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NATURE VS NURTURE
Unpacking Player Spending in F2P Games
S A N F R A N C I S C O 2 0 1 9 | # G D C 1 9
Tammy Levy
VP OF INSIGHTS & ANALYTICS

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WHO AM I?
Great question…
VP of Insights & Analytics
Climbing hobbyist
Gaming industry experience
EA’s pogo
Zynga
Kongregate
5 years
60+ published games
My micromanager checking on my GDC talk!

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KONGREGATE
~200M
Mobile Installs since 2013
>10M
Monthly Active Users
60
Games Published
120k
Games on Kongregate.com

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HyperHippo - AdVenture Capitalist, 2015
SOME GAMES WE’VE PUBLISHED
Mobile F2P: 6 years, 60 games
Synapse - Animation Throwdown, 2016
Juicy Beast - Burrito Bison, 2016 HyperHippo - AdVenture Communist, 2017

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WHAT CAN YOU EXPECT TODAY?
Another great question…
Inspiration to develop what works for YOUR game
Agenda
Monetization data & insights
In-game examples
Goal
Not a checklist of best-practices…
Framework to think about monetization
lots of data!

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FREE-TO-PLAY MONETIZATION

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IN-APP PURCHASES
Are still a big deal!
ad revenue
70%
in-app purchases

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“MOST PLAYERS WILL NEVER SPEND
IN YOUR GAME.”

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“MOST REVENUE WILL COME FROM A (VERY) SMALL
PERCENTAGE OF PLAYERS.”

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CAN ANYONE BECOME A SPENDER?

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% BUYERS BY GENRE
% of players who spend, mobile games
12
Midcore
4.5%
2.5%
2.5%
0.5%
Idle / Incremental
0.2%
1.5%
Casual / Hyper Casual
5%
max for most
mobile games

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% BUYERS ON KONG.COM
Top 500 games since 2014
6%
max for
web games
1% - 3%
for most games

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ARE SOME PLAYERS MORE LIKELY TO SPEND?
Is a spender in one game more likely to spend in another?

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SPENDING ACROSS GAMES
Players who have spent in one game are more likely to spend in another game
15
Total Spenders Play 2+ Games Spend in 2+ Games
40%
17%

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Narrow band of spenders (% buyers)
SPENDING PLAYERS MATTER
Some players are more likely to spend
Please, don’t call them whales!

17.
Successful F2P games focus on
Player’s Lifetime Value
or Average Revenue Per User
GROW LTV! ARPU!
But…

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ARPUaverage revenue per user
ARPPU
avg revenue per paying user
ARPT
avg rev per transaction
% buyers
conversion rate
retention
% repeat spenders
lifetime sessions
ARPDAU
avg rev per daily active user
num of transactions
KPI LETTER SOUP
Which KPIs should you focus on? What do they mean?
MAUDAU

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KPIKey Performance Indicator

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NOT ALL “KPIS” ARE CREATED EQUAL

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DETERMINE WHICH KPIS
MATTER MOST
Goal ➡ strong ARPU
Which KPIs have a strong
relationship with ARPU?
Focus on these!

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CORRELATION ANALYSIS
You can use excel, R, etc
Model relationship between two variables
Can x predict or influence y?
Calculate R2
0: No relationship between x and y
1: Perfect correlation, x predicts y

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WHICH KPIS HAVE A STRONG
RELATIONSHIP WITH ARPU?

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KPIS BY GENRE
Most frequent behavior ranges. There will always be outliers.
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genre # of games arpu
Midcore 12 $1.5 - $5.0
Idle 9 $0.50 - $1.50
Casual &
Hyper Casual
16 $0.10 - $0.30

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SESSIONS & ARPU
Using sessions as a proxy for engagement
25
(3.50)
(3.00)
(2.50)
(2.00)
(1.50)
(1.00)
(0.50)
-
(0.20) - 0.20 0.40 0.60 0.80 1.00 1.20 1.40
LogofARPU
Log of Sessions
casual
idle
midcore

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SESSIONS & ARPU
Using sessions as a proxy for engagement
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(3.50)
(3.00)
(2.50)
(2.00)
(1.50)
(1.00)
(0.50)
-
(0.20) - 0.20 0.40 0.60 0.80 1.00 1.20 1.40
LogofARPU
Log of Sessions
R2 = 0.46
good

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MIN PRICE POINT & ARPU
“Just get a player to spend, even if it is a low price-point”
27
(3.50)
(3.00)
(2.50)
(2.00)
(1.50)
(1.00)
(0.50)
-
(0.60) (0.40) (0.20) - 0.20 0.40 0.60
LogofARPU
Log of avg min price-point
R2 = 0.31
fair

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MAX PRICE POINT & ARPU
Give enough options to your players that want to spend!
28
(3.50)
(3.00)
(2.50)
(2.00)
(1.50)
(1.00)
(0.50)
-
(0.60) (0.40) (0.20) - 0.20 0.40 0.60 0.80 1.00
LogofARPU
Log of avg max price-point
R2 = 0.601
excellent

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ARPT & ARPU
Aim for higher transaction size
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(3.50)
(3.00)
(2.50)
(2.00)
(1.50)
(1.00)
(0.50)
-
(0.60) (0.40) (0.20) - 0.20 0.40 0.60 0.80 1.00
LogofARPU
Log of avg tx size
R2 = 0.503
good

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Sessions Matter1
LESSONS
2 Price-Points Matter
make a fun game!

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ECON 101
LETS TALK PRICING

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YOUR GAME, YOUR MONOPOLY
You are the only game that offers THAT (virtual) good

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HOW SHOULD YOU DECIDE
YOUR GAME’S PRICING?

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If you decrease your gems price and:
Revenue Increases
- Purchases go up, quickly
- Then gems are elastic
Revenue Decreases
- Purchases go up, slightly
- But, not enough to make up the change in price
- Then gems are inelastic
ELASTICITY OF GOODS
The key to pricing

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VIRTUAL GOODS
ELASTIC OR INELASTIC?

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CASE STUDY
LOWERING PRICES
Studio: HyperHippo

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$7.99
old price
$2.99
new price
LOWERED PRICE-POINT
Similar value proposition

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FIRST PURCHASE % SPIKED
Even converted legacy players who hadn’t spent! But…
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Did revenue spike?
lowered price

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ARPDAU DECLINED
but… games are messy ecosystems
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Revenue Declined
lowered price

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✓ Purchases went up
✓ Not enough to compensate the price drop
✓ Revenue decreased
VIRTUAL GOODS ARE
(MOSTLY) INELASTIC!
ELASTICITY OF GOODS
Virtual goods: elastic or inelastic?

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The team identified this quickly
Reacted right away
All was good in the capitalist world!
GOOD NEWS!

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REPEAT SPEND
WILL A LOWER PRICE HELP?

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REPEAT PURCHASE RATE
Overall Portfolio 2nd Purchase %
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50%
Kong
Portfolio

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PORTFOLIO VS 1ST PURCHASE $
Compare overall portfolio & first purchase price-point
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Kong
Portfolio
$50+$26-50$11-25$5-10$1-4
50%

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REPEAT PURCHASE RATE
Lower price-point, lower repeat rate!
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Kong
Portfolio
$50+$26-50$11-25$5-10$1-4
51%
lower repeat rate
50%
46%

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REPEAT PURCHASE RATE
Most players’ first purchase is in the $5-10 range
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Kong
Portfolio
$50+$26-50$11-25$5-10$1-4
51%
in line
with portfolio
50% 46%
50%

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REPEAT PURCHASE RATE
Higher price-point, higher repeat-rate!
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Kong
Portfolio
$50+$26-50$11-25$5-10$1-4
51%50% 46% 50% 60% 62% 70%

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REPEAT PURCHASE
Lower purchase price-point will not impact it!
Lower price-points
Do not increase repeat spend!
Our “sweet spot"
$5 - $25 price range
Find YOUR game’s sweet spot

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FIRST PURCHASE SETS EXPECTATIONS
Most players will spend less on their second purchase
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Price-Points: 2nd vs 1st Purchase
lower same higher
48%
spenders
32%
28%

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$7.99
old price
$2.99
new price
LOWERED PRICE-POINT
Similar value proposition

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HIGHER TRANSACTIONS
For players that converted with the lower price-point
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Transactions based on First Purchase
other $7.99 special $2.99 special
higher
lifetime transactions

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LOWER ARPPU
For players that converted with the lower price-point
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ARPPU based on First Purchase
other $7.99 special $2.99 special
highest ARPPU
lowest ARPPU

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PRICE ANCHORING
Don’t set too low of a bar
Your game, your monopoly
Price comparison ➡ within the game
Price Anchoring
First price ➡ perception of future prices
Anchoring
First piece of info ➡ future decisions

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THEN…
INCREASE ALL THE PRICES?

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CAREFUL BALANCE!

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PRICING MATTERS
Don’t under-price your game!
Correlations with ARPU
- min tx size
✓ max tx size
✓ avg tx size (ARPT)
Games are (mostly) inelastic
Watch out for price anchoring

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WHICH KPIS HAVE A STRONG
RELATIONSHIP WITH ARPU?

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KPIS BY GENRE
Most frequent behavior ranges. There will always be outliers.
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genre # of games arpu % buyers
Midcore 12 $1.5 - $5.0 2.5% - 4.5%
Idle 9 $0.50 - $1.50 0.5% - 2.5%
Casual &
Hyper Casual
16 $0.10 - $0.30 0.3% - 1.5%

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% BUYERS & ARPU
Get more players to spend, get higher ARPUs!
59
(3.50)
(3.00)
(2.50)
(2.00)
(1.50)
(1.00)
(0.50)
-
(4.50) (4.00) (3.50) (3.00) (2.50) (2.00) (1.50) (1.00) (0.50) -
LogofARPU
Log of % buyers
R2 = 0.89
excellent

60.
(3.50)
(3.00)
(2.50)
(2.00)
(1.50)
(1.00)
(0.50)
-
(4.50) (4.00) (3.50) (3.00) (2.50) (2.00) (1.50) (1.00) (0.50) -
LogofARPU
Log of % buyers
% BUYERS & ARPU
Get more players to spend, get higher ARPUs!
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R2 = 0.89
excellent
WOW, that’s super strong!!!

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Sessions Matter
LESSONS
Price-Points Matter
3 Maximizing % buyers is important
1
2

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WHICH KPIS HAVE A STRONG
RELATIONSHIP WITH ARPU?

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KPIS BY GENRE
Most frequent behavior ranges. There will always be outliers.
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genre # of games arpu % buyers arppu
Midcore 12 $1.5 - $5.0 2.5% - 4.5% $50 - $200
Idle 9 $0.50 - $1.50 0.5% - 2.5% $30 - $60
Casual &
Hyper Casual
16 $0.10 - $0.30 0.3% - 1.5% $5 - $30

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ARPPU & ARPU
Avg. Revenue Per Paying User & Avg. Revenue Per User
64
(3.50)
(3.00)
(2.50)
(2.00)
(1.50)
(1.00)
(0.50)
-
0.50
- 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80
LogofARPU
Log of ARPPU
R2 = 0.69
excellent

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ARPPU MATTERS
DOES THIS VARY BY GENRE?

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MIDCORE: ARPPU ~ ARPU
Very strong correlation, high investment per payer really matters
(1.80)
(1.60)
(1.40)
(1.20)
(1.00)
(0.80)
(0.60)
(0.40)
(0.20)
-
0.20
- 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80
LogofARPU
Log of ARPPU
R2 = 0.75
excellent

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IDLE: ARPPU ~ ARPU
Strong investment per payer also matters
(1.40)
(1.20)
(1.00)
(0.80)
(0.60)
(0.40)
(0.20)
-
- 0.20 0.40 0.60 0.80 1.00 1.20 1.40
LogofARPU
Log of ARPPU
R2 = 0.64
excellent

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CASUAL: ARPPU ~ ARPU
Not as high correlation but strong investment per payer also matters
(3.50)
(3.00)
(2.50)
(2.00)
(1.50)
(1.00)
(0.50)
-
- 0.20 0.40 0.60 0.80 1.00 1.20 1.40
LogofARPU
Log of ARPPU
R2 = 0.37
good

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Sessions matter
LESSONS
Price-points matter
Maximizing % buyers is important
1
2
ARPPU matters and varies by genre4
3

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WHICH KPIS HAVE A STRONG
RELATIONSHIP WITH % BUYERS & ARPPU?

71.
SESSIONS & % BUYERS
The more time a player spends in a game, the likelier the are to invest in the game
71
(3.30)
(3.10)
(2.90)
(2.70)
(2.50)
(2.30)
(2.10)
(1.90)
(1.70)
- 0.20 0.40 0.60 0.80 1.00 1.20
Logof%buyers
Log of Sessions
R2 = 0.56
excellent

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% REPEAT SPENDER & ARPPU
Enable steady investment from players who want to spend
72
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
(1.10) (1.05) (1.00) (0.95) (0.90) (0.85) (0.80) (0.75) (0.70) (0.65) (0.60)
LogofARPPU
Log of 2nd purchase %
R2 = 0.45
good

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KPIS BY GENRE
Most frequent behavior ranges. There will always be outliers.
73
genre # of games arpu % buyers arppu
repeat
purchase %
Midcore 12 $1.5 - $5.0 2.5% - 4.5% $50 - $200 35% - 70%
Idle 9 $0.50 - $1.50 0.5% - 2.5% $30 - $60 30% - 55%
Casual &
Hyper Casual
16 $0.10 - $0.30 0.3% - 1.5% $5 - $30 15% - 40%

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Sessions matter
LESSONS
Price-points matter
Maximizing % buyers is important
1
2
ARPPU matters and varies by genre
3
5 Keep % repeat spending in mind
4

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BEST-IN-CLASS
REPEAT SPEND
Studio: Synapse Games

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SYNAPSE’S CCGS
Iteration: take what’s working, improve what isn’t
2015
Spellstone
2016
Animation Throwdown
2013
Tyrant Unleashed

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TYRANT UNLEASHED
First mobile game from Synapse. Very niche.
73%
59%
51%
45%

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SPELLSTONE
Expand audience reach with a more approachable theme
67%
51%
42%
35%

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ANIMATION THROWDOWN
Strong monetization even if, with a bigger audience, metrics take a small hit
62%
44%
33%
27%
Balance Reach
and Monetization

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LIVE SERVICING STRATEGY
Taking what has worked

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Oct 11 Oct 18 Oct 25 Nov 1 Nov 8 Nov 15
Previous Trait
Bonus
Current Trait
Bonus
Next Trait
Bonus
Guild Event
Challenges
Other Events
or Bonuses
LIVE OPS CALENDAR
Well defined cadence of events.

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THE STRUCTURE OF A CARD
Traits don’t have stats… Are they useless?
attack &
health
skills
traits

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LIMITED TIME BONUSES
Grant a specific bonus or penalty based on a trait
Leach: healing skill
Gas: attack skill

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LIMITED TIME BONUSES
Puzzle solving, the right combination will give you a more powerful deck

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Nov 8 Nov 15 Nov 22 Nov 29 Dec 6 Dec 13
Previous Trait
Bonus
Current Trait
Bonus
Next Trait
Bonus
Guild Event
PvP Event
LIVE OPS CALENDAR
Well defined cadence of events.

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LIMITED TIME BOXES
Exclusive cards that match the “active” trait

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LIMITED TIME BOXES
Exclusive cards that match the “active” trait

88.
BOX ENGAGEMENT
The most committed players regularly engage with the boxes
88
% DAU Buying Boxes

89.
STEADY GEM SINK
Cadence of new boxes keeps spending players engaged
89
Gems Spent per Engaged Player
new
box
new
box
new
box
new
box
new
box
new
box

90.
“DEEP” GEM SINK
High spending players, spend a lot of gems in boxes!
90
Gems per Big Spender
2x Gems

91.
GEMS SPENT IN BOXES
70-80% of gems spent come from regular spenders
91
Gems Spent by Purchase “History”
2+ IAP Purchases

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LIVE OPS STRATEGY
Tied to the core design of the game
Spending players will want to spend
Regular and deep content updates
Result
Strong “depth” of spend
Measure
Repeat purchase %
Purchase satisfaction
If it is worth it!

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WHICH KPIS HAVE A STRONG
RELATIONSHIP WITH % BUYERS & ARPPU?

94.
LIFETIME TRANSACTIONS & ARPPU
Higher ARPT + a lot of transactions => Win!
94
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
(0.40) (0.30) (0.20) (0.10) - 0.10 0.20 0.30 0.40
LogofARPPU
Log of avg num of tx
R2 = 0.72
excellent

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Sessions matter
LESSONS
Price-points matter
Maximizing % buyers is important
1
2
ARPPU matters and varies by genre
3
Keep % repeat spending in mind
4
6 Increase the number of transactions
5

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CASE STUDY
INCREASING TRANSACTIONS
Studio: Synpase

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TIER BOXES
New design for event boxes!
Tiers guarantee cards
Buy more ➡ go up tiers
Higher tier ➡ higher price
Higher tier ➡ better value!
Reduce Randomness!

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TIER BOXES
Similar idea to the old gacha boxes, reduced risk for players
rewards available

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TIER BOXES
Similar idea to the old gacha boxes, reduced risk for players
best card

100.
INCREASED ENGAGEMENT
Breadth: More players engaged with Tier Boxes
100
% DAU Buying Boxes
testing regular cadence
Similar System
More Approachable
regular boxes
tier boxes

101.
LOWER GEM SPEND
Then… Is the system viable?
101
Gems Spent per Engaged Player
testing regular cadence

102.
INCREASED GEM SPEND
Found the right balance and system that scales up
102
Overall Gems Spent
testing regular cadence
Lower Starting Price
Much Higher Engagement

103.
INCREASED CONVERSION
Didn’t you say we shouldn’t focus on this too much?!
103
% First Time Buyer
testing regular cadence
Breadth: Higher Engagement

104.
INCREASED AVG TRANSACTIONS
Win, win: players also increased how many times they purchase!
104
Avg Transactions per Spender
testing regular cadence
Breadth: Higher Engagement
Depth: Increased IAP Transactions

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LIVE OPS STRATEGY
There is always room for improvement
Spending players will want to spend
Results
You can increase both
If it is worth it!
Iterate and test different approaches
Find the balance
Between breadth and depth
Without underpricing

106.
TO SUMMARIZE

107.
107
SOME PLAYERS ARE MORE LIKELY TO SPEND
% BUYERS NARROW BAND
image credit
DeltaDNA Blog

108.
108
WHEN OPTIMIZING MONETIZATION
GO DEEPER, THINK BEYOND % BUYERS
image credit
DeltaDNA Blog

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KPIS TO WATCH
% buyers (still matters)
ARPPU
% repeat spenders
Number of transactions

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KEY TAKEAWAYS
If you don’t remember anything else
Depth
Spending players will want to spend
Provide the content to go deeper
Pricing
Don’t underprice your game
Sessions
It all starts with a fun engaging game!

111.
111
THANK YOU
and to everyone that made this talk possible
@KongregateDevs
blog.kongregate.com
@woodstockfencer
Product Specialists
Marketing Managers
kongregate.com/pages/jobs

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ACRONYM DICTIONARY
F2P = Free to Play
KPI = Key Performance Indicator
IAP = In-App Purchases
CCG = Card Collecting Game
LTV = Lifetime Value
ARPU = Average Revenue Per User
ARPDAU = Average Revenue Per Daily Active User
ARPPU = Average Revenue Per Paying User
ARPT = Average Revenue Per Transaction
DAU = Daily Active User
MAU = Monthly Active User