What’s bigger: A 2,000 pound whale or a ton of fish?
In the wake of DeltaDNA’s recent publishing of its Game Profitability Index (GPI), there’s been much conversation as to what the findings mean. The GPI, which looked at data from 2,500 mobile games beginning in January 2016, unearthed a clear and seismic shift in the market’s deep oceans: the ROI of finding and feeding a whale is now second best to trawling for smaller fish, which, when added up, provide greater total return.
The effects of this shift for mobile game marketers are multiple. Who you’re targeting, the way you monetize, and how success is measured all must evolve when shifting tactics from focusing on high-spending players to targeting large numbers of more casual players. Let’s explore some of the critical thinking on how to do that, identify the new KPIs to focus on, and speculate on what’s behind the shift and what might come next.
F2P has changed the climate
Writing for a.list, Steven Wong notes, until recently, the definition of a “whale” in the F2P mobile gaming market centered on those players who spent the most on in-app purchases (IAP). Because whales spent big, the investment to attract and retain high-value players was considered worthwhile.
But, as markets continue to evolve, so does the definition of a whale. According to Wong, “The fast growth of mobile gaming not only redefines what a whale is but brings into question whether a system where the vast majority of revenues are brought in by a minority of players is sustainable.”
The market model at the other end of the scale (monetizing in tiny increments over many players via ads) is, on the other hand, ideal for F2P games. “These games place higher value on user retention, defining ‘whales’ by the number of sessions and time in-app [rather] than overall spend,” continues Wong.
As a result, F2P is changing which players marketers target as well as the methods used to engage users and measure financial success. This, in turn, demands a shift in focus to KPIs that track marketing efficiency, average revenue per user, retention, and lifetime value (LTV).
Smaller fish are jumping in the boat
The maths is easy: According to DeltaDNA’s GPI, the average revenue per daily active user (ARPDAU) has soared in a number of F2P mobile gaming genres since 2016. ARPDAU is up just shy of 200% in strategy games. The ARPDAU from casino games is up nearly 42%, and there has been a full 25% growth in ARPDAU from puzzle games. For casual games as a whole, ARPU is just $0.15 compared to $0.66 for roleplaying games, but casual games make up for the low ARPU number with scale, according to Go-Globe.
In Dean Takashi’s article for VentureBeat, DeltaDNA CEO Mark Robinson remarks on the shift in how F2P games monetize now as compared to just a few years ago, saying results from the GPI “reveal a trend towards [a] more balanced monetization model, which is [a] lot healthier for developers as it moves away from having to rely on a small number of whales to deliver the bulk of the revenue.”
The net effect of the move away from whale hunting mentality is that vast new swaths of market ocean have opened up for those skilled at driving engagement and keeping players coming back. That is certainly within the wheelhouse of this moment’s marketers, and the numbers seem to back up the anti-whale hunting logic. But the question must be asked: Is the “cast a wide net” strategy any more sustainable as the LTV of each smaller player falls?
The whales aren’t gone—they’ve just changed feeding grounds
Perhaps overlooked among the other revelations that have come from the GPI is that, on average, LTV of mobile game players is falling across mobile platforms. The DeltaDNA report found that LTV on iOS is down about 6.6% since 2016 to $29.07. On Android, the drop is even more precipitous—down about 17.7% to $24.37. It should be noted that the reported drop in LTV doesn’t distinguish between genres, and it’s unclear if this impacts hardcore, mid-core, casual, or hyper-casual games.
The market skeptic looks at these figures, assumes the trend will continue, and wonders how long a growing size of catch can offset a diminishing price per unit. The optimist looks at the same figures and speculates that evolutions in technology will continue to increase ARPDAU and find new ways to replenish stocks, thereby mitigating the risk of diminishing LTV (i.e. It doesn’t matter if fish are worth 10% less next year, because we’ll be able to catch 20% more fish by then).
John Koetsier, VP of Insights at Singular, has a different take on why mobile gaming LTV has dropped: players aren’t spending less on the game, they’re just spending more on the same game away from mobile. “On the one hand, some payments are happening off mobile platforms and on console: PlayStation, for example, for Fortnite,” writes Koetsier for Inc. “On the other hand, hugely successful games like Fortnite are moving off official app stores, like Google Play, in order to process payments on their own and save the 30% platform tax that Apple and Google charge.”
In other words, the most voracious (and therefore most valuable) players are spending time and money across platforms these days. Of course, not every developer can measure player ROI across every platform, channel, device, or experience, which makes the idea of modern whale hunting even more daunting. Fortunately, ad monetization tools are a viable and readily available solution for independent developers and smaller studios, and “lower value” prospects can generally be acquired for less upfront cost, and be incentivized to remain for considerably less than whales.
For now, whale-oriented marketing sleeps with the fishes
Whales have always been important in mobile gaming, and they always will be. Players who will spend $100 per month, per week, or per day on your app are keepers. As Koetsier writes., “Money like that talks,” and its siren call will force marketers to get better at chasing whales across channels, mobile and otherwise.
In mobile gaming, the rise of the ad-supported model means billions of new players will emerge and F2P marketers will refine their techniques for acquiring them quickly and sustainably. As mobile gaming marketers focus on the catch just below the surface, the whales may be left to rest, hidden safely beneath the as-of-yet impenetrable haze of deep omnichannel engagement and attribution.
With time, the whales may rise again and marketers may hunt them anew. But for the foreseeable future, those F2P apps that lure the abundant masses and monetize through ads will likely claim greater bounty than those apps hunting whales through IAP.