Interview

Asking the right questions: Scientific Revenue on the monetisation mistakes most developers make

Asking the right questions: Scientific Revenue on the monetisation mistakes most developers make

Pocket Gamer Connects will be heading back to Helsinkion 5-6 September.

Tickets are still available.

So, to give you a hint at what you can expect, we're shining the spotlight onto our speakers to provide a deeper look at the personalities who will be taking the stage.

  • William Grosso is the CEO of dynamic pricing firm Scientific Revenue, and will be giving a talk on trends in monetisation.

PocketGamer.biz: What would you say is the biggest mistake developers make when implementing IAPs in their games?

William Grosso: The biggest mistake we see happening repeatedly is that game developers often don't track the right metrics.

Everyone knows about things like ARPDAU and D1 conversion and so on, and those are good high-level metrics.

But, if you're going to optimise your in-app-purchase revenue, you really need to do a deeper dive.

Here's a great example: second purchase rate. Once someone's spent, do they buy a second time? This is a great metric, and for a game with a good IAP structure and a healthy economy, the second purchase rate should be between 30% and 60%.

If it's a lot less than 30%, you have to wonder: did people receive value? Are the IAPS overpriced?

Why aren't people who bought already - so they both like the game, and they've opened their wallet - buying a second time? But that begins with measuring the second purchase rate.

Fewer than a third of the game studios out there track second purchases.

And of course, once you measure this, you can then measure how various promotional offers - for example, the legendary no brainer first dollar - affect it.

From our conversations, fewer than a third of the game studios out there track second purchases.

How important is dynamic pricing for IAPs when it comes to maximising revenue?

Very. But you knew we'd say that! We like to divide the world of revenue optimisation into three categories.

The first and most important thing is core metrics. It makes no sense to optimise IAP revenue if your D3 retention is 10%, or if you only have 10K daily active users.

The second category is structural changes to the game that can only be done by the game team (with the support of the game analytics team).

For example, adding in events or tournaments -- that can only be done by the game team, and can result in a huge increase in both retention and monetisation.

But, obviously, getting a PVP structure right is a hard thing and can take a long time. It's also worth pointing out that things like tournaments can be added post-launch (the way Clash Royale did).

The third category is high-value revenue optimisations that can be done by third-parties.

The classic example of this is advertising. Most game companies don't write their own ad servers. For most games, pricing - and dynamic pricing - belongs here as well.

The general path we recommend for companies is:

  • First, fix the core metrics. That's the number one focus and until those are good, it should be the only focus.
  • Second, use third party optimisations. They're easy to integrate and they're leverage - the sooner you fix your pricing, the sooner you get a significant revenue boost.
  • Third, make sure you have enough content and are refreshing it appropriately.
  • Fourth, re-examine the structural aspects of your game.

With the rise of rewarded ads, is there any danger of IAPs falling out of favour with players?

Not at all. They're highly complementary techniques. Rewarded video is an excellent way to make money in a large number of games and often leads to an increase in IAP spending as well.

What other major trends do you predict for the rest of 2016?

In monetisation? There's an increasing awareness of pricing and how it interacts with retention and enagement.

The big trends in Q4 are going to be around VR and around industry collaboration.

Our recent Gamasutra articles on annuities and daily login rewards, for example, have gotten a lot of interest and our customers are starting to really leverage more complex pricing strategies (including dynamic pricing).

As a result, they not only get increased revenue, they also get increased engagement.

We also think that subscriptions are going to start to be important towards the end of year.

Apple's pre-announcement at WWDC sparked a lot of interest there and, while subscription support for games isn't solid yet, it's clearly coming, and will clearly be important.

And, of course, we've got some really interesting product announcements coming in Q4 that we think will substantially change the conversation in 2017, but it's premature to talk about them.

Outside of monetisation, the big trends in Q4 are going to be around VR and around industry collaboration.

With respect to VR, as we head into the holiday season, I think the big question is around Sony's Playstation VR, which releases in October.

The question for us is simple: will that take the air out of the room in the same way that, when Pokemon GO was launched, other mobile games generally became less profitable?

With respect to industry collaboration, let's just say there's a lot of fatigue out there.

Game developers are on a constant treadmill of technology and platform changes, and it can be exhausting. As vendors, we need to be more aware of this, and we need to make sure that our solutions work together and are as easy to integrate as possible.

Scientific Revenue started down this path a year ago with our SDKBox integration, and we're happy to say we're continuing to work with other leading solution providers such as PlayFab to make sure our technology is as widely available as possible.

What are you looking forward to seeing at Pocket Gamer Connects Helsinki 2016?

This is Scientific Revenue's first trip to Helsinki. We're really excited to meet a lot of the newer, smaller companies face to face for the first time, and to get connected with the community.

One of the great things about PocketGamer events is that, while they have great attendance, they also have a much more casual and intimate feel than other conferences. You can really get to know the people you're talking to.


Deputy Editor

Ric has written for PocketGamer.biz for as long as he can remember, and is now Deputy Editor. He likes trains.

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