One of the most valued metrics in gaming is ARPDAU (average revenue per daily active user). This metric is especially significant to freemium game developers. According to research firm SuperData, freemium games accounted for 78% of the $139.9 billion in total gaming revenue generated in 2020. Developers are constantly looking for ways to boost ARPDAU.
Use of IAPs (In App Purchases) alongside traditional in-game ads has proven to be an effective growth strategy for big and small gaming companies alike. According to Statista, IAPs accounted for 73% of total revenue generated by RPGs in 2020. Numerous success stories validate the use of IAPs to enhance monetization among AAA games.
Prior to their $250 acquisition by Zynga, Gram Games tested IAPs on one their ten active games, the rest being ad monetized. The results led Gram Games to move towards IAP implementation across all titles, with 90% of their revenue being generated by this model (in-game ad revenue continued to grow over this time frame as well).
Any sequence of the game where players tend to get stuck should be revamped to keep players engaged in gameplay. Doing so will result in a reduction of churn rates, which allow more time in the player life cycle for monetization. By identifying important issues in game play, developers can use analytics to make sense of those issues and improve upon the user experience.
Identify users that are most likely to be monetized by in-game offers and focus marketing efforts on those users. By targeting segments of users, a marketing team can allocate resources to the highest converting groups and tailor promotions to each specific group’s needs.
Any friction within a game’s purchase funnel can put a damper on revenue generated. Teams should focus on each step of the purchase funnel, from add to cart to order confirmation. If a step of the funnel proves to hinder user conversions, that portion of the checkout process should be retooled to create an optimal user experience.
The ever increasing popularity of the freemium model in mobile gaming has created substantial demand for data analytics services in gaming. Many small development teams do not have the resources to hire a team of trained data scientists, yet the need for analytics is too great to ignore. According to VentureBeat, the global gaming market is expected to reach $218.7 billion in 2024. The collection and interpretation of player data is fundamental to understanding which users can be monetized, identifying the underlying issues causing player churn, segmenting players into actionable groups and communicating KPI’s to stakeholders and investors.
Game makers often put in thousands of development hours before their games reach the masses. As seasoned developers know, this is usually only half of the battle. A large number of active users does not always translate to a higher ARPDAU (average revenue per daily active users). The ever popular freemium model encourages many mobile developers to offer a product for free now in exchange for potential future monetization of that product. Fortunately, the barriers to monetization can be significantly reduced with proper analytics.
With segmentation and appropriate targeting, players can be grouped into tiers and marketing campaigns created based upon that segmentation. Thus, the players with the highest likelihood of converting to paying users can be more aggressively targeted. Furthermore, issues in the game that get players stuck and increase churn can be resolved or even turned into opportunities to monetize would be lost users.
Player retention is one of the key factors that investors and publishers alike are eager to explore. A small to medium size gaming company can be heavily rewarded for an aptitude to digest, improve upon and communicate this metric. As previously mentioned, the use of analytics to identify and reduce “sticky points” in the game is often the first place an astute developer will look to improve upon player retention.
With a monetization target in mind, game developers will look to carve out data driven segments of their active user base. This data will fuel marketing campaigns, user experience development, product development and product life cycle decisions. A segment of users may be more likely to get stuck in certain parts of the game, understanding which part of the user experience creates this obstacle can allow developers to retain and monetize users the otherwise would likely churn.
Key characteristics will define a group of users with the highest ARPDAU. Marketing teams will not only target these users more aggressively with offers, but also look to attract more look-alike users with promotional materials.
While the use cases for analytics may vary widely between small and large game developers, the notion that professionalism can be communicated with that data holds as a constant across the board. Whether communicating KPI’s to stakeholders within the organization, or potential outside investors, an understanding of key metrics and the analytics that support them is critical. An investor in search of a solid ROI will want to see player retention and ARPDAU.
Teams within the same organization may disagree on where to allocate resources, and often a failed release will show evidence of misallocation. A unified team with a set of core metrics and data driven evidence to back them can focus resources on the most meaningful areas of development to ensure a higher likelihood of a successful initial release.