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Agenda [1/2]Recap
Intro
Startup types
Mobile games
Startup type + stages
Establishing goals
Mobile games
2
IntroHow you make money drives most of what should be measured, this is basically defined by:
Stage of the company (as seen in last class)
Activity of the company
Starting point: big picture and look for what a “engaged" costumer is.
Fundamental blocks
Segment: different users mean different monetisations
Optimize for good costumers
5
Startup typesThere are several ways of building a business
It is an ever-increasing list
https://hackpad.com/Web-And-Mobile-Revenue-Models-final-EgXuEtSibE7
Consider Amazon:
Transactional, physical-delivery, SEM, marketplace, UGC…
10
Startup typesAs a matter of simplicity, we chose to focus on six models described by Croll & Yoskovitz (2013):
E-commerce: Amazon
SaaS: Skype, Dropbox, etc.
App (in-app purchases): Angry Birds, Clash of Clans, etc.
Advertising: Online newspaper, blogs
Social network (UGC): Facebook, Twitter, etc.
Two-sided marketplace: Uber, Ebay, Etsy, etc.
11
App modelIt is a model made famous especially after iTunes:
App Store (Apple), Google Play, Microsoft Store, Steam, PSN (Sony), etc.
Seamlessly content purchase
Exclusive to a unique vertical or Porting (more than one store)
Challenge: gatekeeping
Limits continuous deployment or A/B Testing, for example
Workaround:
Downloadable content
Launch in a specific country
Launch in Google Play (faster than App Store)
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App model - Revenue Streams
Upselling: upgrade to bundles that contain a certain number of features
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App model - Revenue Streams
Downloadable content: new maps, new players, etc.
Avatar/Character customisation: clothes, hair, etc.
Advantages: weapons, upgrades, power-ups, etc.
Countdown timers: avoid long waits for progress
Upselling: upgrade to bundles that combines features or various revenue items
Subscription: regular payment of a defined fee.
In-game ads: advertising impression or video watching mid-game
Up-front purchase: buying the game from the store
Gift cards: physical cards that gives virtual credits
22
App model - MetricsRevenue Streams ≠ Business Model
Developers need to track a certain number of metrics
There is a pattern/flow of how to "use" an specific app
Discover: search, featured or ranking
Review analysis: screenshots, ratings or comments
Download: free or paid
Register: email, Facebook, etc.
Play
In-game economy: virtual coins, watch ads, power-ups, upgrades
23
App model - Metrics [Downloads]
It corresponds to the number of times a game has been downloaded
ASO: App Store Optimization
A number of techniques employed to reverse engineer the dynamics of an app store
Getting featured impacts ranking (Distimo):
Android: +42 positions
iPhone: +15 positions
Flurry:
Top 25 apps accounts for 15% of all revenue
Remaining Top 100 accounts for 17%
25
App model - Metrics [ARPU]
It corresponds to the average revenue per active user (monthly or lifetime)
ARPU = Monthly revenue / # monthly active users
There must be a balance between fun and revenue streams
26
App model - Metrics [Churn]
User abandonment must be tracked in 3 time periods:
1 day: bug in registration, tutorial, etc.
1 week: problem in deepness of the game
1 month: poor update/retention planning
27
App model - Metrics summary
Downloads
Costumer acquisition cost (CAC)
Launch rate
Percent of active players
Percent of users who pay
Time to first purchase
Monthly average revenue per user (ARPU)
Ratings click-through
Virality
Churn
Costumer lifetime value (CLV)
Is my strategy working?
Apply analysis techniques: Cohort, Segmentation, etc.
29
Startup type + stage
We have already seen two ways of categorising a certain business:
Type: basic activity and functioning
Stage: maturity and development
31
Startup type + stage
Their combination helps defining the "what" and the "when"
t(Croll & Yoskovitz, 2013)32
Startup type + stage
We have already seen two ways of categorising a certain business:
Type: basic activity and functioning
Stage: maturity and development
33
Defining goals - Intro
Now that we know which and when to focus on certain metrics
The question is: “What's acceptable?”
"What’s normal?”
37
Defining goals - IntroIt is really hard to define baseline for digital products
Ever-changing rules and players
Maturity of a particular model
Rough idea: Startup Compass has a good database on “averages"
Tip: Do not rely on averages, most startup fails
38
Defining goalsSome metrics are foundational for almost all business model:
Growth rate
User engagement
Pricing
Costumer acquisition
Virality
Mailing list effectiveness
Uptime
Time on site
39
Defining goalsSome metrics are foundational for almost all business model:
Growth rate
User engagement
Pricing
Costumer acquisition
Virality
Mailing list effectiveness
40
Growth rate - Goal
Goal: 5-7% / week in terms of stage:
Pre-revenue (Stickiness and Virality): Active users
Revenue on: Growth of revenue
41
Engaged users - GoalsWeb-based service: 30% of registered users / month
Mobile-based:
30% of download users / month
10% of registered user / day
Concurrent usage:
Maximum of 10% of daily users
The rate of 30/10/10 is common across a variety of segments
Moving past that: go to Virality, Revenue or Scale stages
Find leading indicators of growth
42
Pricing - Goal
Depends on the product or service market
Testing price sensitivity is key
Very few startups do so!Recommendation: find the "sweet spot" and aim for 10% below for user growth
(Croll & Yoskovitz, 2013)43
Costumer Acquisition Cost - Goal
It totally depends on the market
Rule of thumb goal: 33% of Costumer Lifetime Value
Churn and Costumer Breakeven has a huge impact on this rate: lagging indicator
Forces a baseline: early comparison
44
Virality - GoalAbove Viral Coefficient above 1 is great, but very hard to achieve
A coefficient of 0.75 is pretty good
Build inherent virality into your game
Artificial virality must be contrasted with the costumers it brings
Important: helps to reduce Costumer Acquisition Cost
45
Goals for App metricsSeveral metrics that applies across segments, as seen previously
Some are more specific for mobile apps
App size
Costumer acquisition cost
Launch rate
Etc.
47
Goals for App metricsSeveral metrics that applies across segments, as seen previously
Some are more specific for mobile apps
App size
Costumer acquisition cost
Etc.
48
App size - App metrics
It should be under 50MB, otherwise your user will need Wi-Fi connection
This can be minimised by downloading additional content after install
49
Costumer Acquisition Cost - App metrics
App Store Optimization: two types of marketing:
Mercenary: paid downloads and review ratings
Brings other users through app store rankings
Goal: $0.50 per install
Legitimate: banner ads within other apps
Organic, more engaged users
Goal: $2.50 per install
Overall CAC: less than $0.75
50
Percent of active players - App metrics
Research from Flurry (200,000 apps):
54% remained after one month
43% remained after two months
35% remained after three months
3.7 interactions per day (high variance)
Engagement increase: 25% to 35% in the third month
Smartphone: 12.9 times / week for 4.1 minutes
Tablet: 9.5 times / week for 8.2 minutes
51
Percent of paying players - App metrics
Freemium: 2% conversion (free to paid version)
In-app purchase: 1,5% of users buys something
53
Average revenue per daily active user - App metrics
Per game genre:
$0,01 - $0,05 for puzzle, caretaking and simulation games
$0,03 - $0,07 for hidden object, tournament and adventure
$0,05 - $0,10 for RPG, gambling and poker games
Aim for above $0,05 (ARPDAU)
54
Monthly average revenue per user - App metrics
Average: $3 per month or $0.10 per day
Depends a lot from market segment
55
Monthly average revenue per user - App metrics
Average: $3 per month or $0.10 per day
Depends a lot from market segment
56
Average revenue per paying user - App metricsDepends on the level of expenditure
Whales: 10% players, ARPU of $20
Dolphins: 40% players, ARPU of $5
Minnows: 50% players, ARPU of $1
Identify leading indicator of behaviour for these categories
Offer in-game monetisations for each kind
57
Review rating click-through - App metrics
Number of people who review an app
Less than 1.5% for paid apps
A lot less than 1% for free apps
58
ConclusionKnowing what to measure drives strategy:
Frequently used with loyalty: in-app purchases, advertising
Frequently used without loyalty: per-transaction fee
Infrequent, low-loyalty: up-front purchase, one time fee
Infrequent, high-loyalty: upselling, invite other users
Having some metrics baseline helps starting somewhere and benchmark
59