Earlier this month, at the 2nd Growing Games workshop in 2015, both Jonathan Wisler from SoftLayer and Henrik Riis from Danish games studio watAgame went on stage to talk about monetization and go-to-market strategies. Here are their best tips for other game developers.
Network based growth. That’s how the Growing Games initiative by Interactive Denmark describes itself. By putting a group of game developers in the same room for a day, the initiative aims to have the developers inspire each other and learn from each other’s experiences. So much so that when the day is over, the developers will go home and implement what they have learned in their own company, hopefully helping them succeed even more.
Today, 95% of game revenue on mobile comes from free to play titles. And that’s why for this year’s 2nd edition of Growing Games, the focus was on monetization and go-to-market strategies.
Apart from the tips provided by Jonathan Wisler, General Manager EMEA at SoftLayer, and Henrik Riis, CEO at Danish watAgame, the day also included in-depth sparring sessions focusing on monetization strategies for free-to-play, publisher deals, and the planning of social media marketing. And as always at Growing Games, before the day ended off, a couple of brave game developers got the chance to train their pitch in front of the crowd of attendances, who afterwards provided feedback on the games pitch.
Here are Jonathan Wisler’s 7 tips for building a scalable business from the day you enter the market.
The team is the most important
Have your creative people, have your data-driven people. Have it all. Have that broad group of people. It’s not about data, it’s not about creativity, it’s about a mix of the two. The first thing you’ll want to do is build this team. If you don’t have the right team, you’ll be getting nowhere!.
- Are you a platform, or do you build on top of platforms?
Do you want to be the platform, or use the platform? Unity and CryTech built their own platforms; they built their own robust game engine. Are you a platform or are you building on top of platforms? It’s a strategic choice you will want to make.
- Care for your community
Start getting involved with your community from day one. They’ll give you feedback, and they’ll talk to each other. A good community can either make a game win or make it flop. The community either makes or breaks these core games. This community of people is your salesforce.
- Acquire your customers
Now I have my product, now I need to acquire customers. Your ROI = ARPU (average revenue per user) – CPA (cost per acquisition). A lot of people don’t do this basic math. And sometimes you don’t know what the costs are to acquire these customers, but it’ll force you to think about who they are.
- Build viral aspects
Build in viral aspects. Don’t build it to acquire customers, but build something viral that is part of the system, such as viral PR or chat engines.
- Know why you’re unique
You want to be able to say; this is why I’m different, and this is what we do differently.
- Remember what is driving you to get up
What’s driving you to get up in the morning? Why are you doing what you are doing? Write it down on a piece of paper, fold it up and put it in your pocket. This will help you in the dark days, where you should fold it out and look at it.
Here are Henrik Riis’ 8 tips for monetizing and going to market.
Embrace monetization early
Take the time to teach yourself monetization before building your game. Recognize monetization mechanisms as part of the experience, not an add-on. Integrate monetization into your game design. Monetization thought into your concept from the start will work much more fluently and appear less irritating to your users. If you can do something where the users are requesting to view ads to get currency, then at least you have a positive aspect. It’s not a pop-up banner that you have to click to remove, it’s something that gives you content instead of annoys you.
- Cover all monetization bases
Use affiliate advertisement to monetize gamers who are not willing to pay. Integrate with best in class: Chart Boost, Flurry and Ad colony. Build a system to prioritize affiliates with highest payout per view. Use in-app payments to monetize gamers who are willing to pay.
- Supper the whales
Whales drive your business (unless you build games for kids). Whales deliver 51% of all revenues. Build your game for older males, as they are most likely to be whales. Make sure to identify and service your whales to retain them. Focus your monetization analysis around your whales. Whales are probably less than 2% of your user base.
- Design for core gamers
Mid-core to core gamers deliver growth and revenue. Word of mouth is much stronger with mid-to core gamers. Whales are predominately mid-to core gamers. Mid to core is not niche. They account for 44% of all gamers. Core definition in this context is: Users who appreciate challenging/difficult games, long play sessions and grinding, complex game mechanics, and competition with other users. Examples: Clash of clans and Hearthstone.
- It is a marathon – not a sprint
Launching a game is only the start. In order to keep users engaged and revenues up, make sure to measure key performance indicators and tweak your game and monetization mechanism along the way, add new levels, features etc. routinely, and remember that this is costing you resources that cannot be used to produce new games. We launched March 2014 and are currently working on the 28th update of Momio.
- Have a marketing strategy
Think about how to get noticed in a crowded market. Create marketing strategy from the start. Cost for acquiring a user with affiliate ads is roughly $2.
- Design for volume
Expect low revenue per user. Earning money is a volume game. Gamer-to-customer conversion per month above 5% is difficult. Design for the masses. Designing for a niche target group is risky. Remember, midcore-core is not niche, it’s about 40% of the gamers.
- With games for kids, you can’t talk about whales.
When you target children, the payers are the parents.
Apart from the 8 tips above, Henrik Riis had a couple of additional overall themes in his presentation at Growing Games. These are highlighted below.
- Is free to play an evil plot by developers to rule the world?
According to an EEDAR survey, 50% of game developers say they are into games out of passion for the creation. Such developers would avoid free to play if they could because free to play messes with the game design and easily becomes detrimental to the game experience. Free to play creates A and B teams among your gamers based on valet – not skill or loyalty. Most game designers do not have the knowledge to monetize well with free to play.
- Why do consumers prefer free to play?
Free is magical – some consumers will happily spend 45 minutes in queue for a free soft ice worth 15 kr – just because it is free. Everybody loves free! Additionally, Free to play allows gamers to sample a game before choosing whether to pay. It removes the hard decision of paying that stands between them and downloading a paid app-
- Why free to play revenue trumps paid
Higher download numbers compensate for low conversion to buy. A free app on average generates 70% more revenue than a paid app did in 2014. 31% of apps on the app store are paid, and they account for 21% of the revenue. 69% of apps on app store are free, and they account for 79% of the revenue.
Additionally, paid games suffer from only being able to charge gamers once. According to the Apple review guidelines 11.14: “Apps may only use auto-renewing subscriptions for periodicals (newspapers, magazines), business apps, and media apps”. Or the app will be rejected.
- Are paid apps dead?
First of all, developing, tweaking and producing content to generate in-app payments is not free. Working with IAP requires a totally different skill set for your company. With paid apps your only task is to create the best game ever. The paid apps top ranking might be easier to obtain since there is less competition. But is the tide turning? There are no signs that gamers are gravitating towards paid apps. Many paid apps are now “Paidmium”, which means they also include in-app purchases and/or in-app advertisement. This blurs the lines and weakens paid apps’ appeal of paying once to enjoy the experience.
- Ok, I embrace free to play – will I be rich?
Probably not. The bottom 69% of developers earn less than 1000 USD per month. The bottom 88% of developers earn less than 10k USD per month. Only top 3% of developers earn more than 100k USD per month.
- How I learned to stop worrying and love the bomb
Creating games is still fun and getting it published has never been easier. Costs to develop a game for app store are still within reach of small developers. The mechanism of “free to play” are well established – you do not have to invent it from bottom up. Affiliate advertising is a real revenue source if you have a user volume. Our results so far show an average ECPM = 4 EUR = 0,004 EUR per view.
The next Growing Games takes place on June 23, 2015 in Copenhagen, and you can read more about the event on the Interactive Denmark website.