My jaw dropped this morning when I read the news: Adobe will begin charging a 9% revenue share on revenue above $50k for using some “premium features” in Flash Player. The new pricing goes into effect for apps launched after August 1st that use both of the following features:

ApplicationDomain.domainMemory

Stage3D.request3DContext, when using hardware acceleration

These features are used together by the Unity and Unreal engines and allow console-quality games to be played in the browser. They could also be used together inadvertently by developers rolling their own optimizations; for example, using domainMemory for code optimizations and Stage3D for rendering would also fall under the new terms.

Up until today, developers like me have assumed that, like everything else in Flash Player, these features would always be free.

So, what exactly does “9% of net revenue” mean for social game developers? In the cutthroat, thinning-margin social games business, it probably means that no one will be able to afford to use the new features. Dropping your effective LTV from $3 to $2.73, when you’re paying $2.50 to acquire that user, means you now have 54% less money to cover both marginal costs (hosting and support) and fixed costs (initial and ongoing development). That’s huge.

I suspect we’ll see a few developers give it a shot, but in the longer run this is going to push more people to HTML5 / WebGL and contribute to the eventual abandonment of Flash as a platform for social games.

I can only assume that the Flash Player team is doing this because they’ve been told they have to figure out a way to pay for themselves. But I hope they figure out a different way–perhaps taking a revshare on tools like Unity instead of games themselves–so that the Flash gaming ecosystem can continue to live and grow.

Thanks to Justin Rosenthal for reading drafts of this.