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.
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.