monetization strategies: ios + android
DESCRIPTION
Presented by: John Grotland,TRANSCRIPT
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Monetization Strategies: iOS + Android
John GrotlandGrotland New Media
Grotland New Media LLC
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Y2010 Y2011 Y2012 Y2013 Y2104 Y2015 -
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
3,500,000,000
4,000,000,000
4,500,000,000
OtherMicrosoftRIMSymbianiOSAndroid
Smartphone Growth by OS: 2010-2015
Source: Gartner, April 2011
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Tablet Growth by OS: 2010-2015
Y2010 Y2011 Y2012 Y2013 Y2014 Y2015 -
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
900,000,000
1,000,000,000
other cumula-tive
Microsoft Cumulative
iOS Cumula-tive
Android cumu-lative
Source: Gartner, Aug. 2011
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Laws of Game Monetization1. It’s the game, stupid.
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Laws of Game Monetization
1. It’s the game, stupid.
2.Monetization = part of game development strategy, ≠ the game development strategy.
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Laws of Game Monetization1. It’s the game, stupid.
2.Monetization = part of game development strategy, ≠ the game development strategy.
3.Better to develop monetization plan at concept phase, not at beta or beyond.
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Laws of Game Monetization1. It’s the game, stupid.
2.Monetization = part of game development strategy, ≠ the game development strategy.
3.Better to develop monetization plan at concept phase, not at beta or beyond.
4.Proper monetization = commitment
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Laws of Game Monetization1. It’s the game, stupid.
2.Monetization = part of game development strategy, ≠ the game development strategy.
3.Better to develop monetization plan at concept phase, not at beta or beyond.
4.Proper monetization = commitment
5.Monetization is more than how to price
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Revenue ModelsFour revenue models dominate iOS/Android
Pay per download (PPD)FreemiumFree-to-play (F2P)Advertising/Offerwalls
Auto-renew subscriptions not there yetodds are it will happen—likely Android firstApple—polite “no” for now
Most rev models not new, just implemented with great rapidity in iOS and Android
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Pay Per Download (PPD)
Original monetization method on iOS, AndroidYou buy it, you own it
In general, becoming a more difficult propositionCompetition, price sensitivity = revenue curve
droppingFree games with IAP intro in 2009 skewed market
heavily towards freemium/F2P$0.99 PPD game now seen as “investment”
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PPD: Pros and ConsPros
Simplest game to buildStill can work for strong brands, console ports
Customers know what they are getting and understand the valueBut there are “non-branded” games still make it
work—AB, CTR, etc.
ConsDifficult to make non-branded titles successfulUnless a well-known title (console game port), low
pricing key to successNot many tools for keeping rank highSuccess these days typically requires extended
commitment to title
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Plants vs. Zombies
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Final Fantasy Tactics: War of the Lions
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Freemium
Freemium games are free to downloadBut can only play to a point before you have
to buy/unlock the full (“premium”) version or discrete components with IAP
Can include other monetization features, such as virtual currency
Added to iOS in Q4 2009; added to Android in Q2 2011
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Freemium: Pros
Low barrier to entry for customer; great way to get a mass audience to try a new game
Well executed Freemium game can generate 2X-4X revenues of PPD
Works well for non-branded titles and new IP
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Freemium: ConsConversion dependent on branding and pricing;
non-branded titles can do less money than if they were PPD
Necessary to balance how much free gameplay before conversion
Like PPD, not many tools for rank support
Like PPD, success enhanced by extended commitment to titleFrequent feature updatesSustained marketing effort
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Free To Play (F2P):High Replay Value = Stable Revenue
• Currently generating ~50% of all games revenue on iOS; rapidly growing on Android Market– 16 of top 30 App Store grossing apps are F2P games
(11/14/11)
– Free to play games are free to download titles that have high replay value
– High replay value combined with in-app purchase can create a more stable revenue base than PPD games
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Free To Play (F2P)
• F2P games allow players to play for free if they either will work for items or VC, or if they complete certain tasks effectively– But certain items/features only available to buy with
VC
– Successful monetization typically comes from small percentage of large base buying VC
– 3%-5% conversion percentage typical for very successful games
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F2P: VC, “Social”Almost all F2P games use Virtual Currency (VC)
Players use VC to pick and choose items within the game
Typical to give greater value in VC the more real money spent
F2P games often put in same category as “social” gamesBest when lots of people playing at the same timeBut direct player interaction not necessary for
successmany F2P games on iOS/Android don’t require
customers to interact with each other—e.g. some of the more recent Glu games.
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F2P: ProsARPU typically much higher than the standard PPD
or freemium games (up to 3X-4X)
Works well for non-branded titles/new IP
Low barrier to entry for customer; great way to get a mass audience to try a new game
Social aspect, plus persistence on device deck, add a viral marketing component
Often have a much longer revenue lifecycle than other types of games
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F2P: ConsMore expensive to develop than PPD and
Freemium titles (initial dev cost ~2x-3X more expensive)
Requires back-end systems and servers, particularly for multiplayer and cross-platform games
Consistent need for game feature updatingRequires direct marketing to be involved in
development process to help with social/viral marketing aspects
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Zynga Poker
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Vegas City iPhone: DL vs. Rev
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Ad-Supported Games Currently important on Android, where app stores not as
successful as iOS Angry Birds: $1MM/month ad revs on Android Q2 2011 Glu = many forms in Android games; some in iOS
Classic advertising (banner ads; jump out of game when clicked, CPM/CPC models) are still used, but…
Newer incentivized advertising/customer acquisition models becoming huge—higher CTR, revenue per CPM/CPC/CPD “Rich Media” ads (like iAd) Offerwalls (TapJoy, Flurry, etc.) Video ads
Incentivized ads in Freemium, F2P games becoming important—can be traded for items, VC, etc.
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Ad-Supported Games Pros
significant source of revenue if implemented properly and creatively
No barrier to initial consumer adoption
Useful to monetize freemium titles until conversion F2P games for consumers who don’t want to
shell out $$
Continuing revenue stream
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Ad-Supported Games Cons
Angry Birds Android exception to rule typically very low revenues relative to PPD for average games
(10%-30%) Success requires massive download numbers Massive download numbers require serious, sustained
marketing push Classic banner ads likely to become less
relevant as Offerwalls, Rich Media and other forms gain popularity
Poor reviews if not properly implemented Requires partnership with ad provider,
inclusion of SDKs, etc.
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Mix-n-Match!
More games coming out now with many monetization methods on iOS, Android
Can be very efficient, creative in maximizing revenue
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Mix-n-Match! ExamplesChair/Epic—Infinity Blade: $5.99 to buy, includes a VC system--
earn or buy “Gold” to buy virtual goods, XP to level up, etc.
Rovio—Angry Birds:iOS: $.99 to buy, regular updates + added levels free to players,
discrete virtual goods to purchase via IAP (plus Rio—sponsored)Android: free with advertising
Glu—Contract Killers (iOS and Android)F2P with VC system to earn and buy credits, discrete items, XP, etc.Banner advertisingIncentivized Offerwalls (Android) , incentivized video ads (iOS)Incentivized cross promotion of other Glu games
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Infinity Blade
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Gun Bros
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Pocket God
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Developer Considerations
Success on iOS/Android means embracing the “Long Tail”“Fire and Forget” game projects less
commonNeed to support 3-6 months after launch to
determine tractionSuccess could mean years of consistent
supportPost launch development, updates on titleAnalytics, analytics, analytics!
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Developer Considerations
Business, Process Structures have to changeClassic designer + producer roles driving game
development not enough—new skillsets neededNeed to add Business/Data/Monetization Analyst role to
drivers of game development processDriving how to incentivize, monetize gamesHow to track, analyze customer behavior, make game
tweaks to maximize player satisfaction, revenue
Development team structure must changeNeed “live teams” to quickly, efficiently make changes to
games based on user analytics
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Developer Considerations
“Long tail” strategy can change nature of relationship with publishers on work for hire projectsTurns game development into more of a
partnership; greater risk sharingAgreements need to reflect that, with
relationship beyond game launch spec’d outNeed to be more wary of partial upfront/rev
share deals on one-off titles in this new environment
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Final Thought
Ed Dille of Fog Studios (quoting Clint Eastwood):
“A man needs to know his limitations.”
So, know what you are good at and focus on those things.
Partner, hire and/or acquire for the things you aren’t.
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Thank You!
John Grotland
Grotland New Media
+1 (201) 757-2453