One issue that a lot of people raise at some issue in regards to casual games is the cost of bandwidth. When 99% of your users don’t pay you anything, do the 1% that do pay adequately cover the bandwidth cost?
In the past, I asked around about what bandwidth costs per GB, but never got a solid answer. The problem is that the typical ‘plan’ for small businesses includes a large block of bandwidth, which the ISP grants as a splashy come-on, knowing that most customers will only use 5% or less of their bandwidth. If you actually build a successful business, additional bandwidth provided by your ISP can be much more expensive than the first lot. Moreover, really taxing your host by using a lot of bandwidth can overwhelm the smaller servers and connections these hosts typically rely on, resulting in poor service for your customers.
For New Crayon, I use Dreamhost, and although I haven’t tested their bandwidth out with huge traffic, overall, I’m pleased with them.
They charge $8/month, and provide 1000 GB of bandwidth for that. So, 0.8 cents/GB.
Amazon just launched a ‘pro’ service, S3, with quality standards the same as what they use for their own site (i.e. it uses their internal network). It’s a ‘pay as you go’ service, for 20 cents/GB.
That’s a big swing – 0.8 versus 20 cents / GB. I’m sure Dreamhost would be losing money on you as a customer if you regularly used exactly your allotted 1000GB. Incidentally, Dreamhost charges $1.00 for every GB over 1000 that you use. So if you use 1000 GB, you pay $8 / month. If you use 1100 GB, you pay $108 / month. Clearly there’s some weird price scaling here.
Let’s use the Amazon number, as I frankly trust it more as a gauge of what high volume, reliable bandwidth costs (with adequate coverage for peak periods). What does that mean to the casual games biz model?
A typical casual game is 10MB, sells for $20, and has a conversion rate of 1%.
So, users will download 1 GB (1000 MB, i.e. 10 * 100) for each sale you ring up.
Even at Amazon’s 20 cents / GB rate, the bandwidth cost would only be about 1% of your gross sales (i.e. $20). Even if you allow for traffic for the users that visit your website and don’t download anything, and make other unfavorable adjustments like assuming a larger game size or a smaller conversion rate, bandwidth costs are not likely to be very significant.