Lloyd Melnick

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I am CEO of fiveonenine games, the social gaming joint venture owned by Capitol Broadcasting and The E.W. Scripps Company.

4 responses to Lifetime Value Part 3: Monetization’s role in LTV and how to impact it

  1. 

    I think you are missing several key points.. If gamers were able to trade a virtual item after purchase, thus feeling more comfortable making their first purchase, don’t you think a greater percentage of gamers would spend real money? Moreover, if a gamer could convert one games currency into another, thus increasing the utility of that virtual currency, do you not think more gamers would spend real money knowing they could swap into another game?

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      In my experience, efforts to expand the pool of paying players has not generated nearly the returns as better monetizing players who are already playing. Most visualization of monetization activity has a heavy tail distribution and I think that is the underlying nature of Free-2-Play games, trying to move it into a normal distribution is like acting against the law of physics. Regarding moving currency between games, I was a big advocate two or three years ago but again every effort to do it has failed. The most glaring is Facebook credits. The promise there was people would monetize better because they could use them in any game that took FB credits. The reality was all the games that I saw that had a deep integration of Facebook credits (where Facebook credits replaced the premium currency) saw at least a 25 percent drop-off in ARPDAU and most were over 30%.

Trackbacks and Pingbacks:

  1. The importance of segments and cohorts to Lifetime Value, LTV part 7 « The Business of Social Media - February 26, 2013

    […] previous posts, I discussed the importance of customer lifetime value (LTV), its key elements (monetization, retention and virality) and how to calculate LTV; but it is important to also understand that […]

  2. How negative churn can be a strong growth driver « The Business of Social Media - December 2, 2014

    […] Although it is easy to say just increase revenue per user by 10 percent a month, it is much more challenging in practice. In a free to play game, a combination of fine tuning the economy and providing new content can often drive such growth. For a consumer product, it may be selling it to more members of a family or in a B2B product more employees of an existing customer. It may also be getting people to consumer more of a product, such as by making it a replacement for another product they also use. In a casino, it may be getting players to increase their average bet. You may add an additional revenue source, such as advertising. You can also cross sell other apps, games or products to your existing users. I have written in the past about other ways to impact monetization, and most of those apply in this situat…. […]

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