1. Business Model of Social Games
University of Bournemouth
(2012-Mar-01)
Gerald Tan
Co-Founder, COO (Head of Product)

2. Does music go away?

5. GERALD TAN
Co-founder, COO (Head of Product)
Plumbee
Strategic Advisor Hooplo Media 2011
Independent Consultant 2011
Senior Product Manager / Producer Playfish (EA) 2009-2011
Finance and Business Manager Pogo.com and EA Online
Publishing (EA) 2007-2009
Financial Reporting and Control Manager EMI Group PLC
2004 - 2007
ICAEW Qualified Chartered Accountant
2002
gerald@plumbee.co.uk
Twitter: @tan_gerald

6. Business Model of Social Games

8. 8

9. Evolution
9

10. Games Timeline
PONG
2008
Golden
age of
arcade
machines Social Games

11. Before 2008:
• Games = Niche
• Big, But Closed Industry
• Non-Gamers Not Welcome
• Barriers to entry – you need a console

12. Number of gamers exploded:
2000: 250M
2011: 1B+
• New fast-growing „open‟ platforms (Fb, iOS)
• Metrics-led design, new generation of game devs
• Broadband penetration so very accessible
• Free to play

13. Like 90s dot.com boom it is hyped and
inflated…
But Social Games companies have REAL
REVENUE and PROFTIABLE
Zynga
• Q4 revenue = $311K … and raised $1B
IPO in Dec-11
• Market capitalization $9B vs $5B for EA

14. Why Should You Care?
• 150B minutes spent EVERY MONTH on social games
• That’s an average of 10 minutes for everyone on the planet!
• 81M people play social games at least once a day
• 49M play a few times a day
• 33% of console players said regular playing pattern
declined since starting social games
• Console market expected to shrink globally

15. Social games = (much) bigger
than primetime TV shows

16. Social Games
Mobile Games
Source: Mashable, Oct 2011 16

17. Console vs PC
17

18. Rise of PC Gaming
Source: ignite Game Technolgies Sept-11

19. Different Business Models
Subscriptions Freemium + Lite Freemium
Advertising +
(Display) Microtransactions
Freemium + MTX : Most effective business model
19

20. Definitions Uses
Freemium: Freemium:
- use for free but premium - low barrier entry point
content chargeable
Microtransactions: Microtransactions:
- virtual items purchasable - pay according to what
for small amounts of “perceived” value is
real currency
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21. Social Games
Social Games = Fastest Growing and
Most Disruptive
21

22. Not just small Game Studios
Source: Various

23. Users

24. What do Social Gamers like?
Source: Various (see appendix)

25. Game is a Service not a Product
More
New Ready to
Live Reiterate veteran
Features x-promo
features
Scale
down
Time dependent on game
• Launching the game is just the beginning
• Metrics and analytics
• User Lifecycle
• Ready to x-promo out
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26. User life cycle
Engagement
Conversion Repeat
Installs Virality and Monetization
and Billing spend
Retention
• Different features for different stages of user life cycle
• Fine tune with metrics
• Predictive analytics
• KNOW YOUR USER
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27. The two week sprint
Planning:
Specs and Sprint Stories and Assigning
Roadmaps Planning Tasks team GO
Sprint:
Coding
Art goes starts Code Play
LIVE
first (front and Review testing
backend
27

28. Studio SetupStudio Setup
Tech Lead Producer
Marketing
Lead Back Lead Flash Lead Art & Game
PM CM
End Developer Design Designer
Back End Flash Art &
Design Analyst
Developer Developer
Back End Flash
Developer Developer
• Size is dependent on • Game Design = • Communication
needs of the game • UI Fun channels
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especially on • Artstyle • Game Intel = Data • Community
production management

29. Funnel
Reach size of audience
Acquisition + Liquidity adding audience
Retention keeping audience
Spenders converting to spenders
Revenue bottom line

30. Each key metric is connected
30

31. Right
benchmarks
essential
31

32. #1 Reach
32

33. Reach
Reach
Acquisition + Liquidity
Retention
MAU and DAU Spenders
Revenue
>30M MAU
Peaked at = largest
100M MAU Poker site in
the world 33

34. Reach
Reach
Acquisition + Liquidity
Retention
Spenders
Differs by genre Revenue
Resources Mgt Casual
• DAU big ranges (Cityville • “Real game mechanics”
peaked at • Light and easy to get RPG
100M, Millionaire City into - casual player • Zombie Lane (1.9M)
2.5M, Restaurant City • Bubble Witch Saga • Vampire Diaries (0.3M)
5M) (4.2M DAU and rising) • Combines social but
• Competitive genre – • Bejeweled Blitz (peaked more with a role-playing-
most games are in this at 4.6M) game element
category
Gaming / Casino Hidden Objects
• “New-ish” category • Garden‟s of Time 8.3M
• Slotomania but most popular game
(1.7M), DoubleDown on Facebook in terms of And many more…
Casino (1.1M), Bingo Blitz satisfaction • Sports
(0.9M) • New games: Hidden • Mid-core strategy
• High ARPDAU Chronicles, Jane • etc
• Older female skew Austen‟s inpsired Rouge
and Romance (BBC)
34

35. Source: Various Feb-12

36. #2 Acquisition and Liquidity
36

37. Reach
Acquisition and Liquidity
Acquisition + Liquidity
Retention
Spenders
Revenue
Paid Installs
Viral Installs
37

38. #3 Retention
38

39. Reach
Retention
Acquisition + Liquidity
Retention
Spenders
Revenue
Retention rates
• Day 2 retention rates is crucial
• Good games retain 35% to 40%
• Overtime quality installs drops
• Retention by level and on-boarding
drop offs to prevent lapsing users
Newbies and Veterans
• Day 3 - 7, D14, D21, D30, D60 –
there is a difference between
newbies and veteran retention
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40. Newbie + Veteran Average Retention
Decay curve of a social game
Only 35% and 45% of users
% returning users
Veterans
actually come back the
next day
Newbies
The rest lapse out
40

41. #4 Spenders
41

42. Reach
Spenders
Acquisition + Liquidity
Retention
Spenders
Revenue
Metrics
• Small % of spenders ( <5%)
• Depends on the product offering
• By genre ARPDAU is different
Price
$50 Small % of spenders will
generate most of the
$20
revenue
$5
$1
1% - 5% 95%+ No of users
42

43. #5 Revenue
43

44. Reach
Revenue
Acquisition + Liquidity
Retention
Spenders
Revenue
DAU ARPDAU
Conversion
DAU rate
Spenders
Spenders ARPPU
44

45. Reach
Revenue
Acquisition + Liquidity
Retention
Spenders
Revenue
45

46. 46

47. Gerald Tan
gerald@plumbee.co.uk
twitter.com/tan_gerald
47