Business Model of Social Games (Detailed) - Gerald Tan (2012-Mar-01)

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  • Explosion in number of gamers – 4 years ago WoW was cultural phenomenon with 12M players (today medium sized social game)
  • And Facebook: $60Btoday, Omnicom = $15B
  • Based on key learnings and experience
  • Based on key learnings and experience
  • Based on key learnings and experience
  • Business Model of Social Games (Detailed) - Gerald Tan (2012-Mar-01)

    1. 1. Business Model of Social Games University of Bournemouth (2012-Mar-01) Gerald Tan Co-Founder, COO (Head of Product)
    2. 2. Does music go away?
    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. 4. Business Model of Social Games
    5. 5. 8
    6. 6. Evolution 9
    7. 7. Games Timeline PONG 2008 Golden age of arcade machines Social Games
    8. 8. Before 2008:• Games = Niche• Big, But Closed Industry• Non-Gamers Not Welcome• Barriers to entry – you need a console
    9. 9. Number of gamers exploded: 2000: 250M 2011: 1B+• New fast-growing „open‟ platforms (Fb, iOS)• Metrics-led design, new generation of game devs• Broadband penetration so very accessible• Free to play
    10. 10. Like 90s dot.com boom it is hyped andinflated…But Social Games companies have REALREVENUE and PROFTIABLEZynga• Q4 revenue = $311K … and raised $1B IPO in Dec-11• Market capitalization $9B vs $5B for EA
    11. 11. Why Should You Care?• 150B minutes spent EVERY MONTH on social games • That’s an average of 10 minutes for everyone on the planet!• 81M people play social games at least once a day • 49M play a few times a day• 33% of console players said regular playing pattern declined since starting social games • Console market expected to shrink globally
    12. 12. Social games = (much) biggerthan primetime TV shows
    13. 13. Social GamesMobile GamesSource: Mashable, Oct 2011 16
    14. 14. Console vs PC 17
    15. 15. Rise of PC Gaming Source: ignite Game Technolgies Sept-11
    16. 16. Different Business ModelsSubscriptions Freemium + Lite Freemium Advertising + (Display) Microtransactions Freemium + MTX : Most effective business model 19
    17. 17. 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 20
    18. 18. Social GamesSocial Games = Fastest Growing and Most Disruptive 21
    19. 19. Not just small Game StudiosSource: Various
    20. 20. Users
    21. 21. What do Social Gamers like?Source: Various (see appendix)
    22. 22. Game is a Service not a Product More New Ready to Live Reiterate veteran Features x-promo features Scale down Time dependent on game• Launching the game is just the beginning• Metrics and analytics• User Lifecycle• Ready to x-promo out 25
    23. 23. User life cycle Engagement Conversion Repeat Installs Virality and Monetization and Billing spend Retention• Different features for different stages of user life cycle• Fine tune with metrics• Predictive analytics• KNOW YOUR USER 26
    24. 24. The two week sprint Planning:Specs and Sprint Stories and AssigningRoadmaps Planning Tasks team GO Sprint: CodingArt goes starts Code Play LIVE first (front and Review testing backend 27
    25. 25. Studio SetupStudio Setup Tech Lead Producer MarketingLead Back Lead Flash Lead Art & Game PM CM End Developer Design DesignerBack End Flash Art & Design AnalystDeveloper DeveloperBack End FlashDeveloper Developer• Size is dependent on • Game Design = • Communication needs of the game • UI Fun channels 28 especially on • Artstyle • Game Intel = Data • Community production management
    26. 26. Funnel Reach size of audienceAcquisition + Liquidity adding audience Retention keeping audience Spenders converting to spenders Revenue bottom line
    27. 27. Each key metric is connected 30
    28. 28. Rightbenchmarks essential 31
    29. 29. #1 Reach 32
    30. 30. Reach Reach Acquisition + Liquidity Retention MAU and DAU Spenders Revenue >30M MAU Peaked at = largest 100M MAU Poker site in the world 33
    31. 31. Reach Reach Acquisition + Liquidity Retention SpendersDiffers by genre Revenue Resources Mgt Casual• DAU big ranges (Cityville • “Real game mechanics” peaked at • Light and easy to get RPG 100M, Millionaire City into - casual player • Zombie Lane (1.9M) 2.5M, Restaurant City • Bubble Witch Saga • Vampire Diaries (0.3M) 5M) (4.2M DAU and rising) • Combines social but• Competitive genre – • Bejeweled Blitz (peaked more with a role-playing- most games are in this at 4.6M) game element category Gaming / Casino Hidden Objects• “New-ish” category • Garden‟s of Time 8.3M• Slotomania but most popular game (1.7M), DoubleDown on Facebook in terms of And many more… Casino (1.1M), Bingo Blitz satisfaction • Sports (0.9M) • New games: Hidden • Mid-core strategy• High ARPDAU Chronicles, Jane • etc• Older female skew Austen‟s inpsired Rouge and Romance (BBC) 34
    32. 32. Source: Various Feb-12
    33. 33. #2 Acquisition and Liquidity 36
    34. 34. ReachAcquisition and Liquidity Acquisition + Liquidity Retention Spenders RevenuePaid InstallsViral Installs 37
    35. 35. #3 Retention 38
    36. 36. 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 39
    37. 37. 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 40
    38. 38. #4 Spenders 41
    39. 39. 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 42
    40. 40. #5 Revenue 43
    41. 41. ReachRevenue Acquisition + Liquidity Retention Spenders Revenue DAU ARPDAU Conversion DAU rate Spenders Spenders ARPPU 44
    42. 42. ReachRevenue Acquisition + Liquidity Retention Spenders Revenue 45
    43. 43. 46
    44. 44. Gerald Tangerald@plumbee.co.uktwitter.com/tan_gerald 47

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