Ask HN: My Revenue Model- How does it sound?

Hi, I'm working on a video game start-up in Athens, Georgia. I was asked about our revenue model, so I did a formal write-up and was wondering how it sounds. Any feedback would be greatly appreciated.

Here goes:

Our game will be released in two versions: a free, Lite Version (where users can play endlessly, but upgrades necessary to advance above a certain level are locked) and the Full Version, which will cost one dollar. It is hard to predict sales, but we expect about 50,000 copies in 2012. The App Store keeps 30% of each sale.

The other part of our revenue model is merchandise. One thing that sets our game apart from other restaurant simulations is the simple, expressive, and numerous characters (rather than the boring, generic characters of many other games in this genre). We are focusing on creating popular characters that will re-occur in multiple games and be featured on merchandise. These re-occurring characters will not only boost the familiarity and popularity of each game, but also add to people's desire for merchandise.

In Japan, where I lived, worked, and studied for four years, they have perfected this process; in the development of an animated TV series or video game, for example, there is a large focus on creating high-quality characters (simple, highly graphic, and visually appealing) that can cross over into other media, produce spin-offs, and be featured on merchandise. This ends up generating far more profits than the sales of the original product. I think that many American video game companies do not appreciate the importance and potential of high-quality, appealing characters.

In terms of platforms, our game is planned to be released for the iPhone/iPod Touch, but could easily be ported to the iPad, which is number one on our list. If successful, it could also be ported to the Android. In addition, we would like to make it playable on PCs and Macs, though without the touch-screen, gameplay might take a little reworking.

...So, how does that sound? Thanks in advance for any feedback.

(The game I am talking about is actually an active project on Kickstarter right now, with one day left to go. You can see it here: http://www.kickstarter.com/projects/bts/cafe-murder)

So from what I understand you are looking at a game that incorporates characters that are much more re-marketable than the standard fare of video games in the United States. Having the ability to re-market characters could really build up a brand or series identity... Some American game studios have already thought of making characters like Laura Croft and Gordan Freeman and even making these characters into a series of movies, but I don't know about how it has been applied to iOS/casual gaming.

How are you going to do pricing of upgrades aka DLC?

Have you considered pricing it at ~>=$1.99 instead of $.99 depending upon how much content is included in the original game?

What's the marketing plan?

Still working on that, but making a really fun game seems more important than anything else, since popular iPhone games spread quickly by word of mouth and social networks.

I don't expect our first game to necessarily be a hit, but we'll be working towards what I explained above. It'll probably take time to build up to your 1, 2, and 3 (unless we get lucky and they all resolve in our favor).