Most, if not all, social game companies are missing their greatest source of value. While companies struggle to add $0.01 to ARPDAU, there is an opportunity to exponentially increase the revenue from your player base. And it is an opportunity not unique to social game companies but one many technology companies should explore.
The real value many social game companies have is their player graph and relationships. A player graph is the understanding, on an individual level, of your players’ preferences, decisions and behaviors. Once you figure out how to leverage this information, your revenue from in-app purchases or advertising is a footnote. I remember years ago (2009 to be exact) speaking with a partner at the VC firm Andreessen Horowitz, then an investor in Zynga, who told me that even if Zynga’s players stopped spending entirely the company would be worth over a billion dollars (this was pre-IPO) due to its network of players.
The ability to monetize these players with in-app purchases has since turned into a mixed blessing, as it has blinded many companies to their greatest potential source of value. As many companies generated millions or even billions of dollars in revenue through in-app purchases and thus focused on optimizing revenue from each player, they lost the urgency to harness the true value of their players to optimize their company’s value. Continue reading “Unlocking the value from your social game’s player graph data”