audience. It's more common for games than CPC.
Roughly speaking, ads fall into 2 categories.
Portals (Revenue Share)
Mochi and CPMStar are the major players in the world of in-game advertising. Mochi tends to have lower CPMs than CPMStar, but Mochi's biggest asset is it's distribution network. They blast out new games to thousands of portals to aid in your distribution. CPMStar is an invite only network.
With Portals, your best bet is Kongregate, which shares between 25 - 50% of revenue (through banner ads and pre-game ads) depending how integrated your game is with their API and exclusivity to them. Their CPMs are decent because of the relatively high quality of the games on the site and the focused, gamer-centric audience.
Bottom Line: All in all, ads are at best, a supplementary form of revenue that can tack on a little extra to a game that’s popular or sponsored, but they are rarely a primary source.
Sponsorships are in general, the best way to make money with Flash games.
Sponsors are game portals who purchase exclusive rights to market and distribute your game on their site and other portals. How do they make it back? Through attracting players back to their portal, which drives in ad revenue for them.
Sponsorships vary widely in payment styles and terms. Generally speaking, they fall into one of 3 categories.
Hybrid of Both
In lump sum arrangement, the sponsor pays you a fixed amount to buy exclusivity to the game indefinitely or for an agreed upon period of time, before the game “unlocks” and can be distributed on other portals.
What’s the range? From as low as $100 all the way up into the $10,000+ range. The median is somewhere around $500 for the average sponsor. For higher end sponsors such as Armor Games, it's still possible to receive a couple thousand.
This all depends on your ability to negotiate, your prior portfolio, the terms, the sponsor, and of course, the quality and potential of the game.
In a performance-based arrangement, you are paid per click back to the sponsor’s site or per plays on their site.
Put the two together, and you get a model where you get some upfront payment and payment upon reaching certain milestones. For example, Armor Games could offer you $3,000 base but $150 for every 100k plays on their site and $200 for hitting the front pages of Kongregate and Newgrounds - all milestones that our best games regularly hit.
In the very best circumstances, a well-performing game may receive an offer to port the game over to iOS. ArmorGames did this for Kingdom Rush, and it’s opened up a new frontier in the world of sponsored games.
FGL is essentially an eBay for sponsored games. For a 10% cut, they practically guarantee that a decent game (by their definition - they rate you from 1 - 10, with 8 being the magic number) will receive bids from sponsors. Some developers have voiced concerns with FGL, but for most developers, it’s still a great way to get noticed for the first time.
My advice is this: do your research and make sure you’re not getting screwed by the sponsor. Don’t automatically accept the highest offer. Think it through and go with your gut instinct.
The second way to snag a sponsorship is through contacts and people you know. I can’t coach much on this because it’s a natural cycle - if you know good game developers or have prior contact with the owners of sites, it’s relatively easy to snag a sponsorship that way. Building a reputation for making great, well-performing games will land you in this spot over time.
Not all sponsors allow for non-exclusive licensing, but the better ones do. The idea behind non-exclusive licensing is that you can sell a version of your game to a specific website, such as AddictingGames.com, and you re-brand the game for their website so that it shows AddictingGames’ logos instead of your primary sponsor's logos.
Damijin's primary sponsor was Kongregate, and they paid him for his game, so why would they let him do this with a direct competitor like AddictingGames? Here's what he had to say.
"The reason is that some portals (like AddictingGames in particular) will NEVER under any circumstances show your game on their site UNLESS it is branded with their logos. That means AddictingGames will either have your game wearing their logos, or they will just not show it at all.
Kongregate knows this, and they know that they will not benefit from AddictingGames in any way because of that policy. But they also know I'm a starving developer, so they allow me to do a deal with AddictingGames where I got paid $750 to basically just change my logos and add a little site-lock code.
Non-exclusive licenses have been my second largest form on income behind sponsorships. Most tend to be around the $500 range for me, but I've done them for as low as $150, and as high as $1100. They tend to make up around 25% of the revenue for most of my games."
Some API providers such as Mochi have created virtual currency platforms for providing microtransactions to end users. Although there are plenty of stories of runaway successes with this model, you should be realistic about your chances because those successes came about from particular kinds of games which differ a lot from the games that most Stencylers will be making.
It sounds enticing to be able to sell “level packs” for your game, but you’re often much better off with a sponsorship instead, something that sponsors and industry veterans I’ve talked to have echoed.
Bottom Line: In short, unless your game’s hugely popular, is a Facebook/social game or really fits the virtual currency model, stick to the other methods of generating revenue instead.
Note: This advice is specifically for web games.
Stencyl Games that won Major Sponsorships
All of what's been said about making money would be for naught if we didn’t have games of our own to back up our words.
Many more Stencyl games have received sponsorships than listed here. These are the highlights among them. Although I can’t give figures in respect to the creators, each ranged from 4 to 5 figures.