I have been reluctant to join the bandwagon of people declaring Facebook dead, either overall or as a social gaming platform, but I have gotten to the point where I have lost confidence in Facebook. It has been fashionable since Facebook’s IPO to say the platform was in trouble because of the shift to mobile. In the game space, the anti-Facebook crowd got started even earlier, suggesting the only wise course for social game companies was to develop for mobile platforms instead of Facebook. I was reluctant to join this chorus, given the incredible user numbers Facebook has and the revenue that some games were still generating on Facebook (which dwarfed comparable mobile games). However, I have been rethinking my position.
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”
I have written several times about the increasing options in the tablet market and the great opportunities they represent for social game companies. A recent piece on Techcrunch further illuminates this point and makes a great case on why developers should create first for tablets, then turn their attention to smartphones. The author, Tadhg Kelly, points out that Apple has sold over 100 million iPads and in 2–3 years there may be as many as 400 million tablets in the market. Moreover, price points for paid apps on tablets are higher, and Kelly expects greater monetization for free-to-play games due to longer engagement.
I am equally optimistic about prospects for tablets. Amazon’s new line of Kindle Fires will be a huge holiday seller. The devices are attractively priced, and the ability to focus holiday shoppers’ attention on the devices on the Amazon.com home page and through cross promotion ensures millions will see—and many likely buy—the new tablets. Barnes & Noble’s new Nook tablets share a similar advantage. Again, they are very attractive devices at even better price points. Barnes & Noble also has huge retail reach, with 689 stores and 667 college bookstores, all of which will be prominently showing the new Nook tablets during the holiday shopping season. In addition to these very attractively priced devices that will be in consumers’ faces this holiday season, Samsung (the second largest manufacturer of mobile devices) has a strong line of tablets (including the intriguing Galaxy Note Tab). Also, do not forget Google, that little California company, who has the resources to push its attractive Nexus tablet. Continue reading “The need to focus on tablets”
I have hesitated in publishing a “reading list” because often when I see them on other blogs, they are little more than the author’s effort to get some referral income. As many of you know, I do not monetize this blog at all (there is no advertising and I have refused all sponsorship offers) and the links in this post are not tied to any monetization. With that in mind, I wanted to share some books that have made me much more successful and I think will help anyone in the gaming ecosystem (and probably any other business). Given that we all have very limited time, even to read, I have listed the books by how much of an impact they have had for me. Continue reading “Great books for social game companies”
Originally, I was not going to post about Zynga’s earnings report, which was released Wednesday evening. I am not a stock analyst and I did not feel I brought much to the party. However, the announcement caused so much conversation both from companies in the social gaming space and pretty much everyone else, that I felt remiss if I did not add my analysis.
For those who cannot make my presentation on Wednesday at Casual Connect (4:30 pm) about analytics (separate from my other talk on building a great game company), I wanted to summarize it here. First, I want to thank our Director of BI, Aren Arakylan, and our VP Operations, Ana Echeverri, who provided invaluable help in preparing this presentation.
The presentation will focus on the opportunities to use analytics beyond what is commonly being done in the social gaming space, a topic I have blogged about a few times. First, I will look at the current state of analytics in the social gaming space.
As a follow up to my post on Friday (Social Game Opportunities in Africa), here’s a link to great piece on TechCrunch about how most Africans will have Smartphones within five years.
I read a great interview on CNN.com with Rovio’s VP Bus Dev, Ville Heijari. Rather than repeat the interview, I strongly recommend you read it yourself.
My big takeaways from it were:
- Rovio started in 2003 and did not have a success until Angry Birds (2009). Before Angry Birds launched, they had to cut their staff from 55-60 to 12. If Angry Birds was not successful, they would have had to decide whether or not to continue operating.
- Until Angry Birds, Rovio normally spent 3-4 months on a mobile title. Angry Birds took about eight months because of additional iterations and polishing (including adding the catapult).
- What the above two points combined say to me is that if they did not spend the additional time on polish, Rovio would not exist today, let alone be worth over $1 billion.
- Rovio is now moving into publishing, having licensed a game called Amazing Alex. It is consistent with Zynga’s strategy to add third party publishing, thus increasing the value of their player base.
- Rovio sees itself as an entertainment company, not a game studio.
Overall, I found the article a very useful insight into one of the key players in the mobile game space.
Microsoft’s $300 million initial investment in Barnes & Noble’s Nook unit is arguably the biggest news to hit the social game industry this year. Just last week, I was saying to some colleagues that there have not been any major developments in our sector recently. That changed yesterday. Over the next five years, Microsoft has committed to a total investment of $605 million in Barnes & Noble’s Nook, making it a bigger deal than Disney’s acquisition of Playdom in 2010.
Sometimes, a few things happen concurrently that drives home a point, and last week I had one of those moments. Last week, I taught several sections of a marketing class at Duke’s Fuqua School of Business, focusing on new product launches. One question that came up repeatedly was how Apple was so successful despite not following many of the principles I was outlining, particularly on involving customers in the product development phase.
Then, over the weekend, one of my favorite blogs (Both Sides of the Table by Mark Suster) wrote about why you should not try to replicate Instagram’s $500 million raise (read the post, Don’t Try to “Pull an Instagram.” Here’s Why …). Continue reading “You are not creating the next Apple or Instagram”