Today started out with a session by the IGDA Causal Games SIG. They've put out an hundred page white paper detailing how the industry works. This is now on my reading list :-)
There was also a presentation called “Don't Roll Over”. This was basically a rant about the fact that portals don't share advertising revenue with developers. This is changing (Microsoft and Real Networks have said that they're moving towards this), but it's currently a lot of revenue being left on the table by the developers.
Next up was an interesting session about the business model for casual games in Korea. This model grew out of the fact that piracy is rampant in Asia - boxed retail products make no sense.
Nexon has been in the industry for a while - they have titles such as KartRider that 25% of the population play! That's right - 25% of the entire population of Korea play KartRider.
Their model is free gameplay and the purchasing of items. These items may be decorative (personalization) or functional (speed boost, inventory bag, etc…) You have to be really careful about functional items as you don't want to skew competitiveness. Any item that changes game balance causes a barrier to entry for new players - they would have to buy the item to be competitive.
Strike Force is another of their games. This is basically a port of an FPS into the casual space, but it pulls in $5M per month in item purchases.
This model is in stark contrast to the US model which primarily revolves around try before buy. Revenue is purely purchase of game, advertising and subscription. The conversion rate of demo to purchase is currently at 2% in the US.