Next-Level Indie Forum Recap: How to Improve Free-to-Play Mobile Game Business Models
February 3, 2015
The free-to-play mobile game business model is here to stay. Building a successful mobile game business, however, isn?t as easy as publishing a free-to-play mobile game and hoping players will just spend, especially for indies. Free-to-play requires longer and more expensive production processes and continuous adjustments. Fortunately for indies, there?s still a healthy opportunity to create a successful mobile game business with free-to-play.At the Next-Level Indie Forum (co-located with the Mobile Games Forum) in London, I anchored a chat with a cast of industry experts to discuss mobile game monetization and business models for indie developers.?The panel composed of:
- Daniel Hasselberg, co-founder and CEO of MAG Interactive, a Swedish mobile game studio behind Ruzzle and Ruzzle Adventures
- Vlad Micu, head of studio at Critical Force Entertainment and indie development consultant
- Vicens Marti, CEO of Akamon Entertainment, a social casino gaming company focused on southern Europe and Latin America
- Matthew Wiggins, co-founder and CEO of JiggeryPokery, a mobile game startup focusing on multiplayer titles
During the chat, I asked the panelists the following questions:
- How do you strike a balance between mobile game revenue from IAP and advertising?
- Can you give an example of one successful mobile game monetization method?
- What measurements do you use to evaluate the success of your mobile game?
- Where are the hot market opportunities for indies to increase revenue from mobile games?
How Do You Strike a Balance between Mobile Game Revenue from IAP and Advertising?The panel hit the ground running with answers when I asked them what their ideal breakdown is between IAP and advertising business models. Hasselberg started the conversation by saying how mobile advertising is key to MAG Interactive?s success. He said that Ruzzle, MAG?s free-to-play competitive word game, has a broad audience but a very low conversion rate of players who pay for an IAP (around 1 percent).MAG compensates its low conversion rate with mobile game advertising, which attributes to roughly 80 percent of its revenue. On Android in specific, Hasselberg added that the amount of paying users on iOS far outweighed that of Android, meaning mobile advertising was that much more important on Google?s mobile platform.On the other side of the coin, Marti said social casino game maker Akamon sees about 80 percent of its revenue from IAP and 20 percent from mobile game advertising. In Wiggins? past experiences building casual games, he said indie developers can achieve 50-50 revenue from IAP and mobile ads with a solid optimization process.Striking a balance between IAP and advertising revenue streams requires an acute understanding of a player base. With that sort of information, indies can implement user segments based on their behavior, such as whether they pay or not. In Ruzzle?s case, the game doesn?t display ads in the first three game sessions and the team at MAG continually experiments with different ad frequencies.Can You Give an Example of One Successful Mobile Game Monetization Method?Many of the most successful free-to-play games are those that bake in a business model from the beginning. Since it?s so critical to get the ball rolling on monetization hooks in a game, I asked the group how indies could improve their monetization strategy. Micu said that while indies don?t have as much resources as an established game company, he encourages every studio to add a monetization expert as soon as possible. He added that in free-to-play, a monetization role is as important as a programmer and designer.Wiggins highlighted the video ad integration in Hipster Whale?s Crossy Road. In the Frogger-like game, players can watch video ads to earn virtual coins to use for purchasing new characters. He said the video ads feel like a natural way to unlock more gameplay rather than a disruptive way.What Measurements Do You Use to Evaluate the Success of Your Mobile Game?There?s one fundamental building block of a successful free-to-play game that?s even more important to determine before choosing a business model--figuring out your retention strategy.In a free-to-play game, and all games for that matter, retention is king. Too often mobile game developers focus on how to bring the players in first and how to retain them second. It?s actually quite the opposite especially in free-to-play, where players are used to the plethora of free content and won?t commit to a mobile game unless they feel the thrill, suspense and engagement. In order to build a profitable mobile game business, you need to understand your funnel and track retention for a long period of time.Hasselberg pointed out that the standard retention metrics in mobile gaming are day 1 (D1), day 7 (D7) and day 30 (D30) retention. Among the three, he said D1 is the most important. Hasselberg used Ruzzle as an example, revealing that MAG made various tweaks to Ruzzle--achieving D1 retention that was around 50 percent.When I asked the group about a benchmark for retention, Wiggins said a good distribution of retention rates to strive for is 40 percent D1, 20 percent D7 and 10 percent D3.Micu, however, said high retention rates mainly apply to casual mobile games comparatively to hardcore games. In Critical Force Entertainment?s shooting title Critical Strike, Micu added that the game?s D1 retention is about 10 percent.Where Are the Hot Market Opportunities for Indies to Increase Revenue from Mobile Games?I asked the panel where indies can gain traction for their game without competing too heavily against the big guys in the mobile game industry. Marti explained how Akamon decided to focus on Latin America (LATAM) and southern Spain because they knew they couldn?t compete with major social casino companies such as Big Fish Games and Playtika in English-speaking markets. According to Marti, developers should always take into consideration a three-prong approach for their mobile game business--country, device and genre.According to Micu, the Middle East and North Africa (MENA) region represents the biggest untapped potential for indies since mobile adoption and monetization continues to grow at a torrent pace. More importantly, the leading mobile game companies aren?t paying much attention to this region, meaning user acquisition is still cheap.For loads of data on country, device and genre trends in the mobile game industry, check out the 16-page Power-Up Report that will give you everything you need to know to grow your mobile game business.Want to learn more about the business of mobile games? Subscribe to our blog for regular updates.Subscribe to Our Blog