Adobe has announced that from August 1 2012, developers who make use of hardware-accelerated Stage3D in Flash Player, in combination with Domain Memory, will pay a 9% net revenue share as royalty. Net revenue is what remains after taxes, payment processing fees and “social network platform fees” (sounds like Facebook) are deducted.

“Domain Memory” is a block of memory declared as a byte array that is used as memory by the Alchemy C/C++ to ActionScript compiler. Allocating some bytes from this byte array is much faster than asking the Flash Player to grab some real memory from the system for your new object or variable, and manipulating memory via this technique is quicker too. In other words, it is a hack to improve performance.

Adobe is aiming the new licensing arrangement at games developers. Most developers will not be affected because of the following:

• A license is only needed if both Stage3D hardware acceleration and Domain Memory are used. Use just one of these and you are fine.
• If the game or app is packaged using Adobe AIR for iOS, Android, Windows or Mac (in other words, anywhere) then no license is needed.
• Applications that make less than $50,000 in revenues (not clear whether this is net or gross) will be royalty-free
• Applications released before July 31 2012 will remain royalty-free

There may be a program fee however, which I imagine will apply whether or not you pay royalties.

Although the new royalty is not all that onerous, it is significant as a change of direction. Until now, the deal with all these runtimes – Flash Player, Silverlight, Java – is that you might pay for the tools, but the runtime is free.

If you are considering Flash versus other runtimes for your new project, Adobe has now informed you that future free use of the runtime is not a foregone conclusion. Who knows what Adobe will define as “premium features” that might require royalties in future?

According to the FAQ, further premium features are indeed planned:

We are already planning premium features that enable "instant play" gaming experiences for content that relies on large assets which will be able to cache data using a local storage API. For content publishers looking for better branding and user acquisition, another planned new feature would allow apps to request if the user would like to create a shortcut on the desktop, task bar or start menu pointing to the application.

Overall it seems a curious move, at a time when Adobe seems to be moving away from Flash and towards HTML5 as its long-term strategy. The company may profit a little from a few high-profile games, but the dampening effect on Flash usage in the long term will offset any advantage.

No developer likes to pay runtime royalties and I would guess that Adobe’s move will spark an immediate search for alternatives.

Update: there is a great discussion of the issue with participation from Adobe’s Thibault Imbert here. Why the change in direction, when Adobe has previously made money from its tools:

at some point you are capped. Ask any tooling company today, hence why you see companies going to consumers, services, because games could generate millions of revenue with maybe 200 copies of Flash Builder and Flash Pro sold. Is it a good business? Not really.

says Imbert. Another issue is that third-party tools for Flash have been taking market share away from Adobe, which must hurt:

The model where Adobe invests all of the resources in developing the Flash Player, and then projects such as Haxe and Unity pull developers away from Adobe tooling is one that was not sustainable under the old model. Under the new model, it doesnt matter which tools and technologies you are using to develop Flash content, since revenue is generated based on the runtime and not tooling.

says Adobe’s Mike Chambers.