R2Games: Maximizing F2P Monetization Presentation at the Montreal International Games Summit 2014 (MIGS 2014)

1. Maximizing F2P Game Monetization:
Stats, Best Practices and Common Mistakes
for F2P Core Games
David P. Chiu
Vice President
Reality Squared Games USA

2. Reality Squared Games (R2Games)
• R2Games is a leading international publisher of free-to-play
browser and mobile games for core gamers
• Games includes hits like Wartune, League of Angels, Blade Hunter,
Dragon Pals and Monkey King Online.
• R2Games.com is a leading platform for F2P games serving 25M+
users in 7 different languages worldwide
• #1 publisher on Kongregate.com, Kabam.com and many other
platforms

3. Reality Squared Games (R2Games)
• One of the fastest growing online game companies
• May 2010 – Reality Square is founded
• Sept 2011 – 1st exclusive game Crystal Saga launches in NAR,
USD$1M in 1st quarter
• Aug 2012 – R2 publishes Wartune in NAR, breaking $1.5M in its
first quarter and $7M in its 2nd quarter
• $100M+ projected revenue for 2014
• 200+ employees with offices in Shanghai, Shenzhen, Seoul and
the San Francisco Bay Area
• CEO Jared Psigoda named one of 2014 Forbes China 30 Under 30

4. More than 35 games published

5. Who Am I?
• Former Senior Director of Business Development
and Developer Relations at Kongregate heading
BD worldwide for Kong web and mobile
• Worked with hundreds of developers on F2P
games
• Presented at MIGS 2013 on F2P monetization and
differences in metrics between 2D vs 3D games
and Asian vs Western F2P games
• Now VP of R2Games USA

6. Last year’s talk at MIGS: Asian F2P vs Western F2P
Source: Kongregate
• Asian F2P games have much higher ARPPUs versus Western F2P games
• What can a Western developer learn from the Asian F2P games to improve their monetization?
• Remember that F2P was born in Korea
• And perfected in China (and quickly became the dominant biz model due to piracy)

7. Graph from last year’s talk
• I can now tell you that the giant
bubble on the top right is a
Chinese MMO game called
Wartune, published on
Kongregate.com by R2Games
• 25+ months since Wartune
launch and still going strong
• ARPPU has increased to $533
(11/6/2014)
• Why is Wartune so successful?
Source: Kongregate, Nov 2013
Wartune
(published by R2)

8. Long term retention matters
Source: Kongregate

9. Long term retention matters
Wartune Lifetime % Buyers by Monthly Cohort
• The more someone plays a game, they more likely they are to
convert from a player to a buyer.
• Becomes a hobby and most committed fans can choose to spend
• Real world example: You can watch baseball for free on TV but
hardcore fans choose to spend money on tickets

10. Long term retention matters
Wartune Lifetime ARPPU by Monthly Cohort
• The more someone plays a game, the more they spend
• More time = More transactions

11. Long term retention matters
Wartune ARPU or User LTV by Monthly Cohort
Therefore, user LTV increases with time

12. Majority of spending comes from most
committed players (Wartune)

13. Best Practices from Wartune and
Asians F2P design for increasing
Retention

14. Wartune Quick Intro
• MMORPG with turn-based
battles, city-building and
isometric-perspective
exploration
• Top grossing game in China
before making it to the West

15. Keep players busy!
More things to do = more players staying
• Solo and team PvE
• Solo and team PvP
• Asynch raids
• Guild battles
• World boss raids
• Farming
• Fishing
• City Building
• Weapon/Gear
Synthesizing & Upgrading
• Astral Collecting and
Combining
• Etc.
Pace the introduction of new features/gameplay modes to not overwhelm
players with a long and intimidating tutorial.

16. Keep players busy!
• Simple Daily Tasks to earn rewards
• Scheduled Limited Time Events
• Daily Quests

17. Keep them coming back
• Daily play bonuses are good to get users coming
back regularly
• But improve on the typical 5-7 day daily bonuses
• Wartune players get a stamp for every day of the
month they play the game
• Rewards for playing 2 days up to 26 days
• Incentivizes longer term play
• Doesn’t “punish” players for missing a day

18. Keep them coming back
• Mini games with additional free plays each day to earn rewards

19. Data from MIGS last year…
• The foundations of a F2P game are a strong RPG elements and a
sense of progress over time
• Building up account, leveling up, adding/improves skills and stats, etc
Type % 50+ Plays % Buyers ARPPU ARPU
Multiplayer RPG 2.6% 0.75% $69 $0.51
Multiplayer Non-RPG 1.0% 0.45% $9 $0.05
Single-player RPG 1.8% 1.29% $12 $0.10
Single-Player Non-RPG 0.2% 0.53% $4 $0.02
Source: Kongregate
Deep RPG mechanics and multiplayer matter:
• 25x ARPU for Multiplayer RPG vs Single Player non-RPG!

20. Aim for the Stars
• Motivate players to get to the next milestone
• Leveling up unlocks features, content, rewards
• Positive reinforcement for progressing

21. Aim for the Stars
• Character level provides a sense of progress
• But also give players ways to measure their strength
–  Wartune’s Battle Rating

22. Aim for the Stars
• And tap into their sense of competition
• Leaderboards for everything
• So players can compete in many ways
• Lifetime, daily gain and weekly gain

23. Best Practices from Wartune and
Asian F2P design for increasing
Monetization

24. Depth of spend
• The longer someone plays your game the more likely they are to buy and
the less price sensitive they become
• Give committed players the ability to spend at $1,000+ if they want
• Have lots of items that are appealing and useful to all players from
beginners to elder players who have played for months or years
• Unlock new items to buy as players level up
• But must also create reasons to want the elder items
• Don’t create a situation where spending is capped by availability or utility.

25. Make the shopping and buying experience as frictionless as possible
• Location, location, location –
make the store easy to find!
• Show balance of hard
currency (Balens)
• Shortcut to buy more
(Recharge button)
• Make it easy to find the what
you want
– Meaningful categories and item
descriptions
– No massive scroll bars

26. Buy Currency Screen
• Bonuses % or/and items for larger hard currency packages
• Clearly call out bonuses of larger packages!
• Make all packages visible in one page for easy comparisons (no scroll bars)
• Hide large packages until after first purchase

27. Make the shopping experience interesting
• First time buyer/ Starter packages
• Seed players with some paid/hard currency and guide “intro purchase”
• Deals/events to get people into the habit of spending regularly
• Offer items that enhance the gameplay experience (not just speedups)
• Intro the right items at the right time
– Lvl 1 players should not be shown the lvl 100+ holy sword that’s on sale for $100)
• Keep them coming back – keep store fresh by adding new items, unlocking items as
players level up and featuring seasonal and time-limited items/ sales

28. Create sense of urgency

29. Other DO’s and DON’T’s

30. Timing is everything : Server times
• F2P: games-as-a-service with players all over the world in different time zones
• Don’t let players wondering what time zone the game is in
• Specify time zones or set a server time and have it be visible so there is no
confusion leading players to miss events/sales
• Minimizes confusion and player frustration
• Bar on top of all of R2’s games clearly lists:
• The server time
• The next event’s start time and a countdown to it
DON’T let there be any confusion about event times
DO clearly call out the server time

31. Timing is everything: Server time zones
• For event-centric games, consider separate servers by time zone
Wartune (English) servers
DON’T do separate servers if your CCUs are too low
DO ensure the CCUs are high enough for competition, and merger servers if needed
DO have at least 2 instances of an event if you do not split servers by time zone

32. Timing is everything: Server time zones
DON’T forget to make adjustments for Daylight Saving Time changes

33. Timing is everything: Primetime
• Events drive up player engagement
• Schedule events during periods of highest CCU
• For core gamers, primetime is in evenings and weekends
Monkey King Online PCU by day
DO schedule limited time events during primetime to get more users into them

34. Keeping the Balance
• Have a robust matchmaking algorithm
• Prevent elder players and big spenders from
slaughtering new players
• Offer protection time or shields after getting attack

35. Why is it important to understand F2P?

36. The Mobile Landscape
• F2P is the dominant business model
– iOS Top 50 Grossing Charts has 1 paid game (Minecraft)
– iOS Top 100 Grossing Charts has 2 paid games
• Players used to downloading free games now
• Free games offer minimal barrier to entry and yield
much higher download rates

37. Mobile F2P vs Paid
• Threes was an original puzzle game priced at $1.99
• 2048 was a copy of a clone of a clone of Threes and
was free
• Threes found moderate success while 2048
became a worldwide phenomenon
• Creator of Threes:

38. Mobile F2P vs Paid
• Difficult for paid games to compete with free games
• And F2P is complex
• Takes time and live servicing a F2P game to really learn
• Particularly difficult if you are used to making paid games
instead of games-as-a-service

39. Mobile user acquisition is expensive
• Need solid grasp of F2P to have high monetizing game
• Need a lot of capital to do paid UA

40. App Store features are incredibly powerful
• Minor feature: 10k to 100k+ installs
• Medium feature: 100k-500k+ installs
• Major feature: 500k to 2M+ installs
***For F2P games, not paid

41. But App Store features are hard to get
# of Apps 1,369,386
Approx. # of apps each week 6,350
# of Games 283,170
Approx. # of games each week 2,177
Promo slots of new games 16

42. The Mobile Landscape
• Mobile distribution is very challenging
• Competition is fierce:
– 283k existing games and thousands new games each week
• App store features are hard to get
• Viral hits are rare (Flappy Bird)
• User acquisition is expensive
• Can lower CPIs with big IP (also costly)

43. Self-Publish?
Evaluate your game and team:
• What are your goals for the game and studio?
• Does your team understand F2P?
• Do I have the key talent to do a F2P game?
• Do you have enough runway to learn F2P and
iterate game in test markets?
• Do you have enough capital for paid UA?

44. Is a Publisher Right For Me?
• How can a publisher help me?
• Allow you to focus on the game while they handle:
• Marketing
• App store relations
• Analytics
• QA
• Localization, etc.
• Royalty advances to help you finish the game (not all publishers do this)
• Or/and provide marketing guarantees (not all publishers do this)
• May help negotiate and secure IP for the game

45. Is a Publisher Right For Me?
Evaluate the publisher:
• Are your goals and interests aligned?
• Are they putting some skin behind the game (advances,
marketing, resources for localization, QA, analytics, etc)?
• Potential for long term partnership (e.g. strategic investments)
• Do they understand F2P and have a track record of success?
• Do they have the right talent at the company?
• Does the publisher have 1st party and 3rd party games?
• Does your game fit into their audience and portfolio (casual
vs core)?

46. In Conclusion
• F2P is hard to conquer
• Ensure that you have the right tools, talent
or/and partner(s) to succeed

47. Thank You!
• For a copy of this talk, you can email
david@r2games.com