1.
Generally(the(assump/on(is(that(maximizing(mone/za/on(and(player(sa/sfac/on(are(contradictory(goals,(but(I(really(don’t(think(that’s(true.(( 1(

2.
Like diamonds, good games can last forever, or at least for at least what feelslike forever. 2(

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The 2012 charts were dominated by games that have been around for adecade or more, there’s some serious tenure here. The newest is two yearsold and Madden & Super Mario have earned gold watches for 25+ years ofservice.Of course these are mostly sequels of games/game franchises, but it’scertainly fair to think of them as expansions and updates as they mostly havethe same basic mechanics as their original as well as the same characters/universes. 3(

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It’s just as true of online games. Ultima Online, the first massively popularMMO, is still live and receiving updates 4(

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Everquest, which launched in 1999, released it’s 19th expansion in Novemberand is actively advertising, I got this ad just last week. 5(

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WoW may be down from its 2010 peak but at 10 million subscribers it still hastwice the audience as it did in 2005 and a business we all envy. 6(

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Of course these are all famous games that were big hits from launch and havebeen invested in over the years. But it’s not just them. How many of you haveheard of Netstorm? It was a pretty original online RTS made by a small studioco-founded by my brother. It came out as a PC title in 1997, and was a fungame that got generally strong reviews. But it suffered from poor timing as itwas a bit early for a mainly internet title, a lot of other RTS’s came out thesame season, and the publisher decided not to give it much marketingsupport. The publisher didn’t want either to fund a sequel or release therights, so the studio went out of business and abandoned the game, but open-sourced the servers so that the existing players could play if they wanted to. 7(

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15 years after the game was abandoned it still has active servers andcommunity, and is being remade (non-commercially) in Unity by a farmer fromWest Virginia who is a big fan. 8(

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There’s lots of examples of long-lived PC & web F2P games, and we’restarting to see it in mobile with Clash of Clans camped out at the top of thecharts since last August, but as an industry we don’t think about longevity thatmuch. There’s a talk about Farmville later titled “Why won’t Farmville goaway?”, which is great, but we shouldn’t be surprised that Farmville is stillaround after 5 years, I fully expect it to be around for 20 or more. 9(

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So you can see some of our short-term mindset in the stats that we use, whichboth show what we’re thinking about and limit it to just those things. 10(

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So we launched our virtual goods platform in 2008, more than 4 years ago,and now have more than 300 F2P games using it. The great thing abouthaving a platform is that we can do lots of comparative analysis to understandwhat drives success in games. And the results all say to me that to get themost out the games we should really be thinking much, much longer. 11(

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So let’s take a look at some of that data. Before I dive in I want to give a fewdefinitions so that it’s clear what I’m talking about. 12(

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ARPU is on the vertical axis, % of players who play 2 or more times on thehorizontal. The size of the bubble represents lifetime revenue (which favorsolder games)Apologies to those who’ve seen these charts before, but so important theybear repeating. And data is fresh, with a lot more games & history.Big formless blob – no correlation between ARPU and % repeat, which iscounter-intuitive though higher is better -> more revenue for the same ARPU,game spreads better. But it’s counterintuitive that games can have highARPUs when most people never return and have a chance to monetize. 14(

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Correlation line starts to form, but still a lot of variation 15(

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Correlation number is a lot stronger, my R2 is now over 0.30, and it keepsgoing up as I look at plays deeper and deeper, it’s in the 40s for 100+ plays forgames over 6 months but I won’t bore you with more similar charts. 16(

17.
This is a lot of data. Some things to notice is that the huge increase inrevenue/ARPU is driven most strongly by increasing conversion, but also by abig increase in transactions per buyer. The size of the transactions goes up,too, but not quite as dramatically. 17(

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Performance lower across the board, especially in conversion and the # oftransactions in the deep cohort 18(

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For the top multiplayer games 67% of revenue comes from those spending$300+. For the rest of the multiplayer games it’s 48%, still quite high. 19(

20.
This is the average cumulative spend for buyers who’ve been playing gamesat least 6 months, broken by those who’ve spent $300+ lifetime and those whohaven’t. The big spenders, as expected, dwarf the ordinary buyers – though atabout $4 per day it’s not very different from what many people here spend oncoffee. What’s fascinating is how linear it is: only 50% of the 6M value hasbeen captured at 60 days.Unfortunately with this view it’s a little hard to tell what’s going on with thesmaller spenders. 20(

21.
To better see what’s going on with smaller spenders relative to big let’s switchto looking at a normalized distribution. It turns out small spenders are a lotmore front-loaded than big spenders, who take 2 months to even hit the 50%mark, and look a lot more like the buyers in single-player games. 21(

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Big spenders in top games are even more linear – their spending actuallystarts lower than big spenders in other games, but continue to appreciate afterthe 4 month point when big spenders in other games are flattening out. 22(

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The pattern is even more dramatic with small spenders – spending startssimilarly but in top games grows over time, and quite a few of these buyers willlikely top $300 in the future.What’s driving this? One part has to do with whether investment, especiallycontinuing investment, makes sense in the game. There are some gameswhere a first purchase (say a weapon) make a lot of sense, but furtherpurchases have diminishing returns in terms of value to you as a player. Butmuch more than that it has to do with retention: a player can only spend if theyare still in the game. 23(

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We all tend to obsess over games/companies showing exponential growth butmore often that not that’s followed by a crash. Linear may be less sexy andheadline-catching, but the tortoise generally does win out.Top games still making as much or more as at launch as they hit 2- and 3-yearanniversaries on Kong. 24(

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Okay, so what do I need to do to build my awesome linear business?The first one seems sort of stupid but is actually both hard & complicated onceyou add that 6 month caveat. There’s lots of fun games that you enjoy for anhour or two, or even a week or two, but quickly run out of steam. Here aresome ways to fight that. 25(

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RPG is defined a bit loosely here, and really means that you’re building upyour account over time, leveling up, adding skills, etc. 26(

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This is Wartune, a big hit in China by Seventh Road that has been brought tothe west by R2 games. It has so many currencies, bars, buttons, etc that it’salmost hard to see the screen of an advanced player, though they do a goodjob of introducing them gradually. There’s synchronous solo & team PvP, solo& team PvE, asynchronous plundering, guild battles, farming, town building,weapon synthesizing & upgrading, astral collecting & combining, and I’vedefinitely forgotten something. 27(

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Wartune gives player a literal to-do list of a wide variety tasks that you get areward for completing. And these are fun tasks, not a grind. 28(

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There’s also a wide variety of daily events occurring at different set times 29(

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Seasonal events mix in to add variety 30(

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So not every game is going to launch with everything that Wartune has but agame should launch with plenty of content – a minimum viable productdefinitely needs some sort of end-game, and a good plan for adding more andmore to do over time. 31(

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But if your content is slower to produce than players are to consume it you canbe in a more-or-less permanent hole, and the resources required to keep upwith players may not be justified by the revenue.As your designing your game you want to think about a set-up that allows youto expand the content with as little effort as possible. Multiplayer is the ultimateas interactions with other players create a tremendous variety of experiences.Allowing users to create content through level and sprite editors. Procedurallygenerated content is the ideal (as long as there is a true sense of variety andsurprise) but just planning your systems to allow for easy creation of similarcontent that still creates a variety of experience for the users can work as well,though you’ll need to create deeper variety as wellRealm of the Mad God manages to incorporate all of these, with user-generated monsters & items, procedurally-generated dungeons, and co-opmultiplayer… 32(

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Tyrant, a CCG by Synapse Games, has done a good job of this over the twoyears it’s been on Kongregate. They’ve interspersed major expansions ofmultiplayer elementsThe new card sets drive purchases ! there’s a big burst in revenue as soonas they’re released – but they also provide variety for those who don’t buythem because they are in rotation in the sealed deck tournaments (as well asin the decks of opponents) 33(

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So by social I mean more than multiplayer – you can have multiplayer withfairly anonymous or hostile interactions. By social I mean setting up a situationwhere players can really get to know each other and form relationships 34(

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We’ve got chat next to every game, and forums just below, and we think it’s abig contributor to games reporting significantly higher ARPUs (generally 2X)on Kongregate than on Facebook or other platforms. 35(

36.
Revenue is generally 20x higher for guild members than non-guild members,though generally true of late-stage players it’s a bit hard to tease outcausation. However the addition of guilds, especially competitive guilds, isoften an inflection point for revenue for games. 36(

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The very top games have both synchronous and asynchronous multiplayerbecause more things to do is better, but asynchronous generally the focus.Aysnchronous allows players to play and interact at their pace andconvenience which leads to deeper engagement.Asynchronous in this case means asynch raids, plundering – not turn-basedasynchronous common in mobile. 38(

39.
Since we want people to keep playing lots of game take the tack of punishingpeople (crops withering, troops dying, account deactivated) when they’re gonefor too long. This is bad – we all have times (exams, vacations, work crunches,illnesses) when we need to take a break from a game. And the problem withpunishing people is that the consequences are experienced not when they’regone, but when they come back – the exact behavior you want to reward. Ifthey feel like they’ve lost too much they’re likely to quit – why start again ifyou’ll just lose it?Wartune and Dawn of the Dragons actually reward you with gold and XP afteran absence – Clash of Clans on mobile handles this well as well. Your basemay have been looted but that shows just briefly before your base restoresitself and you can fill up your resource bars. You may even have gainedtrophies… 39(

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Okay, if not easy it’s way easier to get to someone to make a second purchasethan it was to get them to make the first purchase, and way easier than findingsomeone else to play and make a purchase. It’s crucial to leave a buyerfeeling good about the purchase and their investment in the game. 41(

42.
People(leave(bad(rela/onships(and(if(a(player(doesn’t(feel(good(about(the(way(they(treated(they(will(walk,(and(they’re(unlikely(to(give(another(game(you(make(a(chance,(either.((((This(was(a(strong(performing(game(with(a(good(launch(and(excellent(reten/on.(Around(week(15(the(developer(added(an(incredibly(powerful,(very(rare(item(to(its(gambling(wheel,(which(gave(the(impression(that(the(chances(at(items(were(equal.((Sales(shot(up(and(players(poured($100s(and(in(many(cases($1000s(into(the(item,(then(felt(resenPul.(Game(also(introduced(some(terrible(bugs(and(was(not(responsive(to(complaints(–(players(organized(a(revolt(in(the(forums,(sales(dropped(to(nothing,(and(we(received(refund(requests(from(nearly(half(of(the(buyers.(We(convinced(them(to(apologize,(fix(the(bugs,(rework(the(mechanic,(and(do(a(general(compensa/on(and(most(of(the(players(came(back(but(the(game(never(fully(recovered,(and(sales(are(significantly(lower(than(other(games(that(started(with(similar(numbers(and(trajectories( 42(

43.
It’s not just buyers, you want everyone to feel fairly treated. Multiplayer gamesare better when more people play then, that’s why they are the games thatwork best in a F2P model. So every player adds value you to your game, andif non-buyers are having too bad an experience either because they can’tmake progress, or they don’t have a competitive shot, they will leave. This mayhave a long-term impact on your revenue in two ways: 1) every nonbuyer isstill a potential buyer – we had one big spender who played a game 900 timesover 5 months before spending a dime, but then started spending $1,000 amonth; 2) that nonbuyer is likely either the friend or the potential opponent ofyour buyers, whose experience has just been diminished. For whom the belltolls, and all that.There’s a smallish but positive correlation between games that keep nonbuyerretention closer to buyer retention and ARPU. 43(

44.
So this really is just an extension of my previous point: you want to keep all ofyour players and every interaction you have with them matters. If a player feelthat you care about them and their experience they will be tremendously loyal,partly because that experience is sadly rare. Good community management isthe key here. 44(

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1) And ideally, fun – let the players see you’re human2) You don’t have to agree. Players sometimes want things that are batshitcrazy. But if they know you heard them, it immediately feels like a dialog and apartnership.3) Explaining your “why” goes a very long way4) Advance notice gives players time to adjust OR get excited5) Engage the rational in calm discussion, but never let yourself get combativeand disengage once 1-4 have been satisfied. This can be hard. 45(

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5th Planet Games are past masters of this – they’re a community firstcompany, and have the highest rates of players hitting 500+ lifetime plays ofany games on KongregatePlayers usually include both a big spender and a nonbuyer, a guild leader, andrepresentatives of different platforms (Kongregate, Facebook, mobile, etc) 46(

47.
This includes fixes bugs & exploits as well as answering emailsIn the face of a real problem/issue, how much does some virtual currency oritems cost you? Token amounts are often enough to acknowledge the issue,and keeping the player = pricelessBecause news will spread and players will (correctly) think you’re unfair. Sohave rules for what you will and won’t do and why, so you can be consistent. 47(

48.
This is about how you think about your business. 48(

49.
As(/me(passes(postUlaunch(it(gets(more(and(more(temp/ng(to(move(on(to(something(else.((This(doesn’t(mean(you(shouldn’t(be(inves/ng(in(making(other(games.(You(should!(But(you(can’t(reduce(the(amount(of(aYen/on/resources(your(exis/ng(game,(even(temporarily,(without(consequences.(We(see(this(again(and(again(with(small(studios(where(they(get(distracted(by(new(games(–(sales(drop(on(their(hit(as(players(run(out(of(content(and(start(leaving,(the(new(game(doesn’t(do(as(well,(and(while(things(pick(up(when(they(turn(aYen/on(back(to(their(main(game(sales(don’t(reach(previous(heights(because(some(players(have(le[.((This takes a lot of organizational discipline. We’re human, and especiallyentrepreneurial humans are attracted to new and different things 49(

50.
Familiarity(can(breed(contempt(and(as(you(work(on(a(game(you(keep(thinking(about(how(beYer(it(would(have(been(if(you’d(used(a(different(tech,(or(a(different(perspec/ve,(or(mechanic(and(the(desire(to(remake(your(game(in(a(sequel(can(be(really(strong.(While(there(are(situa/ons(where(sequels(make(sense,(par/cular(in(singleUplayer(games,(it’s(rarely(a(great(idea(for(a(deep(mul/player(game.(The(people(most(interested(would(be(those(who(played(your(original(game(the(longest,(and(are(s/ll(playing,(and(it(will(be(difficult(and(disrup/ve(to(move(them(over.((You’re(likely(to(end(up(with(a(fragmented(user(base,(and(unless(your(game(is(truly(massive(you’re(beYer(off(with(one(game,(one(userbase.(Both(Everquest(and(Everquest(II(are(s/ll(maintained,(but(Everquest(III(has(never(been(made.((Zynga(shut(down(Cityville(2(but(le[(the(original(up,(and(original(Farmville,(while(smaller(than(Farmville(II,(is(s/ll(in(the(top(10(charts.(( 50(

51.
There’s(o[en(pressure(for(revenue(this(quarter,(this(month,(this(week.(Companies(and(employees(are(o[en(rewarded(for(hibng(sales(targets(now,(some/mes(for(arbitrary(budget(reason,(some/mes(to(show(growth(in(advance(of(a(funding(round,(exit,(or(earnings(announcement,(and(some/mes(because(you(need(to(make(payroll.(On existing buyers sales events are generally destructive. Demand is fairlyinelastic, and you’re probably just moving future sales forward at a lower priceand simultaneously devaluing what you sell and training buyers to wait to get adiscount. With frequent sales you can get into a vicious cycle where you spikesales, followed by a big drop, which causes you to do a sale to get morerevenue, followed by another drop. Sales and discounts are best for groupswhere demand is more elastic: nonbuyers and lapsed buyers.If you focus on short-term metrics you’re going to get short-term behavior. I’mnot sure what the best long-term stats should be, but as industry we shouldstart figuring them out. 51(

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This is about how you think about your business. 52(