Freemium Gaming Metrics 2012 C a sual G ame s Sec tor Rep or t
What are freemium games? Offering a game, product or service free of charge while charging a premium for advanced features, functionality, or related products and services. Also referred to as Free to Play or F2P.
What it was.
Freemium Games
Traditionally, the basic* metrics that mattered were: For subscription revenue models:
Monthly Cost of Subscription X # of Subscribers = Subscription Revenue For retail:
Price per Copy Sold X Volume Sold = Retail Revenue With freemium: • Monthly cost of subscription - does not apply. • # of subscribers - not all of them make purchases. • Price per copy sold - prices vary and inventory rotates. • Volume sold - Inventory rotates and varies greatly.
* Obviously, there’s a lot more that goes in to calculating revenue. Here we’re talking about back of the envelope estimates.
What it is now. Monthly Active Users X Conversion Rate X ARPPU = Monthly Revenue
Why it Matters. The freemium revenue model is driving growth across gaming genres. MMO Revenues Worldside - Freemium vs Subscription (millions) $10000
Subscription F2P
$8000
Social Gaming Revenues Worldwide (millions) $15000 $12000
$6000
$9000
$4000
$6000
$2000
$3000
$0
2011
2012E
2013E
2014E
2015E
Worldwide Freemium MMO revenue grows twice as fast as subscription MMO revenues in 2012.
$0
2011
2012E
2013E
2014E
2015E
The genre that helped popularize the freemium model shows revenue growth through 2015E. Freemium Gaming Metrics 2012 Ca s ua l G a m e s A s s o c i at i o n
The New Metrics and New way Monthly Active Users What it means
What questions it answers
The number of unique players that have logged in or performed some in-game action within the last 30 days.
> How stable is a game’s traffic? > How successful was a promotion or ad campaign in attracting players?
What success looks like A successful launch or promotion should result in a sharp increase or uptick in MAU. Angry Birds with Friends MAU
Mature, long-term successful games are stable in MAU with highly variable steady-states. Zynga Texas HoldEm Poker MAU (thousands of unique players)
(thousands of unique players)
20,000
40,000
15,000
37,500
10,000
35,000
5,000
32,500
0
30,000
12
12
0/
7/
2 6/
1 6/
12
2
12 4/
1 6/
1/
1 6/
2
1 8/
6/
2
1 5/
12 0/
12 7/
1 2/
6/
6/
3 5/
12 4/
2 5/
12 1/
2 5/
2 5/
2 /1
2 /1
19 3/
2 /1
16 3/
2 /1
13 3/
2 /1
10 3/
2
1 4/
7 3/
2
2 /1
1 1/
3/
3/
2 /1
27 2/
2 /1
24 2/
21 2/
Caution > H igh traffic is not necessarily a signal of success and low traffic is not sign of failure. Conversion and average revenue per user (ssee next page) must be considered too. > L ooking at MAU short-term snapshots (less than 30 days trending) can be misleading. Recent promotions and ad campaigns often increase traffic to unsustainable levels. Source: Appstats.eu
to measure success:
Freemium Games
Stickiness What it means Social Empire MAU
Percentage of monthly active users that return to the game on any given day, often written as the DAU/MAU ratio. This ratio is used to measure the propensity of a player to return.
(thousands of unique players)
8,000
7,250
What questions it answers
6,500
> Are players coming back? > How engaged are a game’s players?
5,750
What success looks like
5,000
2
/1
2
/1
20
17
2
/1
12
/1
14
11
12
8/
2
12
5/
2
6/
6/
6/
6/
6/
6/
2/
2
/1
/1
30
2
/1
Caution > Stickiness is best measured when the game is in its steady state as rapid growth or decline of audience can do funky things to this number. Additionally, stickiness is a measure of the games natural engagement AND the quality of your incoming traffic. Look at optimizing both of these inputs when improving stickiness. This is especially important because all too often, developers will spend tons of money trying to improve the game’s stickiness by adding features and functions to the game—when the real problem is customer acquisition efforts are simply targeting the wrong audience.
27
2
2 /1 20 6/ 2 /1 17 6/ 2 /1 14 6/ 2 /1 11 6/ 12 8/ 6/ 12 5/ 6/ 12 2/ 6/ 2 /1 30 5/ 2 /1
6/
5/
5/
24
5/
/1
21
5/
The higher the better. Most successful freemium games have a 15% to 20% DAU/MAU ratio.
Monthly Active Users
Empire Avenue MAU (thousands of unique Facebook App - Social Empireplayers) MAU
40
38.7
37.5
36.2
35
2 /1
27 5/
2 /1
24 5/
21 5/
Freemium Gaming Metrics 2012 Ca s ua l G a m e s A s s o c i at i o n
The New Metrics and New way Conversion Rate What it means
What questions it answers
The percentage of players who spend real money in your game. Calculated by dividing the number of currently active payers by the total number of active players for a given period of time.
> How good is your game at convincing players to pay real money? > What is a particular audience’s propensity to spend real money? > What strategies/tactics should you employ to increase revenue?
What success looks like
40%
For social games, conversion rates vary from 1% to 5%. Niche categories, like mid-core social games, have higher conversion rates.
25%
Conversion Rates - Social Games
Brazil Mid-Core
Brazil
3%
US
40%
10%
Brazil Mid-Core35%
5%
30%
0%
2%
US Mid-Core
4% 1%
3%
Nov 2011 Dec 2011 Jan 2012 Feb 2012 Mar 2012 Apr 2012
Brazil US
2% 1%
Nov 2011 Dec 2011 Jan 2012 Feb 2012 Mar 2012 Apr 2012
40% 35% UK 30%
20%
40%
10%
35%
5%
30%
0%
20%
Fantasy
30%
Average
25% 20%
Germany
Sci-Fi Fantasy Average
15% 10% Client 5% 0%
UK
Germany Client
40%
25%
Sci-Fi
35%
15%
15%
Browser Based >>>>> 1% to 10% Client Based >>>>> 12% to 50%
Client
25%
Browser
Conversion Rates - MMOs by Distribution Method
Germany Average
UK
15%
0%
For MMOs, conversion rates depend heavily on distribution method. Browser based MMOs have conversion rates under 10%, while client based MMOs are 3x as high.
Fantasy
20%
5%
*Source: SuperData Research.
Average
Client Sci-Fi
25%
10%
0%
Fantasy
15%
US Mid-Core
4%
0%
Sci-Fi
Conversion Rates20% - MMOs
5%
5%
MMO conversion35%rates also vary by region and 30% as fantasy or sci-fi). sub-category (such
Sci-Fi 40%
Sci-Fi Fantasy
35% 30% 25% 20%
Fantasy
Germany Average Average
UK Browser
15% 10%
Caution 5% 0% > D10% eclining conversion does not UKautomatically mean a game is Germany losing payers. It can also signal that a large number of new Browser 5% players has been added to the overall population. > H0% igh conversion mean high spending. UK rates do not automatically Germany Browser
to measure success:
Freemium Social GAMES Games
Average Revenue per User & Average Revenue per Paying User What it means.
What questions it answers
Average Revenue per Paying User (ARPPU): Average revenue generated from each paying or converted user. Calculated by dividing total game revenues by number of paying or converted users. Average Revenue per User (ARPU): Average revenue generated from each playing user. Calculated by dividing total game revenues by number of active players. ARPU is useful when comparing the effectiveness of various customer acquisition techniques.
> How much does a game’s average payer spend? > What’s the average player’s spend for a particular title or game type?
ARPU
ARPPU
Revenue
Revenue
Players
Payers
What success looks like Since freemuim games have no set prices like retail or subscription, ARPPU varies immensely. Wide ranges are seen when comparing regions. Germany loves Sci-Fi MMOs and spends accordingly. Germany Sci-Fi MMO ARPPU: $58.77 France Sci-Fi MMO spending reflects less enthusiasm for the genre. France Sci-Fi MMO ARPPU: $14.83
Wide ranges are seen when comparing paying gamers. The top 10% of paying gamers outspend the rest by a factor of 15 to 100. ARPPU Spenders Compare Spain Social Spain Social GamersGamers Top 10% Top 10% MiddleMiddle 40% 40% BottomBottom 50% 50%
Wide ranges are seen when comparing subcategories. Mid-core social games attract a demographic who identify as gamers and are accustomed to spending on gaming entertainment. This difference is evident when comparing mid-core social game spending to city building spending. US Mid-core Social Game ARPPU: $105.13 US City Building Social Game ARPPU: $34.46
* Source: SuperData Research. May 2012 MMO ARPPU numbers. April 2012 Social ARPPU numbers.
$123.83 $12.13 $12.13 $1.90 $1.90 $123.83
Spain Social Gamers
BrazilGamers MMO Gamers Brazil MMO Top 10% Top 10% MiddleMiddle 40% 40% BottomBottom 50% 50%
$49.16$49.16
$8.84 $8.84
$3.11 $3.11
Brazil MMO Gamers
Caution > A RPU/ARPPU alone is not enough to assess the health of a game’s player base. > Dependency on top spenders increases overall risk for a game’s revenue.
Freemium Gaming Metrics 2012 Ca s ua l G a m e s A s s o c i at i o n
Key Terminology ARPPU
Freemium: also called free to play (F2P)
Average Revenue Per Paying User.
Average Revenue per User.
Offering a game, product or service free of charge (such as software, web services or other) while charging a premium for advanced features, functionality, or related products such as virtual goods and services.
BROWSER BASED GAMES
Microtransactions
ARPU
Games played directly inside of a web browser such as IE or Chrome. Often referred to as HTML5 or Flash games.
CLIENT BASED GAMES
Low value transactions at a high volume.
MID-CORE Casual games created for the enthusiast game players.
Games played in a standalone application which is installed on a device typically through download.
MMO
Conversion Rate
Massively Multiplayer Online game where millions of players interact in a game environment.
The number or percentage of users that have shifted from non-paying to a paying status.
Monthly Active Users (MAU)
Cost per Acquisition (CPA)/ Customer Acquisition Cost
The number of unique users that have used an application at least once over the course of a month.
Cost of acquiring leads or customers. CPA is calculated by dividing the cost of advertising by the number of gamers/ players for a given period of time.
PAY TO PLAY (P2P)
CUSTOMER ACQUISITION OPTIMIZATION
RETENTION
Using metrics such as stickiness, retention, ARPU, ARPPU, MAU, DAU and conversion to determine the optimal customer acquisition techniques.
Percentage of a given cohort who remains engaged over a given time. Especially important when evaluating customer acquisition techniques.
Daily Active Users (DAU)
Virtual Goods
The number of unique users that have used an application at least once over the course of a day.
In-game items or game-related services, such as a virtual currency or temporary subscription, that enable or enhance game play.
Users must pay to play game. A limited trial is often used to hook players.
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