When it comes to monetizing free to play (F2P) games, developers have a tough job trying to strike the right balance between player experience and profitably in an overcrowded marketplace. The majority of F2P games are not profitable, with only 30% hitting 10c Average Revenue Per Daily Active Users (ARPDAU), or $1 player Lifetime Value (LTV). These figures are indicative of being in the ballpark for success and what the best games all have in common.
Over the last few years we have seen stabilization of some core free to play models, like the radical improvements in retention mechanics, frictionless interactive on-boarding, hierarchical approaches to game loop at session and an aggressive rewarding process that provides player momentum. In spite of this, games with good retention are still struggling to monetize and drive repeat spend.
Using game data on the deltaDNA platform, we have analysed the design principles that successful games all have in common. Through our analysis, (using data from the 100 best performing games by MAU, evenly split across Puzzle, Action and Strategy genres, IOS and based in the US) we have found that there are 4 main reasons for games with good retention figures to struggle with monetization…
1. IAPs are too cheap
Some developers are too cautious or overly generous when it comes to utilizing monetization methods such as IAPs (In-App Purchases) or ads, and instead place more emphasis on retention. But by doing so, they are missing out on big opportunities to make money.
A successful game is all about striking the right balance and your IAP strategy can fail if you are not daring enough. So be brave and bold! Our data shows that games that charge twice as much, tend to make roughly twice as much money. As you can see in the chart above, conversion does not decrease if the minimum price point is increased, the ARPDAU actually increases dramatically, and price points lower than $2 devalues games significantly.
2. Too generous to non-payers
By being too generous and providing lots of fun content for free, players have absolutely no incentive to pay. You will retain players for a while, but they won’t spend any money. You need a D7 retention rate of at least 10%, with 10% of these players being payers. The chart above shows that despite high D7 retention, it is no guarantee of good monetization. In fact, of the 54% of games with D7 Spenders, only 10% have $00.10 ARPDAU.
Examples of good monetization strategies can be seen in Golf Clash with well-balanced bundle offers, Star Wars: Galaxy of Heroes with gacha and collection mechanics, Clash Royale with ‘soft’ pinch points and Best Fiends Forever with monetization integrated into the core reward loop.
3. No drive for repeat spending
One of the issues many unsuccessful games have in common, is that there is not enough repeat spending in the game. Many developers focus on the first spend, however it is much more profitable to establish a spending core loop within the game that encourages repeated purchases. It’s hard to get above 10¢ ARPDAU without at least 3 IAPs in the spender’s lifetime.
In order to drive conversion, you can choose to either ‘reward’ or ‘punish’. If you chose to use the ‘carrot’ approach you will offer a premium experience with flexible play. This will naturally lead to repeat purchase, but it can be challenging to design. If you decide to use the ‘stick’ approach you will have resource pinch points and pay walls, which are easy to construct, but they can increase churn.
4. Not enough Whales
One of the realities of F2P is that the majority of revenue is generated by a small fraction of a percent of the player base. They are termed Whales and we define them as players who pay more than $100 a month. These players love what you do and enjoy spending money on things they value.
Most of your money will come from the small percent of Whales, therefore, it is crucial to identify these players quickly and build the game in order to monetize them. A minimum of 5% of your spenders must be Whales to have a profitable game.
The recipe for success
So, what is the recipe to successful monetization? If you want 10c ARPDAU you need:
1. Day 7 retention higher than 10%
2. Payers on day 7 need higher than 10%
3. Minimum price point is higher than $2
4. Average at least 3 spends per spender
5. At least 5% Whales spending more than $100 in their lifetime
Your core game needs to drive committed players towards IAP, the pricing must be well thought out and the game should drive repeat conversion. Break it all down into individual steps and ask yourself the crucial questions. If you have engaged players who aren’t spending, why aren’t they? If players don’t spend multiple times, why not? By finding answers in the data you will, in turn, see a direct impact on revenue.
Designing a successful game is not easy, but with analytics it is possible to identify and understand under-performing aspects, and improve upon them to maximize the success and profitability of your game.
If you enjoyed this article, you may wish to explore these topics further by downloading our three volumes of – Dr Roseboom’s Game Analytics Insight Compendium.