1. Grotland New Media LLC
Monetization Strategies:
iOS + Android
John Grotland
Grotland New Media

2. Smartphone Growth by OS: 2010-
2015
4,500,000,000
4,000,000,000
3,500,000,000
3,000,000,000
Other
2,500,000,000 Microsoft
RIM
2,000,000,000 Symbian
iOS
1,500,000,000 Android
1,000,000,000
500,000,000
-
Y2010 Y2011 Y2012 Y2013 Y2104 Y2015
Source: Gartner, April 2011

3. Tablet Growth by OS: 2010-2015
1,000,000,000
900,000,000
800,000,000 other
cumulative
700,000,000
Microsoft
600,000,000 Cumulative
500,000,000 iOS
Cumulative
400,000,000
Android
cumulative
300,000,000
200,000,000
100,000,000
-
Y2010 Y2011 Y2012 Y2013 Y2014 Y2015
Source: Gartner, Aug. 2011

4. Laws of Game Monetization
1. It’s the game, stupid.

5. Laws of Game Monetization
1. It’s the game, stupid.
2. Monetization = part of game development
strategy, ≠ the game development strategy.

6. Laws of Game Monetization
1. It’s the game, stupid.
2. Monetization = part of game development
strategy, ≠ the game development strategy.
3. Better to develop monetization plan at
concept phase, not at beta or beyond.

7. Laws of Game Monetization
1. It’s the game, stupid.
2. Monetization = part of game development
strategy, ≠ the game development strategy.
3. Better to develop monetization plan at
concept phase, not at beta or beyond.
4. Proper monetization = commitment

8. Laws of Game Monetization
1. It’s the game, stupid.
2. Monetization = part of game development
strategy, ≠ the game development strategy.
3. Better to develop monetization plan at
concept phase, not at beta or beyond.
4. Proper monetization = commitment
5. Monetization is more than how to price

9. Revenue Models
 Four revenue models dominate iOS/Android
 Pay per download (PPD)
 Freemium
 Free-to-play (F2P)
 Advertising/Offerwalls
 Auto-renew subscriptions not there yet
 odds are it will happen—likely Android first
 Apple—polite “no” for now
 Most rev models not new, just implemented with
great rapidity in iOS and Android

10. Pay Per Download (PPD)
 Original monetization method on
iOS, Android
 You buy it, you own it
 In general, becoming a more difficult
proposition
 Competition, price sensitivity = revenue curve
dropping
 Free games with IAP intro in 2009 skewed market
heavily towards freemium/F2P
 $0.99 PPD game now seen as “investment”

11. PPD: Pros and Cons
 Pros
 Simplest game to build
 Still can work for strong brands, console ports
 Customers know what they are getting and understand the value
 But there are “non-branded” games still make it
work—AB, CTR, etc.
 Cons
 Difficult to make non-branded titles successful
 Unless a well-known title (console game port), low
pricing key to success
 Not many tools for keeping rank high
 Success these days typically requires extended
commitment to title

12. Plants vs. Zombies

13. Final Fantasy Tactics: War of the Lions

14. Freemium
 Freemium games are free to download
 But can only play to a point before you have
to buy/unlock the full (“premium”) version
or discrete components with IAP
 Can include other monetization
features, such as virtual currency
 Added to iOS in Q4 2009; added to
Android in Q2 2011

15. Freemium: Pros
 Low barrier to entry for customer; great
way to get a mass audience to try a new
game
 Well executed Freemium game can
generate 2X-4X revenues of PPD
 Works well for non-branded titles and
new IP

16. Freemium: Cons
 Conversion dependent on branding and pricing;
non-branded titles can do less money than if they
were PPD
 Necessary to balance how much free gameplay
before conversion
 Like PPD, not many tools for rank support
 Like PPD, success enhanced by extended
commitment to title
 Frequent feature updates
 Sustained marketing effort

17. Free To Play (F2P):
High Replay Value = Stable Revenue
• Currently generating ~50% of all games revenue
on iOS; rapidly growing on Android Market
– 16 of top 30 App Store grossing apps are F2P games
(11/14/11)
– Free to play games are free to download titles that
have high replay value
– High replay value combined with in-app purchase can
create a more stable revenue base than PPD games

18. Free To Play (F2P)
• F2P games allow players to play for free if they
either will work for items or VC, or if they
complete certain tasks effectively
– But certain items/features only available to buy with
VC
– Successful monetization typically comes from small
percentage of large base buying VC
– 3%-5% conversion percentage typical for very
successful games

19. F2P: VC, “Social”
 Almost all F2P games use Virtual Currency (VC)
 Players use VC to pick and choose items within the
game
 Typical to give greater value in VC the more real
money spent
 F2P games often put in same category as “social”
games
 Best when lots of people playing at the same time
 But direct player interaction not necessary for success
 many F2P games on iOS/Android don’t require customers
to interact with each other—e.g. some of the more
recent Glu games.

20. F2P: Pros
 ARPU typically much higher than the standard
PPD or freemium games (up to 3X-4X)
 Works well for non-branded titles/new IP
 Low barrier to entry for customer; great way to
get a mass audience to try a new game
 Social aspect, plus persistence on device
deck, add a viral marketing component
 Often have a much longer revenue lifecycle than
other types of games

21. F2P: Cons
 More expensive to develop than PPD and
Freemium titles (initial dev cost ~2x-3X more
expensive)
 Requires back-end systems and
servers, particularly for multiplayer and cross-
platform games
 Consistent need for game feature updating
 Requires direct marketing to be involved in
development process to help with social/viral
marketing aspects

22. Zynga Poker

23. Vegas City iPhone: DL vs. Rev

24. Ad-Supported Games
 Currently important on Android, where app stores not as
successful as iOS
 Angry Birds: $1MM/month ad revs on Android Q2 2011
 Glu = many forms in Android games; some in iOS
 Classic advertising (banner ads; jump out of game when
clicked, CPM/CPC models) are still used, but…
 Newer incentivized advertising/customer acquisition models
becoming huge—higher CTR, revenue per CPM/CPC/CPD
 “Rich Media” ads (like iAd)
 Offerwalls (TapJoy, Flurry, etc.)
 Video ads
 Incentivized ads in Freemium, F2P games becoming
important—can be traded for items, VC, etc.

25. Ad-Supported Games
 Pros
significant source of revenue if implemented
properly and creatively
No barrier to initial consumer adoption
Useful to monetize
freemium titles until conversion
F2P games for consumers who don’t want to
shell out $$
Continuing revenue stream

26. Ad-Supported Games
 Cons
Angry Birds Android exception to rule
typically very low revenues relative to PPD for average games
(10%-30%)
Success requires massive download numbers
Massive download numbers require serious, sustained
marketing push
Classic banner ads likely to become less
relevant as Offerwalls, Rich Media and other
forms gain popularity
Poor reviews if not properly implemented
Requires partnership with ad
provider, inclusion of SDKs, etc.

27. Mix-n-Match!
 More games coming out now with many
monetization methods on iOS, Android
 Can be very efficient, creative in
maximizing revenue

28. Mix-n-Match! Examples
 Chair/Epic—Infinity Blade: $5.99 to buy, includes a VC system--
earn or buy ―Gold‖ to buy virtual goods, XP to level up, etc.
 Rovio—Angry Birds:
 iOS: $.99 to buy, regular updates + added levels free to
players, discrete virtual goods to purchase via IAP (plus Rio—
sponsored)
 Android: free with advertising
 Glu—Contract Killers (iOS and Android)
 F2P with VC system to earn and buy credits, discrete items, XP, etc.
 Banner advertising
 Incentivized Offerwalls (Android) , incentivized video ads (iOS)
 Incentivized cross promotion of other Glu games

29. Infinity Blade

30. Gun Bros

31. Pocket God

32. Developer Considerations
 Success on iOS/Android means
embracing the ―Long Tail‖
 ―Fire and Forget‖ game projects less
common
 Need to support 3-6 months after launch to
determine traction
 Success could mean years of consistent
support
 Post launch development, updates on title
 Analytics, analytics, analytics!

33. Developer Considerations
 Business, Process Structures have to change
 Classic designer + producer roles driving game
development not enough—new skillsets needed
 Need to add Business/Data/Monetization Analyst role to
drivers of game development process
 Driving how to incentivize, monetize games
 How to track, analyze customer behavior, make game
tweaks to maximize player satisfaction, revenue
 Development team structure must change
 Need ―live teams‖ to quickly, efficiently make changes to
games based on user analytics

34. Developer Considerations
 ―Long tail‖ strategy can change nature of
relationship with publishers on work for
hire projects
 Turns game development into more of a
partnership; greater risk sharing
 Agreements need to reflect that, with
relationship beyond game launch spec’d out
 Need to be more wary of partial upfront/rev
share deals on one-off titles in this new
environment

35. Final Thought
Ed Dille of Fog Studios (quoting Clint Eastwood):
“A man needs to know his limitations.”
So, know what you are good at and focus on those
things.
Partner, hire and/or acquire for the things you aren’t.

36. Thank You!
John Grotland
Grotland New Media
john.grotland@gmail.com
+1 (201) 757-2453