Why mobile social games need a platform now morethan ever - Eros Resmini - Openfeint
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Why mobile social games need a platform now morethan ever - Eros Resmini - Openfeint

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Many mobile social games are freemium but lack strong social effects. Only with the help of SNS platforms do mobile social games truly become social and achieve cost-effective acquisition, retention, ...

Many mobile social games are freemium but lack strong social effects. Only with the help of SNS platforms do mobile social games truly become social and achieve cost-effective acquisition, retention, and monetization rates.

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  • Fiscal year 2012 in Japan ends June 30, 2012. Q1 (FY 2012): Net Sales (30,432 million Yen) and Operating Profit (16,646 million Yen) Q2 (FY 2012): Net Sales (41,529 million Yen) and Operating Profit (22,535 million Yen)
  • See attachment I emailed regarding GREE plans in APAC, Middle East, and Latin America.
  • This shows how free apps with IAP are generating more and more revenue for Apple. Couldn’t find stats on what is from IAP vs. microtransaction and coinbased economy.
  • Building games on a social platform provides specific techniques and channels to very efficiently tune the various aspects of the LTV calculation. Engages players, lowers the cost of acquiring new users, to increase margins.
  • Social network and platform provide everything you need to increase LTV and decrease CPI/CPA, at a seemingly low cost. Without social network and platform, devs have to seek these methods on external channels which adds friction, and management and overhead costs. You could argue that on mobile there is a ceiling on growth for existing social freemium games without any type of predominate platform to provide this efficiency. Social network: users are aggregated and discover game through happenstance or because they’re pinged by friends within social network. On mobile, these platforms are built within an SDK that developer implements within game. User discovers social network within game.
  • Acquisition: App portal and requests speed acquisition and lower cost of acquisition (otherwise would have to get through ad networks). Retention: Ability to constantly ping the network, reawaken users and bring them back, publish content, run sales, etc. Also if platform is doing its job well, it’s easy for players to get back into the game. (On mobile there is a lot of fragmentation: messages may be sent through SNS or email; context is lost. You may be able to send user into game but not to a specific point within a game.) Monetization: highly engaged user base monetizes better, can better promote monetization opportunities and universal currencies (On Facebook, universal currency has worked well and provides liquidity).
  • Everything is more costly without the platform. Acquisition: ad networks are spotty for coverage and vary in terms of conversion accuracy. Their targeting systems don’t have refined targeting criteria on metrics (i.e. who spends, who likes this game genre). Some specialty install networks are developing this targeting technology but it’s limited. Have to manage campaigns across multiple channels=dealing with varying CPI rates and requiring people to sit and watch these campaigns. If you consolidate this in a common platform it simplifies things and should reduce costs. CPI may increase over time within a given platform (this has occurred on Facebook) but it is still cheaper than managing multiple campaigns without a platform. Retention: use channels like push notification, SNS, and marketing promotions but the return and full conversion to get players back into your game is more difficult. Tracking installs on iOS is very difficult. When all this activity is contained within a given platform, these types of metrics are readily available and overall conversion rate should be higher. Monetization: Monetization is dependent upon retention which leads to difficulty increasing ARPU. Also don’t have a common currency. (However, monetization can be well tuned in games that are not on platforms. In this situation, games are hyper sensitive to monetization and ARPU maintenance when user acquisition and retention are not easy because these costs are high and developers need to earn a margin. So, they adopt strategies to have games that cater to high engagement audiences.)
  • Case study of JP and US platforms
  • Casual gamers began playing games online through various casual game portals. In 2007, many casual game portals ignored players who wanted to connect to each other in-game. However a few did not: Pogo.com’s focus was online games with community features and aspects. MSN and Playfirst also ventured into the more social realm of online games, introducing things like badges (MSN) and microtransactions (Playfirst’s DinerDash). Facebook began in 2004 and by 2007, already had 25 million users and was growing fast… http://www.gamasutra.com/php-bin/news_index.php?story=15955
  • Facebook owns the online social game market because they mastered social first, drawing in the huge user base and retaining and monetizing them. Zynga’s DAU (62M currently) grew as a function of Facebook’s DAU (483M currently).
  • We will see the same transition that we saw with PC games, on mobile games. And, for the first time in history that smartphone sales are outpacing PC sales.
  • Mobile social games have succeeded in recent months without platforms, however this success and growth isn’t sustainable. Next slide covers the challenges in the global mobile social market.
  • Users and Games Facebook: 483M DAU Google+: 90MM users (60% use a Google product daily) and 35 games http://www.forbes.com/sites/jeffbercovici/2012/01/19/whoa-google-plus-has-54m-daily-users-not-quite/ https://plus.google.com/games/directory?hl=en GREE: 190MM users and 7,500 games Mobage: 35MM users and 1,800 games http://techcrunch.com/2012/01/11/ngmoco-partners-with-glu-mobile-to-bring-gun-bros-to-mobage/ Zynga: 62M DAU Game Center: iOS 5 will offer turn-based game support http://developer.apple.com/technologies/ios5/ http://www.pcworld.com/article/241921/up_close_with_ios_5_game_center.html
  • Emerged as a social network
  • Designed to bring in a lot of users to the network: widely accepted theme, easy game mechanics…designed to bring in high DAU
  • Facebook as a whole ecosystem vs. casual game portals (wild tangent, big fish, real arcade) consumers are moving away from these PC sites and moving to Facebook, zynga, etc. this happened on PC and will happen on mobile. Angry birds, fruit ninja, etc. and we experienced this in openfeint, but mobile is moving to a facebook like ecosystmea nd this is what will happen in mobile. On pc device people were consuming info from casual sites to FB. Same movement to social network content is happening on mobile.
  • http://www.appdata.com/apps/facebook/291549705119-cityville
  • Fix citations: cite article instead of link Case study A: Analyst at Sterne Agee Case study B: CEO of NaturalMotion
  • Fix citations: cite article instead of link What companies were not successful without a platform. Case study A: Analyst at Sterne Agee Case study B: CEO of NaturalMotion

Why mobile social games need a platform now morethan ever - Eros Resmini - Openfeint Why mobile social games need a platform now morethan ever - Eros Resmini - Openfeint Presentation Transcript

  • Why Mobile Social Games Need a Platform Now More than Ever Eros Resmini SVP of Marketing & Developer RelationsConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • GREE Overview Japan’s Leading Mobile Social Gaming Platform Tokyo Founded December 2004 Founder & CEO Yoshikazu Tanaka International San Francisco Founded January 2011 CEO Naoki AoyagiConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • OpenFeint Overview Leading Mobile Social Gaming Ecosystem • Mobile social gaming standard with millions of users globally • Cross platform ecosystem: iOS + Android • Open source & customizable UI • Founded in April 2009 in Burlingame, California • Acquired by GREE in April 2011Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • GREE Financial Overview Net Sales & Operating Profit USD 2007 2008 2009 2010 2011 • $5 Billion market cap Net Sales 3.8M 34.6M 164.1M 414.5M 750M O. Profit △1.2M 12.3M 98.4M 230.3M 370M • Fastest Growing Tech Company in Japan USD (Millions) • 2,636% revenue growth over 3 years • Q2 FY2012 record high revenue ($536M) topped Zynga ($311M) * Fiscal year-end, June 30 Source: Deloitte Technology Fast 50 Japan 2010Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • GREE’s Global Reach Amsterdam London Seoul Beijing San Francisco Tokyo Dubai Singapore São PauloConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Growing User and Game Network Live GamesPlayers (Millions) 190+ MM 7500+ Unique User Accounts Live Games 2010 2011 2012 2010 2011 2012 Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • A Platform Symbiosis mobile social designConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Growth in Free-to-Play Games Game Design Shifting to Freemium with IAP Premium games User Revenue monetize users once Free-to-play with IAP $ Paid Longer play = more $$$$ F2P games monetize users many times Premium Game Virtual goods market was $7.3B in 2010; will Time game played double by 2014 Download App Source: Zynga SEC filing, via In-Stat market intelligence firm.Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Free-to-Play Games Monetize US App Store: 20 of Top 25 Grossing Games are Free to Download Source: iTunes store February 18, 2012Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • IAP Increasingly Generates Revenue % of 2011 US Apple App Store Revenue from Free Apps Source: Distimo Report, 2011 (* Top 200 grossing iPhone apps in the US per month)Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Goal of Freemium Games Increase Player Lifetime Value (LTV) Player Lifetime Revenue Engagement Value = Per User X (LTV) Cost Per Acquisition (CPA)Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Goal of Freemium Games LTV Greater than Cost Per Acquisition (CPA) Lifetime Cost Per Value Acquisition (LTV) (CPA)Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Social Games are Special Social is a unique variant of “freemium” that uses social network effects to increase LTV and lower CPI/A SNS or social platform Game Economics Player Lifetime Engagement Value = Revenue X (LTV) Per User from friends Cost Per Requests Acquisition (CPA)Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Social Gaming Ecosystem Social Games are More Efficient on Platforms Facebook: Users Start with SNS, then Discover and Play Games Mobile: Users Start with Games, then Tap into SNSConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Benefits of Social Games Ecosystem Optimizes Acquisition, Retention, Monetization • App portal optimizes distribution Acquisition • Cross promotion builds user base • Social & communication tools engage users SNS Social Platform Retention • Games and platform engage users • Viral effect cross games Monetization • Standard virtual currency across all games on platform increases ARPUConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Why Fragmentation is Inefficient Inhibits Acquisition, Retention, Monetization Acquisition Multiple High cost & Through campaigns poor results Multiple Ad Networks Retention “Loose coupling” of users Low retention Channels are Email, SMS, notifications Weak Limited Monetization Dependent on retention Difficult to Due to Univ. currency, VG tools increase ARPU Economic ScaleConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Case Study: Game Evolution on PC & MobileConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • PC: Casual Game Portals Early Portals Lacked Strong Social Effects Most portals lacked social features, inhibiting player- to-player interaction. SNS Some portals emerged offering weak social features, badges, and micro-transactions.Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • PC: Facebook Social Games Emerged on Facebook in 2007 Facebook won social and dominates the online social gaming market. SNS Developers leverage Facebook’s high DAU and social effects to retain and monetize users.Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • 2012: A Pivotal Moment Smartphone Sales Outpace PC Sales Global Smartphone vs PC Sales出所: MorganStanley 「 Mobile Internet Trend 」より当社作成 Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Mobile: Fragmented Network Games on Mobile are Currently in a Fragmented Player Ecosystem Users currently discover social network within each game. SNS Fragmentation makes acquisition, retention and monetization challenging for developers.Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Mobile Game Type Evolution Mobile Game Type Becomes Increasingly Social Free-to-Play Free-to-Play Free-to-Play Social Games Social Games Arcade Games Games with In- (fragmented (within social App Purchases & ecosystem) network) Virtual EconomicsConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Mobile: Social Gaming Platforms Platforms are Emerging to Solve Fragmentation Acquisition Similar to the shift we saw on PC, mobile games are Mobile moving to social platforms. Social SNS Platform Retention These platforms provide efficient channels and Monetization features for developers.Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Emerging Mobile Social Platforms Current global marketConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • NimbleBit: Tiny Tower Mobile Social Game Without a Platform Social games can be successful without platforms and viral friending loops Apple named Tiny Tower the 2011 iPhone Game of the Year Boasts 1 million DAU Zynga recently announced similar title on mobile called Dream Heights Sources: http://www.pocketgamer.biz/r/PG.Biz/Tiny+Tower/news.asp?c=36660 http://www.gamesbrief.com/2011/07/ios-tiny-tower-on-track-to-make-3-million-in-its-first-year/Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Global Mobile Market Challenges … but several platforms are emergingConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Potential Platform Landscape SNS Focus Social Platforms Meta-Platforms Game Focus OS Platforms Studio PlatformsConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Business Strength GREE Integrates User IDs, SNS, Games, Platform Business Field Device Global SNS Platform Game Mobile Unified ID Game Center ✔ ✔ ✔ ✔ ✔ Google+ ✔ ✔ - ✔ ✔ ✔ ✔ ✔ ✔ - ✔ ✔ - ✔ ✔ - ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • GREE Platform: Addressing Global Mobile Audience GREE global platformConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • GREE + OpenFeint A New Global Platform for Developers and Gamers Social Games 7,000+ Games Current Current New Global GREE Japan OpenFeint GREE Platform Platform Platform High-ARPU 150MM+ users users, plus social 12,000+ developers know-howConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • GREE Platform Strategy Offer developers the most robust toolset to take advantage of the global mobile gaming market Global Social OpenConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Comprehensive Offering 190 MM Users Unified global platform Cross promotions through developer announcements Key regional distribution partners Promotional programs Distribution Acquisition Localization services Wall posting Friend invites Gifting Incentivized invites Social sharing Social sharing Engagement Push Notifications Virality Gifting Dashboard access to game Universal billing analytics International currency Game, player, and management monetization data Monetization AnalyticsConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Thanks! Questions? eros.resmini@gree.net facebook.com/gree twitter.com/gree_corpConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • We’re Hiring! Apply Now San Francisco office apply at GREEjobs.com London, Beijing, Singapore, Seoul offices apply at corp.gree.net/uk/en/ - Admin & HR - Legal - Art & UX - Marketing & PR - Business Analysis - Operations - Biz Dev & Operations - Product - Engineering - SalesConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Appendix 35Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • GREE Japan Platform Grew as a Game Platform on a Carrier Platform 1st mobile social game launches GREE goes public Users (Millions) Japanese Mobile Carriers GREE 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • World’s First Mobile Social Game GREE’s Tsuri Star Shows Early Design Launched in 2007. Successful for over 4 years. Goals are to fish, buy special tools, participate in events, and show off skills. Why so popular? •Popular hobby •Simple rules •The more you play, the more you discover – simple but involved game playConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Facebook & Zynga Users Zynga DAU Grew on Facebook Platform Daily Active Users (Millions) Sources: Zynga SEC Filing and Facebook SEC Filing.Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Zynga Revenue Growth CityVille * Daily Active Users (Millions) Revenue (Millions) Farmville Café World Zynga Annual Revenue Facebook DAU Zynga DAU Note: FY 2011 Zynga revenue is speculated based on the assumption that Q4 revenue will be the same as Q3 revenue.Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • High-DAU vs. High-ARPU Strategies Differ with Platform Conditions CityVille Kingdoms of Camelot •10MM+ DAU •210K DAU •Highest MAU FB game •High % paying users •Lions share of FB users •Maximize LTV •Leverage DAU to cross •Competitive strategy in promote other games consolidated marketConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Recent Zynga in the PressArvind Bhatia, Analyst Zynga spent $120M on Marketing Torsten Reil, CEO of at Sterne Agee (Jan-Sep 2011) NaturalMotion Acquired 400K new users Acquired 1M new users 3M unique payers in Dec 2010; 3M unique payers in Dec 2010; 3.4M in Sep 2011 3.4M in Sep 2011. But factor in 20% attrition rate and attracted 1M new users Spent $300 per new user Spent $120 per new user Each new user spends $150 Each new user spends $150 Zynga Loses $150 Per Zynga Makes $30 Per New Paying Customer New Paying CustomerConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Case Study: Zynga Jan-Sep 2011: Zynga spent $120M on Marketing and users grew from 3M to 3.4M A Arvind Bhatia, Analyst at Sterne Agee B Torsten Reil, CEO of NaturalMotion Acquired 400K new users Acquired 1M new users Each new user Each new user spends $150 spends $150 Lost $150 Per New Earned $30 Per New Paying Customer Paying Customer Sources: http://www.pocketgamer.biz/r/PG.Biz/NaturalMotion+Games+news/news.asp?c=37153 http://www.gamasutra.com/view/news/39747/Analyst_Zynga_is_losing_150_per_new_paying_customer.php? utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+fingergaming+%28FingerGaming%29Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Case Study: Zynga Jan-Sep 2011: Zynga spent $120M on Marketing and users grew from 3M to 3.4M A Arvind Bhatia, Analyst at Sterne Agee B Torsten Reil, CEO of NaturalMotion Acquired 400K new users Acquired 1M new users Factors 20% attrition, so 1M total new users Each new user Each new user spends $150 spends $150 Lost $150 Per New Earned $30 Per New Paying Customer Paying Customer Sources: http://www.pocketgamer.biz/r/PG.Biz/NaturalMotion+Games+news/news.asp?c=37153 http://www.gamasutra.com/view/news/39747/Analyst_Zynga_is_losing_150_per_new_paying_customer.php? utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+fingergaming+%28FingerGaming%29Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • Need to Factor Attrition Rate Case B Factors Attrition, Leading to a Larger Acquisition Number and LTV Users Acquired B 20% Attrition Larger Total New Acquisition Paying Number Users & LTV A (3.4M) Marketing $ 44Confidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.
  • The Future is Mobile Mainframe Personal Desktop Internet Mobile Internet Computing Computing Computing Computing ~1970s 1980s 1990s 2000sConfidential Copyright © 2004-2012 GREE,Inc. All Rights Reserved.