Tag: monetization

We are not concerned about monetization and other lies people tell investors

A friend recently mentioned how he met with a game company who told him they were doing great but not focused on monetization yet. This should be a red flag if you hear this at your company or a company you are thinking of working with.

What it means not to be concerned about monetization

If there was a Google translate for game development, when you type in the phrase we are not focused on monetization yet, the output would be “want don’t want to admit to ourselves or to you that our game does not work and is a failure.” Continue reading “We are not concerned about monetization and other lies people tell investors”

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Author Lloyd MelnickPosted on June 23, 2015January 4, 2016Categories General Social Games Business, General Tech Business, LTVTags lies, lifetime value, monetizationLeave a comment on We are not concerned about monetization and other lies people tell investors

Only 0.15 percent of mobile gamers account for 50 percent of all in-game revenue

This article clearly shows why you need to focus on your best customers or VIPs,. Development, product management and marketing need to all understand the need to attract and retain VIPs. I also appreciate the fact that the post does not suggest that your revenue should be a bell-shaped distribution; as I previously wrote, there is nothing wrong with a heavy-tail distribution.

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Author Lloyd MelnickPosted on February 26, 2014March 5, 2014Categories General Social Games Business, Social Games MarketingTags Heavy tail, heavy tail distribution, monetizationLeave a comment on Only 0.15 percent of mobile gamers account for 50 percent of all in-game revenue

Lifetime Value presentation to Yetizen

Below is a presentation that I gave yesterday on lifetime value (LTV) to the portfolio companies of YetiZen. It covers the importance of LTV, key variables (monetization, virality and retention) and how to affect them, importance outside gaming, cohort analysis and the predictive nature of LTV. Other than the final section on uncertainty, which echoes my blog post on Tuesday, the presentation is largely consistent with the one posted earlier that I gave at Groundwork Labs a few months ago. Here is the one from last night:

Yetizen presentation on LTV from Lloyd Melnick

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Author Lloyd MelnickPosted on April 25, 2013April 30, 2013Categories Analytics, LTVTags LTV, monetization, retention, uncertainty, Virality, Yetizen2 Comments on Lifetime Value presentation to Yetizen

Why would anyone buy a virtual good?

Many do not understand, or even accept, the motivation for people to spend real money for virtual goods. Some are even more amazed at the success of virtual casinos, where players gamble but can never collect their winnings. They discount it as manipulation or irrational thinking by the consumer. In fact, purchasing virtual goods is a very rational behavior consistent with how people conduct other aspects of their life. Understanding this motivation will help you develop a game that better satisfies your customers’ needs.

Why people shop

Although some people shop because they need something (food, clothing, steak), yet there are many other reasons people shop. In a seminal piece from the Journal of Marketing entitled “Why People Shop?“, Edward Tauber wrote that the obvious answer (“to purchase something”) “can be a most deceptive one and reflects a marketing myopia.” Below are several reasons that Tauber hypothesizes drive shopping behavior, which do not reflect ending up with a physical good. These reasons can also drive monetization in a game: Continue reading “Why would anyone buy a virtual good?”

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Author Lloyd MelnickPosted on March 20, 2013April 9, 2013Categories General Social Games Business, Lloyd's favorite postsTags gambling, monetization, shopping, virtual goods7 Comments on Why would anyone buy a virtual good?

Don’t charge for your app, PLEASE (at least if you want to make money)

One of the greatest mistake game companies make is building or launching products that are paid apps, not free-to-play (F2P), which then monetize through micro-transactions. Despite the fact that survey after survey shows F2P games generate more revenue than paid apps, virtually all the investment money goes to F2P products (and VCs are pretty intelligent) and most companies that abandon paid apps for F2P never go back, there are a surprisingly high number of companies still focusing on the paid app model. In particular, many mobile studios whose roots are in the traditional (console) gaming world still prefer the paid app model. As I am often asked to help game companies, it is very frustrating when they forgo my advice and build a paid app. The usual refrain is “But look at Angry Birds.”

A recent analysis by Forbes (“Rovio’s Revenue Crisis and the App Market Evolution”) shows beyond a shadow of a doubt it is just foolish to still be building paid apps, even if you are Rovio. To summarize the key analysis and findings from the Forbes data: Continue reading “Don’t charge for your app, PLEASE (at least if you want to make money)”

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Author Lloyd MelnickPosted on March 11, 2013April 11, 2013Categories General Social Games Business, Lloyd's favorite postsTags F2P, monetization, paid app, rovioLeave a comment on Don’t charge for your app, PLEASE (at least if you want to make money)

Why app toys fail and Skylanders soar

The Wall Street Journal reported that more than 90 percent of app toys fail around the same time Activision announced that Skylanders’ sales exceeded $500 million. Among the failed app toys were Barbie Dolls and Hot Wheels cars with special conductors to control games on a tablet from Hasbro, Disney’s Cars AppMates, and a version of the Game of Life from Hasbro in which players spin a wheel on an iPad rather than a physical wheel. Yet, Activision’s physical virtual goods continue to sell incredibly well, driving Activision’s profitability. This interesting juxtaposition of news shows the value of using the equivalent of in-app purchases rather than the business models designed around retailing, distribution and manufacturing processes from the last century.

What is wrong with App Toys?

The biggest problem with app toys is that the toy makers are simply trying to move the same product to a new platform. The toy companies do not understand what creates compelling experiences on tablets (or consoles or phones, for that matter). Instead, they are replicating the same experience people have with the physical goods in the virtual world, which is not what consumers are looking for. They are competing with (thousands of) native games and products that are created to meet customers’ needs. It becomes obvious why the app toys cannot compete. Continue reading “Why app toys fail and Skylanders soar”

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Author Lloyd MelnickPosted on February 19, 2013February 25, 2013Categories General Social Games Business, LTVTags app toys, free to play, monetization, physical virtual goods, SkylandersLeave a comment on Why app toys fail and Skylanders soar

Physical virtual goods prove their value to game publishers

Activision’s earnings announcement yesterday shows how attractive successfully conquering the physical virtual goods market is. On November 27, I blogged that Activision would be the big winner Q4 2012 on the strength of the Skylanders franchise and its reliance on a new business model, selling physical versions of virtual goods. I elaborated on that post earlier this month, commenting that the emergence of the Physical Virtual Goods monetization model was one of the most exciting developments in the gaming space in years .

Today, Activision’s stock rose 14 percent because earnings tripled from the fourth quarter last year (in a period in which overall video games sales slumped). Net income increased 257.58 percent to $354 million in the quarter versus a net gain of $99 million in the year-earlier quarter. Revenue rose 25.66 percent to $1.77 billion from the year-earlier quarter (unfortunately, some of that is due to my family).

This report affirms my belief that physical virtual goods are an incredible opportunity. While I do not advocate trying to copy exactly what Activision has done (I believe in blue oceans, not fast following), there are many elements in this space (e.g., product type, demographic) that represent incredible opportunities for game companies.

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Author Lloyd MelnickPosted on February 8, 2013February 19, 2013Categories General Social Games BusinessTags Activision, monetization, physical virtual goods, SkylandersLeave a comment on Physical virtual goods prove their value to game publishers

Talk on LTV and Monetization

I will be speaking today at 11 at Groundwork Labs, the Durham-based technology accelerator, on why companies in any industry need to focus on LTV, the primary levers and its impact on success. Anyone interested and in the area is free to come by. Much of the discussion has been covered previously in this blog, but feel free to check out the presentation on Slideshare:

Groundworks presentation on monetization and ltv from Lloyd Melnick

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Author Lloyd MelnickPosted on February 1, 2013January 31, 2013Categories Analytics, General Social Games Business, LTVTags groundwork labs, LTV, monetization, presentationLeave a comment on Talk on LTV and Monetization

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

Monetization is one of three components that you use to determine LTV (lifetime value of a customer) and is the one that is the easiest to improve. Two weeks ago, I wrote about the central importance of lifetime value to the success of your game and your company. This week I want to discuss monetization, its importance and how you can improve it.

How to define monetization

Monetization at its core is how much money an average player spends in your game. As with the other two components of LTV, there are different facets of monetization that you can use to create a more accurate calculation. With all monetization measurements, you need to incorporate all revenue, including revenue that does not come from in-app purchases (e.g., advertising revenue, subscription revenue) to get a true picture of monetization and LTV.

The primary metric for monetization is ARPDAU (average revenue per daily active user) but there are several other metrics that together can help you get a more robust LTV calculation. Continue reading “Lifetime Value Part 3: Monetization’s role in LTV and how to impact it”

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Author Lloyd MelnickPosted on January 22, 2013February 19, 2013Categories Analytics, General Social Games Business, LTVTags LTV, monetization, social gaming4 Comments on Lifetime Value Part 3: Monetization’s role in LTV and how to impact it

Physical virtual goods

The use of virtual goods in a physical form is one of the most interesting (and profitable) monetization techniques that I have seen. By “physical virtual goods” (my term), I mean taking a virtual good that is normally sold through an in-app purchase and making it into a physical retail item that is used to unlock the virtual good inside the game (with no functionality for the physical product).

The Skylanders example

Activision’s Skylanders are the perfect example of this monetization strategy. Activison has two video games, Skylanders Giants and Skylanders Spyro’s Adventure, that sell at retail, just as you would purchase Call of Duty or Super Mario Bros. However, instead of selling downloadable content or offering upgrades through in-app purchases (depending on the platform), players must purchase Skylanders characters at retail, place them on a game-specific portal (a device that plugs into the game console) or enter a code that comes with the character (again, depending on the platform) to unlock the character in the game. Continue reading “Physical virtual goods”

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Author Lloyd MelnickPosted on January 10, 2013January 22, 2013Categories General Social Games Business, Lloyd's favorite postsTags Activision, monetization, physical virtual goods, Skylanders3 Comments on Physical virtual goods

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What it means not to be concerned about monetization

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Why people shop

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What is wrong with App Toys?

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How to define monetization

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The Skylanders example

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