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The Business of Social Games and Casino

How to succeed in the mobile game space by Lloyd Melnick

Category: Growth

Recommended Holiday Reading

Contagious: Why Things Catch OnLast year I recommended the ten professional books that I had found most valuable. I recently finished reading Contagious: Why Things Catch On and found it incredibly enlightening. The author, Jonah Berger, is a Wharton professor who is probably the leading expert on generating word of mouth.

Word of mouth is one of those black boxes that many growth or marketing professionals resignedly claim is a matter of luck. Berger, who has spoken to Google and Facebook among others, shows the fundamentals of creating a product that will generate word of mouth (the growth of which is not necessarily marketing, but rather integrated with building your game the right way). I will write more about Berger’s work in the future but you should put it at the top of your holiday reading list.

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Unknown's avatarAuthor Lloyd MelnickPosted on November 25, 2013November 20, 2013Categories General Social Games Business, Growth, Social Games MarketingTags Contagious, Growth, Jonah Berger, marketing, Word of Mouth2 Comments on Recommended Holiday Reading

The best option left in game financing: growing your company

I get many questions on how to raise money, and in the current business environment the best strategy is growing your business through cash flow. Institutional investors who are open to the game industry are primarily looking for companies that are at a later stage, have significant cash flows and customer bases and are already close to an exit. In fact, the venture capital environment has shifted for almost all enterprises, with a typical A-round (the first round of institutional investment) now primarily going to more advanced companies that already have traction. A few months ago, I wrote about Turning Your Customers into Venture Capital and the importance of that practice has been magnified in recent months.

You do not need investment to create a billion dollar company

I recently read Hamdi Ulukaya’s article in Harvard Business Review on how he grew Chobani (the Greek yogurt maker) into a $1 billion business without any external capital. This article drove home that financing from cash flow could not only be a way to create a nice, profitable lifestyle business but also create a billion dollar business that could IPO if it wanted to go that route. If you are not going to rely on a huge investment to build your company, though, you need to do everything the right way since you cannot just fall back on a big pile of cash. As Ulukaya wrote, “Too many entrepreneurs believe it’s impossible to scale a business without relying on VCs or other equity investors. That view is wrong. If I could grow a company from zero to $1 billion in less than a decade in a capital-intensive industry, many other businesses can too.”

Chobani in top 10 Yogurt Makers

Continue reading “The best option left in game financing: growing your company”

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Unknown's avatarAuthor Lloyd MelnickPosted on October 9, 2013October 18, 2013Categories General Social Games Business, GrowthTags Chobani, Hamdi Ulukaya, Institutional investors, investment, Venture Capital3 Comments on The best option left in game financing: growing your company

The dangers of fast following

One of the biggest problems I see in the San Francisco/Silicon Valley area is the fallacy that fast following is a way to build a successful business. For those not familiar with this concept, it is identifying a successful business model or product, replicating it quickly and bringing the new company or product to market. There are some successful examples, none probably worth more than Microsoft’s fast following of WordPerfect with Word, Lotus 1-2-3 with Excel and Freelance Graphics with Powerpoint. This strategy generated hundreds of billions of dollars for Microsoft and its shareholders. This example is the exception rather than the rule, as fast following is more likely to sub-optimize or fail.
Fast Follower

A strategy built on arrogance

A key indicator that fast following is a flawed strategy is that it is built on arrogance. Fast followers are saying they can take an idea or product and do it better than the original company or anyone else. The question then arises, “Why are you going to be better?” Continue reading “The dangers of fast following”

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Unknown's avatarAuthor Lloyd MelnickPosted on October 2, 2013October 9, 2013Categories General Social Games Business, GrowthTags entrepreneur, fast following, microsoft3 Comments on The dangers of fast following

The secret of creating a hit game

It all comes down to one word: simplicity. This sounds very easy but creating a simple game experience is one of the most difficult elements of game design. In the social and mobile space, the games that are most appealing to the mass market are those that are very straightforward, simple experience. You can understand the game and start playing in the time it takes to get a latte at Starbucks (and often for less money). If you think of the games that have defined casual and social gaming, including Bejeweled, Farmville, Angry Birds and Candy Crush Saga, they are all easy to begin playing and simple to understand. Yet how many thousands of companies have unsuccessfully tried to quickly follow these successes with disappointing results?

Candy Crush iconHave fun fast

The key factor is that the player should be able to start playing and having fun immediately. They should not have to memorize an intricate system or go through a long tutorial. No long manuals, no Google searches, no emailing friends for instructions should be needed, or even considered, by the player. First, the player needs to be exposed immediately to the core game loop, that is the underlying mechanic the makes the game fun and keeps the player coming back. The quicker the player gets engaged with the core game loop, and not distracted by other features, the better. This engagement is seldom achieved through a tutorial, a convoluted story or mini-games. Design your game so the player can start playing quickly and understand what they are doing and their goals without it being explained to them. Continue reading “The secret of creating a hit game”

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Unknown's avatarAuthor Lloyd MelnickPosted on August 13, 2013August 19, 2013Categories General Social Games Business, GrowthTags Candy Crush Saga, Game development, simplicity6 Comments on The secret of creating a hit game

Want to be a world-class growth hacker? Then get out of the building!

Great article about the importance of thinking about your customer when growing your product.

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Unknown's avatarAuthor Lloyd MelnickPosted on April 22, 2013April 22, 2013Categories Growth, Social Games MarketingLeave a comment on Want to be a world-class growth hacker? Then get out of the building!

Three rules for becoming a truly great game company

A recent article in the Harvard Business Review, “Three Rules for Making A Company Truly Great,” pointed to three elemental rules that were consistently followed by exceptional companies. There are a lot of hyperbole and clichés about how to create great companies, but the research by Michael Raynor and Mumtaz Ahmed (in the HRB article) shows that three fundamental principles are the keys to success. This finding was based on a statistical study of thousands of companies, so it is much more analytic than what business book happens to be at the top of the charts in a particular week. It is also apparent that these principles apply to social and mobile game companies.

3 Rules for becoming a truly great game Continue reading “Three rules for becoming a truly great game company”

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Unknown's avatarAuthor Lloyd MelnickPosted on April 4, 2013April 9, 2013Categories General Social Games Business, GrowthTags mobile games, social gamesLeave a comment on Three rules for becoming a truly great game company

Reblog of a good post on Player Valuation for Marketing in Free to Play Games

Good post on the value of non-payers.

Philip Driver's avatarGames Marketer

Aggressive monetization and targeting of high value players is receiving more and more attention from game developers, especially in the mobile channel. This had led to a more analytical approach to game creation. Now before I discuss the industry standard metrics of CAC (Customer Acquisition Cost), ARPU (Average Revenue per User) and LTV (Lifetime Value), I want to touch on something I am concerned is becoming overlooked in the Free to Play Market, the value of non-paying players.

Free to play is just one of many video games business models and the basic premise is that whilst the game itself is free to play or download, certain elements of the game are monetized to create revenue. This can be items, characters, time savers etc. that create the revenue that pays for the development and subsequent profitability of the game.

As the use of Free to Play expands amongst game makers…

View original post 2,030 more words

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Unknown's avatarAuthor Lloyd MelnickPosted on March 21, 2013March 21, 2013Categories General Social Games Business, Growth, LTVLeave a comment on Reblog of a good post on Player Valuation for Marketing in Free to Play Games

Growth tactics for mobile game and social media companies

Growth Hacking ConferenceThe big buzz phrase in the Bay Area the last year or so has been “growth hacking,” and the ideas behind it can help significantly game companies. The underlying principle in the phrase is that modern start-ups should be focused on using the new tools available via technology to grow rapidly their user base rather than relying on older, sometimes outdated, marketing techniques. Growth—unlike marketing—usually encompasses multiple aspects of an organization, with the growth team not only bringing in users but also working with the product team to optimize the product for growth. It stresses the importance of product to growth and how the two should work together rather than having marketing set aside in a corner. The phrase itself was coined by Sean Ellis, CEO of Qualaroo and the first marketer at many great tech companies including Dropbox and LogMeIn.

What is a growth team?

A quora post from Andy Johns (currently on Quora’s growth team and one of the early members of Facebook’s growth team) described the typical people an early stage company would put on its growth team: Continue reading “Growth tactics for mobile game and social media companies”

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Unknown's avatarAuthor Lloyd MelnickPosted on February 25, 2013February 26, 2013Categories Analytics, General Social Games Business, Growth, International Issues with Social Games, Social Games MarketingTags Chamath Palihapitiya, Elliot Shmukler, Growth, iteration, marketing, Sean Ellis, testing, user acquisition3 Comments on Growth tactics for mobile game and social media companies

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Get my book on LTV

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Understanding the Predictable delves into the world of Customer Lifetime Value (LTV), a metric that shows how much each customer is worth to your business. By understanding this metric, you can predict how changes to your product will impact the value of each customer. You will also learn how to apply this simple yet powerful method of predictive analytics to optimize your marketing and user acquisition.

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Lloyd Melnick

This is Lloyd Melnick’s personal blog.  All views and opinions expressed on this website are mine alone and do not represent those of people, institutions or organizations that I may or may not be associated with in professional or personal capacity.

I am a serial builder of businesses (senior leadership on three exits worth over $700 million), successful in big (Disney, Stars Group/PokerStars, Zynga) and small companies (Merscom, Spooky Cool Labs) with over 20 years experience in the gaming and casino space.  Currently, I am the GM of VGW’s Chumba Casino and on the Board of Directors of Murka Games and Luckbox.

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