In January at Pocket Gamer Connects London 2015, there was a Monetizer Mavens panel - for which our Mavens provided plenty of interesting questions.
And in terms of the discussions - there were also several interesting outcomes - ranging from everyone laughing at my suggestion of the (slight) return of paid games, and Eric Seufert's statement that $250,000 was now the minimum UA spend for launching a big F2P games.
But the most interesting comment was that best practise in F2P games is never about monetisation but retention and engagement.
With this in mind, we asked the Monetizer Mavens -
Do you think the industry's focus on ARPU (and our focus on monetisation techniques) is fundamentally misguided?
Should we all be talking much more about fun or are those developers who say 'we're not bothered about monetisation yet' deluding themselves?
I don’t believe the industry is focused on monetisation. Or at least, not the people I talk to.
I know that some people have been. Zynga was obviously focused on ARPU, and we always heard, whether true or not, that [Mark] Pincus was behind it. Similarly at Bigpoint, and we also heard that the CEO, Heiko [Hubertz], was very much behind it.
But we’ve heard Kristian Segerstrale say that the reason Vainglory isn’t topping out the grossing charts is because they are focusing on retention.
I, for one, believe him and provided you can afford it, I think it is the better strategy.
As any entrepreneur will tell you, chasing the money is usually a fool’s errand. Build something that people want and value, and figure out a way to let them pay for what they value.
Chasing the money, in its own right, can bring short term cash but rarely long term success.
It might be easier to increase the monetization of a low-monetizing, high-retention game than grow the retention of a high-monetizing, low-retention game.Justin Stolzenberg
At flaregames, we started out with very casual, high retention games (35+% Day 30, 30% Day 90) that monetized very, very little per player.
We experimented a lot and find a balanced approach more sustainable when you try to push for growth in a controlled manner.
Our newer games now rather have ~10% Day 30, but by that time have already realized 5x or more the LTV per install that we saw in our more casual games throughout the whole player lifetime.
It might be easier to increase the monetization of a low-monetizing, high-retention game than grow the retention of a high-monetizing, low-retention game.
But I believe a more useful approach is to work towards a fun, accessible, “good enough” retaining core gameplay that ties in with broad monetization systems. Revenue should be the measurable outcome of having a great game with an appropriate monetization strategy.
Zynga focused very much on short-term metrics, which can easily lead to a conflict of interest between monetization managers and game designers.
To avoid that, we’re setting our goals for product managers in LTV (which obviously includes a strong retention component), and ROI for marketing.
Just like any other industry, the focus is not on ARPU or retention or fun, but rather on what is the best/still viable strategy to make money.
Sometimes the end products whose sole focus was on ARPU have been a disappointment, but that's just a byproduct of how capitalism works and this is a part of the natural evolution of the industry.
Design and monetization have to work hand in hand throughout production.Dimitar Draganov
That being said, I do believe that F2P has matured enough to realize that making a profit with a non-holistic approach just doesn't work as a sustainable business even in the mid-term.
We are at a point where design and monetization have to work hand-in-hand throughout production or even better - be represented by the same person, so that the marketing eCPI targets are achieved and a profit is made.
Lead designers/game directors are no longer able to think "just" about fun because if they don't do the monetization plan and LTV vs. eCPI computations themselves, there's just two options:
- 1) someone will come and do those for them which will surely result in a sub-product of the original idea;
- 2) the product will fail.
With over 15 years’ data mining experience, Mark co-founded deltaDNA, formerly GamesAnalytics, to unlock big data to drive player understanding, introducing the concept of Player Relationship Management to build better games.
Fun has to come first!
We see time and again poor retention rates for Day 1 - 15-20% whereas most games should be able to get to 40% as a minimum.
Many novices leave in session one due to poor experiences. Day 7 retention is a much better metric to determine what volume the core player base can get to.
Lifetime value follows engagement.Mark Robinson
We have also seen time and again that lifetime value follows engagement. Monetization needs to be subtle.
In a typical game economy most payers start spending in session 1. The vast majority spend once and then quickly leave. A small number become whales.
However if you can convert a new spender in session 3 to 5 then they will be much more valuable in terms of total lifetime valuie.
Therefore if you get engagement right you can start to monetize later and still increase the overall income levels to be successful.
I agree with the general feeling, for sure. The general point stands that people who aren't playing, aren't paying.
If you're truly designing and operating games as a service, you need revenues that match - steady and reasonably predictable and sustainable.
Successful F2P games are a subset of games that are fun.Mark Sorrell
There's always a few huge success stories that lead people to think that gigantic revenues are realistic or obtainable, but really if you're making a profit and enjoying your work, you can count yourself a success.
That all said, I do think 'find the fun' is used too quickly.
Fun is important but it is entirely possible to make a game that is great fun, but that doesn't retain or monetise in a sustainable fashion.
Successful F2P games are a subset of games that are fun...
Jon, that should be your pull quote...
"successful F2P games are a subset of games that are fun."
Ben is a 15-year veteran of the games industry - he's worked as a senior executive, studio head, project lead, creative director and game designer at companies like DeNA, EA, Sony and Lionhead.
He started working on traditional games, but has been focussed on the free-to-play business model since 2006 - an extremely long time by western standards. During that time He's worked on a total of ten separate free-to-play games across five different platforms reaching over 50 million users.
A focus on just a user's average ARPU or retention will get you nowhere.
It is easier to increase monetization for a game that retains rather than retention for a game that monetizes.Ben Cousins
A company (interested in making money rather than solely increasing their valuation for further funding round or potential sale), should really be focussing on the result of the combination of those metrics - i.e. the user's average lifetime value.
The reason a lifetime value-focussed strategy always ends up with a higher emphasis on just retention is because there are thousands of pieces of data out there that show that it is easier to increase monetization for a game that retains rather than retention for a game that monetizes.
However, if you just focus on retention, it's common to create a game that is too free. So I always recommend a focus on retention until you can prove that the game is good enough, followed by a focus on monetization.
It's essential that a F2P game's budget and timeline take that into account in advance.
Regarding Mark's point - always talk about the difference between fun and compulsion. Free-to-play games that are fun with no compulsion fail (hundreds of examples on the App Store every week). free to play games with compulsion but no fun can work rather well but developers hate them (FarmVille).
The big hits nowadays are all both fun and compulsive.
Around the middle of 2014, we noticed a few incoming clients at AC+A who were telling us, verbatim, "We know how to monetize our games - we need help making them fun."
And these were some of the biggest players in the freemium mobile market.
So it was clear to us that the industry had put a huge focus on monetization, and in so doing, had lost some of the "fun gameplay" expertise.
Adrian Crook & Associates has been around now for over 7 years, so it feels like we've come full circle.
When we started out, monetization was the dark art and merely knowing something about how to implement a freemium strategy would get you deals. As the industry matured though, so did we, eventually bringing on a freemium economist and going all-in on our monetization expertise to the point where we were reverse engineering the freemium economies of massive titles for our clients.
Now a lot of that freemium expertise, while not exactly commoditized, is well known or rote.
It's naive to ignore monetization when designing for freemium.Adrian Crook
There still are a great many of our clients who require it - maybe they know how to make fun games, but no idea how to monetize them - but that said, an increasing number of our larger clients are looking for equal parts game design and monetization expertise.
In some of those larger orgs, game design expertise might have been pushed to the side in the last few years as everyone raced to grok freemium. It's coming back now.
Good freemium designers have always had to balance sound game design and solid monetization design, as the two go hand-in-hand. For every unicorn story about a game that was a runaway hit purely because it was fun, there are countless others that found critical acclaim but not commercial.
It's naive to ignore monetization when designing for freemium. It is possible to have a lot of highly engaged users, yet be earning $40 a day in IAP (as a game dev colleague shared with me about his title this morning).
So focusing on a "fun game" over a monetizing one, or vice versa, is a red herring. A holistic approach has always been what's required.
Publishers 'not bothering to worry about monetization yet' are definitely deluding themselves and will likely end up leaving a ton of money on the table.
I think to truly succeed in today's market a publisher has to not only consider both fun and monetization but must also work hard to correctly balance them in a game.
I believe the industry is now evolving rapidly, and what was once advanced science in terms of game economies or compulsion loops is now table stakes.
What was once advanced science in terms of game economies is now table stakes.Jon Walsh
I agree that the best overall metric to consider is lifetime value, as it is ultimately a combination of retention (fun) and monetization. LTV can be tricky to estimate, especially in new games, but there are leading indicators that all games can look to early on in a games life cycle, including 1 day retention, number of sessions, session length and level completion along with paying player conversion and value of IAPs purchased.
The bottom line is that the simplest way to calculate LTV is to multiply ARPDAU (both IAP and Ad) by the lifespan (or estimated lifespan) in days of your players.
This leaves publishers with three main levers,
- IAP revenue,
- Ad revenue and
- The number of days players play.
There are, of course, many levers below each of these, but improving player lifespan by even a few days can greatly impact total revenue.
Adding days to a player's life can come not only by tweaking core game elements/design, but also by actively marketing to your audience to bring them back to the game for things like events or tournaments, offers, etc.
Of course this quickly becomes another topic entirely... ;)
Monetization in freemium games is not a combination of best tricks or a result of magical fun factor.
Instead monetization can be broken down in a very simple base formula:
Revenue = DAU x ARPPU x CONVERSION.
When we're talking about "fun" and retention, we're talking essentially about DAU.
Sales only change paying behavior without actually affecting overall lifetime revenue.Michail Katkoff
DAU is a result of both new players and retained players. Significantly increasing amount of new players is not a sustainable strategy, which makes retention so important. To oversimplify even more, the better the game the more players will return, which results in higher DAU.
ARPPU tells the average amount of money players spend in the game.
In games like Clash of Clans, Hearthstone or League of Legends, players can spend hundreds and even thousand of dollars, while in games like Subway Surfer, the amount of money player is really incentivized to spend is double digits at best.
To increase ARPPU developers usually add more content (Candy Crush Saga) or run events (Puzzle & Dragons). Running a sale is a trick to increase ARPPU on a short term but multiple studies I've seen show that sales only change paying behavior without actually affecting overall lifetime revenue.
Conversion is the percentage of players who monetize and it can be further divided into new and repeat buyers.
This number can be increased through good game designs and solid tuning. In puzzle games, levels that you just almost pass but end up buying additional turns boost conversion. Then again in MOBAs, conversion is achieved through introduction of a new hero that is well hyped and slightly overpowered.
Sales are good way to increase conversion when they are aimed only at players who haven't made any purchases below.
So, should we be talking more about fun? Well no, because we'd end up leaving the two other important monetization factors out of the discussion.
Oh, and developers who aren't bothered by monetization are either making tons of money or out of business.