F2p market foundations
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F2p market foundations

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Quick overview about the f2p market in Europe, a talk I held in Copenhagen 2009 but is still valid

Quick overview about the f2p market in Europe, a talk I held in Copenhagen 2009 but is still valid

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  • Weekly payment
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  • Out of 280+ games, not market share
  • Out of 280+ games, not market share
  • 182 companies studied

F2p market foundations F2p market foundations Presentation Transcript

  • Free to Play Games
    • Essentials
    • by Teut Weidemann
    • Consultant Online Entertainment
    • Please do not put online for download without my permission. If you use parts of this presentation please quote me as the source
  • Definition: Classic Business
    • Retail Sale
    • Buy before you play
    • Reviews, Demos as guidelines
    • Risk of returns
    • Very indirect customer feedback
    • System Specs sensitive
  • Classic Market
  • Free to Play (=f2p)
    • No costs involved
    • free game download
    • or free access via browser
    • try before you commit: no costs involved
    • Low entry barrier
    • Usually low system specs
    • Majority are online games (MMO)
  • f2p specifics
    • If your game sucks the customer has nothing to loose when leaving
    • Because its free customer accepts compromises in quality*
    • So: How do you make money?
  • f2p Business
    • Extra services (Premium accounts)
      • also called Freemium Games
    • Timesavers
    • Items
    • Customization
    • = Micropayment or Itemsales
    • Advertising < 5% of revenue (excl. USA)
  • f2p Micropayment Examples
  • f2p business
    • Successful sale items are very dependent on the game type & genre
    • Business success is closely tied to game design
    • Knowledge of economy basics essential
    • Thus f2p designers need to relearn
    • Thats why the classic industry hasn‘t „got it“ yet
  • User Attributes
    • Anonymous
    • Can leave anytime (low stickyness)
      • This effect is called „Churn Rate“
    • Usually brings 0.5-2 friends with him
    • Once he pays, he pays even more
    • Pay Variables:
  • User Values
    • Churn Rate: how many leave per month
    • Reg to Active: How many play* after registering
    • *Active User Definition: returning after first day and first login
    • Active to Pay: How many actives pay = Conversion Rate
    • ARPU: Average Revenue per User
    • ARPPU: Average Revenue per Paying User
    • CPA/CPL: Cost per Acquisition/Lead (of user)
    • LTV: Lifetime value
    • PCCU: Peak Concurrent Users
    • MAU/DAU: Monthly/Daily active users
  • User Origins
    • Due to low system specs ...
    • Users comes from countries usually not strong as a classic games market
    • Low average income (below $400)
    • can‘t afford high spec PC‘s or Consoles
    • So many play in Internet Cafes
  • Country Origin Example
  • Example 2
  • f2p Economic Principles
    • Online games = Persistent Social Entertainment
      • Entertainment : has value from day 1
      • Persistent : day 1 value = 0, increases with time
      • Social : day 1 value = low (except Facebook games), increases with time
        • Network effect (works both ways!)
    • Recurring costs needs recurring revenue
      • Online Games = service not product
      • Marginal costs tend to zero
    • Free = no friction
      • Lowest possible barrier to entry
      • Others are important : accessibility, downloads, signup forms...
      • Keep CPA < LTV
      • Source: Thomas BIDAUX
  • Business Case
    • 1 Million registered users
    • Reg to Active: Churn rate varies (we assume 60%)
    • Rule of Thumb: 5%-15% Users pay i.e. 400.000 active users:
      • 5%: 20.000 paying users
      • 15%: 60.000 paying users
    • ARPPU 15€: 300-900 thousand/month (ARPU: 0.75-1.5€)
    • ARPPU 30€: 600-1.8Mil per month (ARPU: 2.25-4.50€)
  • Market Size & Forecast ARPU(!) Source: IDATE Sept. 2008
  • f2p Marketing
    • Viral
      • Community Management
      • Facebook, Twitter, etc.
    • Media Coops
      • payed per user (€0.50/active), you get their reach
    • Online (SEM, SEO)
      • Click Ads don‘s do good
      • Google SEM does (and similar)
    • For each Channel CPA can be exactly defined
      • So you know what a paying user costs (on the cent!)
  • Freemium Games Examples
    • Various Sources, mainly from icopartners.com
  • Dofus
    • Game: Dofus
    • Genre: Browser-friendly fantasy MMO (Flash/java)
    • Developer: Ankama (France)
    • Numbers: 170 000 PCCU; 400 000 Subscribers; ARPPU 5 €
    • Key territories: France, Spain
    • Premium features:
    • Zone privileges
    • Item privileges
    • No combat cap
    • PVP
    • Pets
    • No cap on crafting
    • Housing
  • Runescape
    • Game: Runescape
    • Genre: Browser-based fantasy MMO (java)
    • Developer: Jagex (UK)
    • Numbers: 250 000 PCCU; 1 000 000 Subscribers;
    • ARPPU 5 $
    • Key territories: US, UK, Netherlands, Scandinavia
    • Premium features:
    • Zone privileges/Item privileges
    • Quests privileges/Extra skills
    • Transport privileges/Dedicated servers
    • Dedicated mini games/Extra Bank space
    • Housing/Extra emotes
    • Game: Tibia
    • Genre: Client-based fantasy MMO
    • Developer: Cipsoft (Germany)
    • Numbers: 50 000 PCCU; 300,000 Active, 100 000 Subscribers; ARPPU 5 €
    • Key territories: Poland, Eastern Europe
    • Premium features:
    • Zone & Transport privileges
    • Extra spells
    • Housing
    • Dedicated servers
    • Leveling & Bank privileges
    Tibia
  • Other f2p Games in EU Game From Genre Size Country Tribal Wars Innogames (DE) Management 4M actives DE, EEU, PT, NE, TU Travian* Travian (DE) Management 4.4M actives (250K PCCU) 51 languages in 40 countries Hattrick Extralives (SE) Sport Management 1.6M actives IT, DE, SP, PT Managerzone Power Challenge (SE) Sport Management 500K active TU, PO Stardoll* Stardoll (SE) Life Sim 35M registered, 5M active UK, FR, PO Moshi Monsters Mind Candy (UK) Virtual World 400K active US, UK AQ Worlds Artix (US) RPG 1.5M active US, UK, Nordic Spineworld Playdo Virtual world/RPG 3M registered US, UK, Nordic
  • Micropayment Games Examples
    • Various Sources, mainly from icopartners.com
  • Habbo Hotel
    • Game: Habbo
    • Genre: Browser-based kid virtual world (flash)
    • Developer: Sulake (Finland)
    • Numbers: 10 M active users; ARPU 1.3 $
    • Key territories: Nordic, UK, Germany, France
    • MT features:
    • Furnitures/Clothes
    • Pets and Pet food
    • Mini-games access
    • Screenshots
    • Home page perks
  • Metin 2
    • Game: Metin 2
    • Genre: Client-based Fantasy MMORPG
    • Publisher: Gameforge (Germany)
    • Numbers: 5 M active users;
      • 35K PCCU; ARPPU 20 €
    • Key territories:
    • Germany, Poland, Turkey
    • MT features:
    • Gameplay & Experience buff
    • Gold gain buff
    • Repair items
    • In Game shop
    • Potions/Trasnports
    • Looks/Gender swap
  • Dark Orbit
    • Game: Dark Orbit
    • Genre: Browser-based Space management game
    • Publisher: Bigpoint (Germany)
    • Numbers: 70K+ PCCU; ARPU 3.6 €
    • Key territories: EU, Turkey
    • MT features:
    • Elite items
    • Faster real time game features
    • Discounted items
  • O-Game
    • Game: Ogame
    • Genre: Browser-based Space management game
    • Publisher: Gameforge (Germany)
    • Numbers: 2.4M active users
    • Key territories: France, Germany, Italy, Turkey. Exists in many languages.
    • MT features:
    • Commander: Building queue, More UI
    • Admiral: More fleet slots
    • Engineer: Less damage taken
    • Geologist: Better mining
    • Technocrat: Better espionage
    • Trading ressources
  • Runes of Magic
    • Game: Runes of Magic
    • Genre: Client-based MMORPG
    • Publisher: Frogsters (Germany)
    • Numbers: 500 K active users;
      • 30 K PCCU; ARPPU 20 €
    • Key territories:
      • Germany, UK, Nordic
    • MT features:
    • Transport/Mounts
    • Death management
    • Housing customization
    • Experience Buff/Loot buff
    • Crafting tools/Respecs
    • Chests keys/Pets
  • Other Micropayment games in Europe Game From Genre Size (estimates) Country Dragonica Gala Net Europe MMORPG N/A Rappelz Gala Net Europe MMORPG 150K FR, DE Last Chaos Gamigo MMORPG 60K DE Battleforge EA RTS 60K DE Seafight Bigpoint Management 500K EU (+35) Silkroad Online Joymax MMORPG 300K TU Florensia Burda IC MMORPG 120K DE, FR 4Story Gameforge MMORPG 70K DE Nostale Gameforge MMORPG 100K DE, FR, UK Perfect World Games Masters MMORPG 200K DE, PO Knight Online K2 MMORPG 500K TU Cabal Online Games Masters MMORPG 230K TU, EEU, DE Twelve Sky 2 MAYN Interactive MMORPG 150K US, DE, TU
  • Online Gaming Portals
    • Central attraction sites of „new“ players
    • Some do 250k new registrations/day!
    • Some have 90+ million of registered users
    • Example: Bigpoint.com
    • Attracts different user then the viral
    • Good for media coops (white labeling)
  • F2P developers in Europe overview
    • Sample from 280+ games
  • F2P developers in Europe overview
    • Direction taken by EU Developers
  • F2P developers in Europe overview Studios Geographical breakdown
  • Future of f2p
    • Huge growth already (350%+/year)
    • Just germany does €500+ mil/Year revenue
    • They will look as good as retail next year
    • What happens to „classic“ games at that time?
    • f2p is already here, however the classic industry is too slow to adapt it
  • Q & A
    • Contact me:
    • on Facebook
    • or Twitter (Teut)
    • or LinkedIn
    • or Xing
    • or ... simply [email_address]