Metrics for a Brave New Whirled Daniel James | CEO | Three Rings www.threerings.net [email_address]

What is Whirled? Player-created Flash virtual world Rooms, avatars, toys, games, music, etc. Social network ‘geography’ (home rooms == profiles, etc.) Flash single and multi-player games to accrue ‘Coins’ (‘play money’) Shop for player creations, comments, ratings, etc. ‘ Bars’, hard currency bought for $$$ Third ‘cash-out’ currency ‘Bling’ earned by creators on Bar sales Small, engaged beta community ~20,000 weekly registered active

Whirled Simultaneous Players

Hourly Simultaneous Players

What is Puzzle Pirates? Casual MMO Broad demographics: Ages 7-70, ‘Double Bump’, 50/50 Male/Female Signed Java Applet, ~60mb, installs from web Subscriptions since launch Oct 2003 Virtual currency business model since Feb 2005 2007 Revenues $4M, ~$3M virtual currency ‘Doubloons’

Puzzle Pirates Metrics Conversion (from landing to registration): ~5% Retention (returning after one month): ~35%,~25% into month 2 Paid Customer Conversion (registration to revenue): ~3.5% Average Customer Lifetime Value : ~$120 Average Registrant ‘Value’: $4.20 Registered Players since 2004: 4,200,312 Customers since 2004: 90,197 ‘Doubloons’, 68,807 Subscription Current active players: ~110,000 Active paying players: ~30,000 Average Hours played per player per month: 21

Moar Reading Andrew Chen www.andrewchenblog.com Eric Ries startuplessonslearned.blogspot.com Slides for this Talk and moar links thefloggingwillcontinue.com

Andrew Chen

www.andrewchenblog.com

Eric Ries

startuplessonslearned.blogspot.com

Slides for this Talk and moar links

thefloggingwillcontinue.com

(mo)AARRR! Dave McClure’s awesomeness: http://500hats.typepad.com/500blogs/2007/09/startup-metrics.html Updated: http://500hats.typepad.com/500blogs/2008/07/oct-2nd-starton.html

Dave McClure’s awesomeness:

http://500hats.typepad.com/500blogs/2007/09/startup-metrics.html

Updated:

http://500hats.typepad.com/500blogs/2008/07/oct-2nd-starton.html

The Funnel that goes AARRR Acquisition Activation Retention Referral Revenue

Acquisition

Activation

Retention

Referral

Revenue

Acquisition Paths Ads (Networks, Google SEM) Search (SEO) - a problem for rich apps Referral Emails (‘Virality’) Facebook, Myspace etc. Notifications Affiliate Links and Revshare Deals Game ‘Sponsorship’ Clicks Organic ‘Shows up’ Traffic

Ads (Networks, Google SEM)

Search (SEO) - a problem for rich apps

Referral Emails (‘Virality’)

Facebook, Myspace etc. Notifications

Affiliate Links and Revshare Deals

Game ‘Sponsorship’ Clicks

Organic ‘Shows up’ Traffic

Cost of Acquisition Dashboard Not all these numbers are real, but they are representative CPM/CPC/CPA washes out to a CPA Whilst optimising and changing flow, CPC or CPM may make sense. Once optimised, CPA is lower risk for buyer! $1.14 $1,265 11,126 6.8% 163,871 0.33% 50,205,778 $0.08 Adsense Source CPM CPC CPA Ad imps CTR Clicks Signup % Users Cost CPA Ad Network 1 $0.50 ? ? 700,000 5% 35,000 $17,500 $0.50 Ad Network 2 $0.30 20,000,000 0.10% 20,000 20% 4,000 $6,000 $1.50

Not all these numbers are real, but they are representative

CPM/CPC/CPA washes out to a CPA

Whilst optimising and changing flow, CPC or CPM may make sense.

Once optimised, CPA is lower risk for buyer!

Viral Coefficient For every new player acquired, how many new players arrive via Referral channels If > 1 then exponential growth. Ye win! Many ‘viral’ mechanics are ‘crafty’ e.g. email scrapers in registration process, FB games with invite incentives Facebook still highly viral, but most apps supplement viral channels with paid ads Myspace reportedly relies more on paid acquisition FB invites work well for ‘frivolous’ Apps, but is there a conflict with ‘alternate persona’ games with depth? Do ‘fantasy’ players want to invite their real friends?

For every new player acquired, how many new players arrive via Referral channels

If > 1 then exponential growth. Ye win!

Many ‘viral’ mechanics are ‘crafty’ e.g. email scrapers in registration process, FB games with invite incentives

Facebook still highly viral, but most apps supplement viral channels with paid ads

Myspace reportedly relies more on paid acquisition

FB invites work well for ‘frivolous’ Apps, but is there a conflict with ‘alternate persona’ games with depth? Do ‘fantasy’ players want to invite their real friends?

Activation Metrics Site Visitors -> Playing Experience (~25%) Different Landing Pages, Straight into Game etc. Forced Registration is efficient But, Retention works out similar to ‘play first’ Registration Conversion (~6% of visitors) Active Players - logged in during the period Simultaneous Players Session Time (~20 minutes PP / Whirled)

Site Visitors -> Playing Experience (~25%)

Different Landing Pages, Straight into Game etc.

Forced Registration is efficient

But, Retention works out similar to ‘play first’

Registration Conversion (~6% of visitors)

Active Players - logged in during the period

Simultaneous Players

Session Time (~20 minutes PP / Whirled)

The Whirled Funnel

Puzzle Pirates Registrations (Different colours are different sources)

(Different colours are different sources)

Retention Metrics Retention - % of new visitors who return to the site within some period Churn - % of total players who leave (usually monthly) Whirled: ~2% Retention, 1st Visit -> Return after one Week ~23% of Registered Players return after one week

Retention - % of new visitors who return to the site within some period

Churn - % of total players who leave (usually monthly)

Whirled:

~2% Retention, 1st Visit -> Return after one Week

~23% of Registered Players return after one week

Retention Cohorts A new Cohort shows up each week Table shows % retained week-after-week These numbers are not ideal!

A new Cohort shows up each week

Table shows % retained week-after-week

These numbers are not ideal!

Improving Retention Sticky Fun! Daily Return incentives (gift box) Email: Notifications, Feeds, Newsletters Validate your emails, check your spam

Sticky Fun!

Daily Return incentives (gift box)

Email: Notifications, Feeds, Newsletters

Validate your emails, check your spam

Referral Channels Word of Mouth: Organic ‘Shows Up’ Registration ‘Find Friends’ Email Game Invites: Email, FB Connect, IM URL cut n paste Trophy Notifications via FB Share Games via URLs, FB, Myspace etc. Share and Embed Rooms

Word of Mouth: Organic ‘Shows Up’

Registration ‘Find Friends’ Email

Game Invites: Email, FB Connect, IM

URL cut n paste

Trophy Notifications via FB

Share Games via URLs, FB, Myspace etc.

Share and Embed Rooms

Revenue Metrics Conversion to Pay - usually % of registered players who pay Average Revenue per Active Player (ARPU) - total revenue / active players, monthly Paying Players / Customers - those who Purchase in that month, OR Active Users that have ever Purchased? Currency purchases are often bursty. Let’s call Paying Players those who bought in the month, and Ever Paid Players those who have ever paid Percentage of Paying Players - Paying Players / Active Players Percentage of Ever Paid Players - Paid Players / Active Players Average Revenue per Paying Player per Month (ARPPU) - purchase amount for those who bought in the month. This is around $50 for many microtransaction games, inc. Puzzle Pirates Average Revenue per Ever Paid Player per Month (AREPPU) - this is usually less, around $10 for Puzzle Pirates, as many active paid players do not necessarily purchase in that month

Conversion to Pay - usually % of registered players who pay

Average Revenue per Active Player (ARPU) - total revenue / active players, monthly

Paying Players / Customers - those who Purchase in that month, OR Active Users that have ever Purchased? Currency purchases are often bursty. Let’s call Paying Players those who bought in the month, and Ever Paid Players those who have ever paid

Percentage of Paying Players - Paying Players / Active Players

Percentage of Ever Paid Players - Paid Players / Active Players

Average Revenue per Paying Player per Month (ARPPU) - purchase amount for those who bought in the month. This is around $50 for many microtransaction games, inc. Puzzle Pirates

Average Revenue per Ever Paid Player per Month (AREPPU) - this is usually less, around $10 for Puzzle Pirates, as many active paid players do not necessarily purchase in that month

Mo’ Revenue Metrics: Lifetime Value Customer Lifetime - average life of a paying customer in months. For PP ~14 months Average Paying Player Lifetime Value (often called LTV) - total earned from a customer over lifetime = AREPPU x Lifetime (for PP this is ~$125) Average Registrant Value - this is the critical value to compare to your CPA = AREPPU x Lifetime x Conversion to Pay For PP = $125 x 3.5% = 4.37%

Customer Lifetime - average life of a paying customer in months. For PP ~14 months

Average Paying Player Lifetime Value (often called LTV) - total earned from a customer over lifetime

= AREPPU x Lifetime (for PP this is ~$125)

Average Registrant Value - this is the critical value to compare to your CPA

= AREPPU x Lifetime x Conversion to Pay

For PP = $125 x 3.5% = 4.37%

Whirled Economy Overview Currency and value: Free / Time Currency, rewards for gameplay (Coins) Hard / Cash Currency, $$$ (Bars, Doubloons) Creator earn-out Currency for Whirled (Bling) Pricing Player-controlled with some guidelines based on creator rating Modest listing fees in Coins Price in Coins to earn Coins, or Bars to earn Bling Listed Items to Date 21,000 Avatars, 31,000 Furniture items, 20,000 Backdrops, 700 Toys, 3,600 Pets, 270 Games, 25,000 Tunes, 28,000 Images

Currency and value:

Free / Time Currency, rewards for gameplay (Coins)

Hard / Cash Currency, $$$ (Bars, Doubloons)

Creator earn-out Currency for Whirled (Bling)

Pricing

Player-controlled with some guidelines based on creator rating

Modest listing fees in Coins

Price in Coins to earn Coins, or Bars to earn Bling

Listed Items to Date

21,000 Avatars, 31,000 Furniture items, 20,000 Backdrops, 700 Toys, 3,600 Pets, 270 Games, 25,000 Tunes, 28,000 Images

Good Economic Management Balance your soft currency faucets / drains Optimize Pricing Refresh and Merchandise Items Limited Edition and Rare Goods Consumable Items / Mini-Subscriptions

Balance your soft currency faucets / drains

Optimize Pricing

Refresh and Merchandise Items

Limited Edition and Rare Goods

Consumable Items / Mini-Subscriptions

Economy: Soft Currency

Economy: Hard Currency

Economy: What Sells (Coins)?

Exchange of Coins and Bars

Players / Purchasers by Age

Spending per Purchaser

Spending by Age

Item Sales Distribution (PP) Products mix of Vanity (clothes, furniture) and Utility (ships, swords) Coin shop, Mostly personal utility, some gifting, all recurring (mini-subscriptions) Portraits, vanity, often groups Rooms / Houses, sometimes group

Customer Development Develop Customers whilst developing Product Ship early, track player behavior Iterate against player behavior and rapidly revise product to meet customer expectations Be prepared to completely re-tool product if customers don’t want it! IMVU is the case study Reading: ‘Four Steps to the Epiphany’ by Steve Blank http://www.steveblank.com/

Develop Customers whilst developing Product

Ship early, track player behavior

Iterate against player behavior and rapidly revise product to meet customer expectations

Be prepared to completely re-tool product if customers don’t want it!

IMVU is the case study

Reading: ‘Four Steps to the Epiphany’ by Steve Blank http://www.steveblank.com/

Billing Bits Payment Breakdown: Credit card (70%, ~2% costs) Paypal (15%, ~2% costs) SMS (~5%, mobillcash, ~10% cost, ~50% carrier markups) Pre-paid Card (~5%, Target via GMG, >20% costs) Others via PaybyCash etc. (~5%, costs vary) New: Offers via Peanutlabs (too early to say) Fraud, Spending Limits Don’t build, but use a provider Twofish, Gambit, Fatfoogoo, Social Gold, Peanutlabs, Offerpal, Super Rewards, Zong, Vindicia, Aria, etc.

Payment Breakdown:

Credit card (70%, ~2% costs)

Paypal (15%, ~2% costs)

SMS (~5%, mobillcash, ~10% cost, ~50% carrier markups)

Pre-paid Card (~5%, Target via GMG, >20% costs)

Others via PaybyCash etc. (~5%, costs vary)

New: Offers via Peanutlabs (too early to say)

Fraud, Spending Limits

Don’t build, but use a provider

Twofish, Gambit, Fatfoogoo, Social Gold, Peanutlabs, Offerpal, Super Rewards, Zong, Vindicia, Aria, etc.

That’s all Folks! Slides going up on the blog later today: http://www.theflogginwillcontinue.com/ Please to RSS! [email_address]

Slides going up on the blog later today:

http://www.theflogginwillcontinue.com/

Please to RSS!

[email_address]