- Serendipitously enough, I was intending to post Jamie Cheng's latest Klei Entertainment blog piece, called 'Disruptive Technology: Free Online Games', and then we happened to run Kyle Orland's 'The Flash Game Business: Making A Living Online?' over at Gamasutra - and now I can make a post with both of them in, huzzah!

In Jamie's piece, the game-biz centric gem is the first paragraph: "Most of you are probably familiar with the notion of low-end Disruptive Technology. In a nutshell, it happens when products focus on the least demanding, least profitable customers in a market... Eventually, the entrants create more value than is needed for the low-end customers, and the product moves up-market, stealing market share from the incumbent. Because they were forced to innovate and create better value-add with lower costs, the entrants give better value to the encumbent’s mid-value customers, and the encumbents are forced to serve an ever-shrinking high-end market." Hear that, AAA $20 million games?

So, Cheng claims, this is exactly what's happening with free online Flash games, and Orland's article is talking about that precise move upmarket, though the biz model is still extremely nascent: "Kongregate's [Jim] Greer thinks that Flash games won't really get out of the gaming ghetto until developers are able to charge for them. As it stands now, the advertising and sponsorship money involved is just too small. 'Let's say Armor Games gives you a sponsorship for $2,000. You get another $1,000 from ad revenue, another $1,500 from prize money, maybe Miniclip licenses your game for $5,000... you might make $10,000 to $15,000 on your Flash game -- and that's a really successful Flash game.'" So we still have a ways to go here.