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4 Years 300 Games - What We've Learned About Free-to-Play

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Talk from Casual Connect Europe 2013. Delves into the performance of synchronous & asynchronous multiplayer, PVP vs PVE, best- and worst-performing genres, and LTV of different payment methods.

Talk from Casual Connect Europe 2013. Delves into the performance of synchronous & asynchronous multiplayer, PVP vs PVE, best- and worst-performing genres, and LTV of different payment methods.


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  • So far, so good, but we didn’t want to limit ourselves and our developers to just ad revenue
  • There was actually a lot more going on than we realized in our Silicon Valley bubble, especially in Europe, where Bigpoint, Innogames, etc were already building strong businesses
  • So without much research we made a whole lot of assumptions
  • Addplatformer with coins image
  • The great redistribution of VC money to indie devs. We worked with some great teams who’ve gone on to success (Hundreds, Solipskier, Bubble Safari, the Papa’s Pizzeria series) but most of the teams were over their head doing multiplayer, and we were giving advice about things we didn’t yet understand.
  • By summer of 2009 we were pretty depressed about the prospects of this ever working, though FB games were making real money and generate a lot of energy in the space.
  • In the end the openness of the Kong platform saved things. An indie MMO called Sacred Seasons became a sleeper hit on Kongregate over the summer and once they integrated kreds, the first non-funded game to do it, we suddenly had some traction, and a roadmap of the kind of games that could work.
  • After 4 years we have a broad variety of core & mid-core games, from developers large & small, East & West, designed for FB or for stand-alone sites or Kongregate itself. And with that many & variety of games we can do a lot of great analysis. Looking back at our original assumptions here’s some of what we’ve learned.
  • For CC buyers median transaction is$20, average of $31. 20% of our transactions are $100+, same % as $5, and those $100+ account for nearly half our revenue.
  • That’s a 3x difference in LTV! Now there’s some selection bias going on, someone who unclicks the “store cc” box is probably a more careful spender, but it’s hard not to believe it’s a substantial portion of the difference. I expect storing is why CC buyers are about 20% more valuable than Paypal buyers, where the default is “not stored”.
  • Team Fortress 2 and WoW may be able to sell significant amounts of cosmetic items but it takes a huge, passionately engaged audience to work at all.
  • Don’t think both is a worse than just asynchronous. Adding some synchronous to a successful async game is generally successful. But some games with both focus too much on the synchronous.
  • Explain bubble chartSome synchronous games do very well, but on average async does betterSingle-player games low ARPU but can do a decent amount of revenue, especially in-line with how much easier they are to make.
  • PvE helps drive engagement and retention, PvP drives deeper spend, combo is additive perhaps because PvE is a good stepping stone to PvP.
  • A single-player with strong RPG elements will outperform a multiplayer game without them. This is one of the biggest mistakes we made in our initial games. It shows up most strongly in retention and ARPPU. Regardless of how much you like a game you’ll invest more (whether time or money) where you feel a sense of progress.
  • I don’t think genre is destiny. All three of the weaker subgenres are very popular with players, but the structure of the games makes the monetization less automatic. Character progression tends to be weaker, and there’s less reason to continue to invest. Once I have a couple of guns/pets I like, why buy more? But if done right they can
  • Again some selection bias – those willing to use a site/play a game in English are likely more committed and more educated.
  • For us this was the biggest lesson.
  • Transcript

    • 1. 4 Years, 300 Games:What We’ve Learned About Free-2-PlayCasual Connect Europe 2013Emily Greer, Co-Founder & COO
    • 2. Brief History of KongregateLaunched in 2007 as developer-friendly, open platform for freeweb games – Only source of revenue was advertising – Almost all games single-player & Flash – Level & achievement system attracted core, male audience
    • 3. The New New ThingWe’d heard about something called“microtransactions” that were a huge source ofrevenue for web games in Asia Not many games had tried them in the US, but virtual worlds like Second Life, Gaia Online, Habbo & IMVU were doing well with them
    • 4. What Were We Thinking?1. Transactions will mostly be <$1, therefore – Payment processing costs are a big deal – Incenting larger purchases will be valuable – Stored credit cards and existing balances will be a powerful way to reduce friction2. Players will be buying cosmetic items, gifts, power-ups & content3. Multiplayer/social elements are crucial4. US/English speaking much more valuable than any other market
    • 5. Let’s build a platform!• Because of the transactions costs & friction we should build a site-wide currency for our developers to use• There’s no point to creating a currency if there aren’t games to use it
    • 6. The Blind Leading the Blind• Funded 6 games, focusing on synchronous multiplayer & unique gameplay• Monetization elements tacked on, shied away from pay-to-win elements: – Cosmetic Items (Dinowaurs & Remnants of Skystone) – VIP subscriptions with more content (Skystone, Battalion) – Some power-ups & currency (Zening, Skystone, Battalion)
    • 7. Launch to FailureOur currency “kreds” launched in November 2008“Premium” gameslaunched graduallyover the next 6-9months with decentratings but minimalsales
    • 8. Open Sesame First FB Game 1st Asian MMO 1st MMO
    • 9. 4 Years, 300 Games
    • 10. “Transactions will be really small, <$1” Transactions Revenue 2% 1% 3%$5 11% 7% 7%$10 20%$20 11% 14%$50 24%$100$250 22%$500 23% 37% 18%
    • 11. What Were We Thinking? Revisited1. Transactions were going to be really small, <$1 mostly, therefore  LOL! – Payment processing costs will be a big deal  Only on mobile – Incenting larger purchases will be valuable  Still very true. Testing has shown that bonusing larger purchases raises revenue by 14%, increases buyers who spend $100+ by 25%
    • 12. You Always Need More Storage – Stored credit cards and existing balances will be a powerful way to reduce friction  Also very true LTV on non-stored credit card buyers: $66, 3.6 trx LTV on stored credit card buyers: $195, 7.8 trxIn general the higher the friction of the payment type, thelower the value of the buyer: % of Type LTV Avg Trx # of Trx Revenue Credit Card $ 130 $ 28 4.7 50% PayPal $ 110 $ 25 4.4 32% Mobile $ 43 $ 8 5.7 7% Prepaid Cards $ 69 $ 19 3.6 6% Offers $ 10 $ 2 4.4 5%
    • 13. “Players will buy cosmetic items, gifts, power-ups & content”Almost all sales (95%?) are for items that affectgameplay – ~70% purchases are for permanent items and upgrades, about 30% go to consumables like energy – Cosmetic items have minimal sales, but cool-looking items sell better than more ordinary ones – Gifting behavior is quite light with our 85% male audience – Content sells somewhat in single-player games, but sells best mixed with a package that includes skill points or another power-up.
    • 14. “Multiplayer/social elements are crucial” Yes! But it still doesn’t look like we expected it to. In the early games we funded we focused on synchronous multiplayer, both PvP and co-op PVE. That was a mistake. Type % 50 Plays % Buyers ARPPU ARPU Synchronous 1.4% 0.54% $43 $0.25 Asynchronous 3.6% 0.80% $88 $0.66 Both 2.9% 1.07% $51 $0.55 Single-Player 0.8% 0.85% $7 $0.05
    • 15. ARPU & ARPPU
    • 16. “Multiplayer/social elements are crucial” What about PVP vs PVE? Both! Type % 50 Plays % Buyers ARPPU ARPU PvP 2.2% 0.63% $61 $0.38 PvE 2.4% 0.56% $24 $0.14 Both 2.8% 0.91% $71 $0.65 Single-Player 0.8% 0.85% $7 $0.05 Guilds make everything better – all top games have them. Guild wars & guild leaderboards are very powerful.
    • 17. Multiplayer is very important, but it’s not the mostcrucial element.Turns out the single most important aspect of agame is strong RPG/character progression.Type % 50 Plays % Buyers ARPPU ARPUMultiplayer RPG 2.6% 0.75% $69 $0.51Multiplayer Non-RPG 1.0% 0.45% $9 $0.05Single-player RPG 1.8% 1.29% $12 $0.10Single-Player Non-RPG 0.2% 0.53% $4 $0.02
    • 18. So what genres work best?Some of the best sub-genres: % 50 Plays % Buyers ARPPU ARPUEmpire Builder 3.9% 0.87% $104 $0.78CCG 2.6% 1.01% $65 $0.71Lootfest 3.3% 0.88% $67 $0.66Some of the weakest sub-genres: % 50 Plays % Buyers ARPPU ARPUPet Battlers 1.9% 0.97% $19 $0.18Artillery 1.3% 0.61% $26 $0.14Shooters 1.7% 0.56% $19 $0.11
    • 19. “US/English speaking much more valuable than any other market”Broadly true – 65% of Country % Buyers ARPPU ARPU Switzerland 6.96% $ 248 $ 17.24 Kuwait 1.64% $ 499 $ 8.19our revenue comes from Austria 5.49% $ 143 $ 7.88 Norway 4.43% $ 143 $ 6.34English-speaking Germany 5.77% $ 100 $ 5.75 United Arab Emirates 1.07% $ 512 $ 5.46countries. Singapore 2.26% $ 203 $ 4.59 France 5.34% $ 85 $ 4.56 Cyprus 2.18% $ 207 $ 4.53 Netherlands 4.66% $ 96 $ 4.47 Sweden 3.95% $ 112 $ 4.44Individual smaller Denmark 4.03% $ 106 $ 4.27 Belgium 4.94% $ 74 $ 3.64markets outperform the Japan 2.99% $ 118 $ 3.54 United States 4.20% $ 81 $ 3.40US, however, especially Australia 3.29% $ 102 $ 3.37 Finland 2.73% $ 122 $ 3.32Northern & Western Canada United Kingdom 3.81% $ 86 $ 3.29 3.54% $ 84 $ 2.97Europe Russian Federation 3.64% $ 78 $ 2.83
    • 20. Keep Going, Keep LearningWe struggled for nearly a year (two includingdevelopment) before we saw any success.Your first game isn’t likely to do well either. Free-2-play is hard, and many important elements arecounterintuitive. But once the elements cometogether the improvement is exponential
    • 21. Die EndeTo learn more/find links to other talks visit developers.kongregate.comTopics include: • retention • big spenders • item pricing • promotion management • moreFor web games contact us at apps@kongregate.comIf you’re interested in mobile publishing it’s mobile@kongregate.comFollow me on Twitter: EmilyG