I'm not sure why I've gotten so hung up on casual online games recently, but this tidbit from GigaOm's Wagner James Au caught my attention. Wagner talks about MyGame.com, a kind of "YouTube-meets-casual games proposition" with a very user-created feel. It's essentially a gaming site where developers can upload their games, and if they become popular enough, they can share ad revenue with the company. And now Google is reaching out to these developers to partner with it's Adsense/Adscape network. In other words (and unfortunately for me), it's a good time to know how to use flash.
These developers can make thousands of dollars off a popular flash game using a variety of different business models. The two most successful models seem to be the Pogo strategy, where free games are supported by ad revenue and subscribers can pay a small fee for added benefits; and the MochiAds strategy, which places interstitial ads that run in the beginning and in the middle of independent flash games. While there aren't huge profits to be made (Kongregate CEO, Jim Greer, estimates about $10 - $15 thousand per game if it's really popular), it's still a substantial amount of money for anyone who doesn't rely solely on flash game development as a source of income.
Wagner's question essentially added up to "how can this survive as an industry if there is so little money to be made?" Well, I suppose it really couldn't if the people that were making the games were large businesses. However, if the only real "businesses" that are involved are the host game sites, then there is still plenty of ad revenue to go around, and anyone with a fun idea and a lot of patience for designing games in Flash can make a little money for their hobby. And we've seen the popularity of user-generated content on the web - there is no lack of support. People can make the games that they want to play, developers can make some money for their work, and advertisers can still find places to put their ads through the host sites - everybody wins.