Who is making what in an online game? What conversion rates can you expect ? What is a whale and how much, exactly, do they spend. Nicholas Lovell takes you through the ten key metrics for success in a free-to-play game, shows you how to work out exactly how much money you will make from an online game and, most importantly, teaches you how to tweak your business to maximise revenues.

1. METRICS, BENCHMARKS AND BUCKETS
OF MONEY
Nicholas Lovell
GAMESbrief
Game Connection, Paris, 6th December, 2011

2. Nicholas Lovell, GAMESbrief
• Author, How to Publish a Game,
GAMESbrief Unplugged
• Director, GAMESbrief
• Clients include Atari, Channel 4,
Channelflip, Firefly, IPC, nDreams,
Rebellion and Square Enix
• @nicholaslovell / @gamesbrief

3. Subscribe to the blog

4. MAKING F2P SIMPLE

5. REMEMBER: It’s about the fun

6. 25 Add friction
o Game design is about
taking friction out.
o Freemium design is about
adding friction.
o GOOD freemium design is
about finding a balance –
just enough friction to
encourage some players to
pay, without ruining it for
the rest of us.

7. It’s about the metrics
Conversion K-factor ARPU
DAUs CPI
ARPDAU
LTV Virality
CPA
Retention
MAUs
ARPPU
CAC

8. It’s about the metrics
OMFG

9. It’s about the metrics
WTF

10. What is the point of metrics?
• To connect game development and the finances of
making games
• To teach you about your players and your game
• To help you make better decisions
KEEP IT SIMPLE

11. THE GAMESBRIEF
SPREADSHEET

12. The spreadsheet
www.gamesbrief.com/spreadsheet

13. 6 key metrics
• MAUs
• DAUs/MAUs
• Retention rate
• Conversion rate
• Split into whales, dolphins, minnows
• ARPU
• Oh, and I have platform share but it’s not a metric

14. THE PRINCIPLES

15. 1 Feed the funnel
o To build a successful games
business, you must feed the
funnel
o Potential customers arrive
at the top. In the middle,
you convert them to
payers.
o At the bottom, they
become long-term, high-
spending customers.

16. 2 ARM yourself
o A successful online game
must Acquire users, Retain
them (usually overlooked!),
and Monetise them.
o All three aspects must be in
harmony.
o You need all three to build
a successful long-term
business.

17. 8 Avoid the leaky bucket
o Acquiring customers is both
hard and expensive.
o Once you get them, focus
on retention to keep them.
o Don’t worry about getting
new customers until you
can satisfy the ones you’ve
got!

18. 3 Make it free AND expensive
PRICE
Revenue opportunity
Marketing opportunity
Demand
o Giving your content away for free is a marketing
opportunity.
o You have to find your revenue opportunity.
o Draw customers along the curve by offering them
things they truly value.

19. THE DATA

20. MAUs
• I start with 200k MAUs – an ESTIMATE
• If I were being more accurate, I would model customer
acquisition costs.
• Maybe in version 2.0
• You won’t get a sizeable audience without spending
money
• CPI on Facebook is $1.00 to $1.50. Mobile seems to be cheaper
• BUT audience isn’t your primary measure of success
• Find a small, niche audience with great retention, conversion and
ARPU
• Stop thinking like traditional media

21. DAUs/MAUs
• Also known as engagement
• Bizarre stat
• Driven by what Facebook chooses to publish
• Odd result:
• MAUs easier for financial results, long term planning
• DAUs drive monetisation, more accurate snapshot
• Target: 0.15 (aka 15%)
• Ratio fell steadily through 2011
• Trip Hawkins said “FB games are shallow”
• I said “its just the summer”
• Facebook’s recent changes bumped the engagement
ratio up again

22. Retention rate
• I have an sighting estimate of 75%
• Churn rate = 1 – retention rate (i.e. 25%)
• Duration = 1 / churn rate (i.e. 4 months)
• Zynga has a duration of < 2 months.
• Very hard to get accurate benchmarks for retention
• My view: 75% is not average, it’s great.
• NOTE: Where you calculate retention from makes a
difference.

23. 6 Acquisition lasts longer than you think
o The Acquisition process doesn’t end when I click
“install”!
o 20 million people every month take a look at Cityville –
and never return!
o You haven’t got a customer until they spend 20
minutes playing. Make sure those first 20 minutes are
your best stuff!

24. Conversion rate
• Should I look at it daily or monthly?
• I use daily
• When looking at benchmarks, try to work out what
conversion rates they are using:
• What percentage of daily users spent money?
• What percentage of monthly users spent money?
• What percentage of all users have ever spent money?
• Tiny Tower: 3.8% of users in the first six weeks
• ngMoco: 2% of DAUs
• Anything from <1% to around 20% is feasible

25. Whales, dolphins, minnows
PRICE
Revenue opportunity
Demand
• An approximation of the power-law
• Minnows: spend the minimum ($1), 50% of spenders
• Dolphins: a “middling amount” ($5), 40% of spenders
• Whales: spend a lot ($20), 10% of spenders

26. The importance of the power law
Revenue
($) (%)
Whales $ 36,000 44.4%
Dolphins $ 36,000 44.4%
Minnows $ 9,000 11.1%
Gross revenue $ 81,000
• Whales are 0.5% of your users; 44.4% of your revenue
• 89% of your revenue comes from your higher spenders
• Across the whole business:
• ARPU: $0.41
• ARPPU: $4.50

27. HOW TO USE THE
SPREADSHEET

28. DISCLAIMER
• Your business will not look like this.
• You will not make $2,946,789 in year one
• Do not rely on this spreadsheet as an accurate financial
predictor

29. The practical use
• All game developers have too many ideas to improve their
game
• You need to prioritise
• Use the GAMESbrief spreadsheet to get a snapshot of the
headline areas of Acquisition, Retention, Monetisation
• Identify which are below benchmark
• Work on those areas for the next sprint
• Move on
• Repeat

30. Conclusion
• You need metrics to make a successful free-to-play game
• They are useless unless you use them to make informed
decisions
• And then act on them
• It doesn’t even matter if my spreadsheet is right: look for
the improvement in the metrics over time, not the absolute
number
• If the spreadsheet doesn’t fulfil your needs, change it
• (And if you want to, send it back to me, or tell me what
you’ve changed)

31. 26 Pre-register for the book
o http://www.gamesbrief.com/52-game-idea-bombs/
o THANK YOU FOR LISTENING

32. Thank you
nicholas@gamesbrief.com
Follow my blog
www.gamesbrief.com
Buy my books
www.gamesbrief.com/spreadsheet