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Business Model of Social Games - Gerald Tan (2011-Jan-25)
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  • 1. Business Model of Social Games TIGA Event - Casual Games Meetup (2012-Jan-25) Gerald Tan Co-Founder, COO (Head of Product)
  • 2. 3
  • 3. GERALD TANCo-founder, COO (Head of Product)PlumbeeStrategic Advisor Hooplo Media 2011Independent Consultant 2011Senior Product Manager / Producer Playfish (EA) 2009-2011Finance and Business Manager Pogo.com and EA OnlinePublishing (EA) 2007-2009Financial Reporting and Control Manager EMI Group PLC2004 - 2007ICAEW Qualified Chartered Accountant2002gerald@plumbee.co.ukTwitter: @tan_gerald
  • 4. Each key metric is connected 5
  • 5. Rightbenchmarks is essential 6
  • 6. Different Business ModelsSubscriptions Freemium + Lite Freemium Advertising + (Display) Microtransactions Freemium + MTX : Most effective business model 7
  • 7. Definitions Uses Freemium: Freemium: - use for free but premium - low barrier entry point content chargeable Microtransactions: Microtransactions:- virtual items purchasable - pay according to what for small amounts of “perceived” value is real currency 8
  • 8. Users
  • 9. Social Games Mobile GamesSource: Mashable, Oct 2011 10
  • 10. Funnel Reach size of audienceAcquisition + Liquidity adding audience Retention keeping audience Spenders converting to spenders Revenue bottom line
  • 11. #1 Reach 12
  • 12. Reach Reach Acquisition + Liquidity Retention Spenders MAU and DAU Revenue Differs by genre Resources Mgt Casual Gaming / Casino• DAU big ranges (Cityville • “Real game mechanics” • “New-ish” category peaked at 100M, • Light and easy to get • Slotomania (1.7M), Millionaire City 2.5M, into - casual player DoubleDown Casino Restaurant City 5M) • Bubble Witch Saga (1.1M), Bingo Blitz (0.9M)• Competitive genre – (4.2M DAU and rising) • High ARPDAU most games are in this • Bejeweled Blitz (peaked • Older female skew category at 4.6M) 13
  • 13. #2 Acquisition and Liquidity 14
  • 14. ReachAcquisition and Liquidity Acquisition + Liquidity Retention Spenders RevenuePaid Installs • As low as $0.1 to start • $1 to $3 depending on segments • Auction based platform • Scale and spend is punishedViral Installs • k-factor ranges btw 10% to 25% • Good social games with strong viral hooks can be very high at start • Reach close to peak within 3 to 4 months 15
  • 15. #3 Retention 16
  • 16. Reach Retention Acquisition + Liquidity Retention Spenders Revenue Retention rates• Day 2 retention rates is crucial• Good games retain 35% to 40%• Overtime quality installs drops• Retention by level and on-boarding drop offs to prevent lapsing users Newbies and Veterans • Day 3 - 7, D14, D21, D30, D60 – there is a difference between newbies and veteran retention 17
  • 17. Newbie + Veteran Average RetentionDecay curve of a social game Only 35% and 45% of users % returning users Veterans actually come back the next day Newbies The rest lapse out 18
  • 18. #4 Spenders 19
  • 19. Reach Spenders Acquisition + Liquidity Retention Spenders Revenue Metrics• Small % of spenders ( <5%)• Depends on the product offering• By genre ARPDAU is different Price $50 Small % of spenders will generate most of the $20 revenue $5 $1 1% - 5% 95%+ No of users 20
  • 20. #5 Revenue 21
  • 21. ReachRevenue Acquisition + Liquidity Retention Spenders Revenue DAU ARPDAU Conversion DAU rate Spenders Spenders ARPPU 22
  • 22. ReachRevenue Acquisition + Liquidity Retention Spenders Revenue 23
  • 23. 24
  • 24. Gerald Tangerald@plumbee.co.uktwitter.com/tan_gerald 25