4 years 300 games - what we've learned about free-to-play

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4 Years, 300 Games: What We’ve Learned About Free- 2-Play Casual Connect Europe 2013 Emily Greer, Co-Founder & COO $$$$$$$

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Page 1: 4 Years 300 Games - What We've Learned About Free-to-Play

4 Years, 300 Games: What We’ve Learned About Free-2-PlayCasual Connect Europe 2013

Emily Greer, Co-Founder & COO$$$$$$$

Page 2: 4 Years 300 Games - What We've Learned About Free-to-Play

Brief History of KongregateLaunched in 2007 as developer-friendly, open platform for free web games

– Only source of revenue was advertising

– Almost all games single-player & Flash

– Level & achievement system attracted core, male audience

Page 3: 4 Years 300 Games - What We've Learned About Free-to-Play

The New New ThingWe’d heard about something called “microtransactions” that were a huge source of revenue for web games in Asia

Not many games had tried them in the US, but virtual worlds like Second Life, Gaia Online, Habbo & IMVU were doing well with them

Page 4: 4 Years 300 Games - What We've Learned About Free-to-Play

What Were We Thinking?1. Transactions will mostly be <$1, therefore

– Payment processing costs are a big deal– Incenting larger purchases will be valuable– Stored credit cards and existing balances will be a

powerful way to reduce friction2. Players will be buying cosmetic items, gifts,

power-ups & content3. Multiplayer/social elements are crucial4. US/English speaking much more valuable than

any other market

Page 5: 4 Years 300 Games - What We've Learned About Free-to-Play

Let’s build a platform!• Because of the

transactions costs & friction we should build a site-wide currency for our developers to use

• There’s no point to creating a currency if there aren’t games to use it

Page 6: 4 Years 300 Games - What We've Learned About Free-to-Play

The Blind Leading the Blind• Funded 6 games,

focusing on synchronous multiplayer & unique gameplay

• Monetization elements tacked on, shied away from pay-to-win elements:– Cosmetic Items (Dinowaurs & Remnants of Skystone)– VIP subscriptions with more content (Skystone, Battalion)– Some power-ups & currency (Zening, Skystone, Battalion)

Page 7: 4 Years 300 Games - What We've Learned About Free-to-Play

Launch to FailureOur currency “kreds” launched in November 2008

“Premium” games launched gradually over the next 6-9 months with decent ratings but minimal sales

Page 8: 4 Years 300 Games - What We've Learned About Free-to-Play

Open Sesame

1st MMO

1st Asian MMO

First FB Game

Page 9: 4 Years 300 Games - What We've Learned About Free-to-Play

4 Years, 300 Games

Page 10: 4 Years 300 Games - What We've Learned About Free-to-Play

“Transactions will be really small, <$1”

20%

22%

37%

11%

7%

2% 1%

Transactions

$5 $10 $20 $50 $100 $250 $500

3%

7%

24%

17%23%

14%

11%

Revenue

Page 11: 4 Years 300 Games - What We've Learned About Free-to-Play

What Were We Thinking? Revisited1. Transactions were going to be really small, <$1

mostly, therefore LOL!– Payment processing costs will be a big deal Only on mobile

– Incenting larger purchases will be valuable Still very true. Testing has shown that bonusing

larger purchases raises revenue by 14%, increases buyers who spend $100+ by 25%

Page 12: 4 Years 300 Games - What We've Learned About Free-to-Play

You Always Need More Storage

Type LTV Avg Trx # of Trx % of

Revenue Credit Card $ 130 $ 28 4.7 50%PayPal $ 110 $ 25 4.4 32%Mobile $ 43 $ 8 5.7 7%Prepaid Cards $ 69 $ 19 3.6 6%Offers $ 10 $ 2 4.4 5%

– Stored credit cards and existing balances will be a powerful way to reduce friction

Also very true LTV on non-stored credit card buyers: $66, 3.6 trx LTV on stored credit card buyers: $195, 7.8 trx

In general the higher the friction of the payment type, the lower the value of the buyer:

Page 13: 4 Years 300 Games - What We've Learned About Free-to-Play

“Players will buy cosmetic items, gifts, power-ups & content”

Almost all sales (95%?) are for items that affect gameplay

– ~70% purchases are for permanent items and upgrades, about 30% go to consumables like energy

– Cosmetic items have minimal sales, but cool-looking items sell better than more ordinary ones

– Gifting behavior is quite light with our 85% male audience

– Content sells somewhat in single-player games, but sells best mixed with a package that includes skill points or another power-up.

Page 14: 4 Years 300 Games - What We've Learned About Free-to-Play

“Multiplayer/social elements are crucial”

Yes! But it still doesn’t look like we expected it to.

In the early games we funded we focused on synchronous multiplayer, both PvP and co-op PVE. That was a mistake.

Type % 50 Plays % Buyers ARPPU ARPUSynchronous 1.4% 0.54% $43 $0.25

Asynchronous 3.6% 0.80% $88 $0.66

Both 2.9% 1.07% $51 $0.55

Single-Player 0.8% 0.85% $7 $0.05

Page 15: 4 Years 300 Games - What We've Learned About Free-to-Play

ARPU & ARPPU

Page 16: 4 Years 300 Games - What We've Learned About Free-to-Play

“Multiplayer/social elements are crucial”

What about PVP vs PVE? Both!

Type % 50 Plays % Buyers ARPPU ARPUPvP 2.2% 0.63% $61 $0.38

PvE 2.4% 0.56% $24 $0.14

Both 2.8% 0.91% $71 $0.65

Single-Player 0.8% 0.85% $7 $0.05

Guilds make everything better – all top games have them. Guild wars & guild leaderboards are very powerful.

Page 17: 4 Years 300 Games - What We've Learned About Free-to-Play

Multiplayer is very important, but it’s not the most crucial element.

Turns out the single most important aspect of a game is strong RPG/character progression.

Type % 50 Plays % Buyers ARPPU ARPUMultiplayer 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

Page 18: 4 Years 300 Games - What We've Learned About Free-to-Play

So what genres work best?Some of the best sub-genres:

% 50 Plays % Buyers ARPPU ARPUEmpire Builder 3.9% 0.87% $104 $0.78CCG 2.6% 1.01% $65 $0.71Lootfest 3.3% 0.88% $67 $0.66

Some of the weakest sub-genres:% 50 Plays % Buyers ARPPU ARPU

Pet Battlers 1.9% 0.97% $19 $0.18Artillery 1.3% 0.61% $26 $0.14Shooters 1.7% 0.56% $19 $0.11

Page 19: 4 Years 300 Games - What We've Learned About Free-to-Play

“US/English speaking much more valuable than any other market”

Broadly true – 65% of our revenue comes from English-speaking countries.

Individual smaller markets outperform the US, however, especially Northern & Western Europe

Country % Buyers ARPPU ARPU Switzerland 6.96% $ 248 $ 17.24 Kuwait 1.64% $ 499 $ 8.19 Austria 5.49% $ 143 $ 7.88 Norway 4.43% $ 143 $ 6.34 Germany 5.77% $ 100 $ 5.75 United Arab Emirates 1.07% $ 512 $ 5.46 Singapore 2.26% $ 203 $ 4.59 France 5.34% $ 85 $ 4.56 Cyprus 2.18% $ 207 $ 4.53 Netherlands 4.66% $ 96 $ 4.47 Sweden 3.95% $ 112 $ 4.44 Denmark 4.03% $ 106 $ 4.27 Belgium 4.94% $ 74 $ 3.64 Japan 2.99% $ 118 $ 3.54 United States 4.20% $ 81 $ 3.40 Australia 3.29% $ 102 $ 3.37 Finland 2.73% $ 122 $ 3.32 Canada 3.81% $ 86 $ 3.29 United Kingdom 3.54% $ 84 $ 2.97 Russian Federation 3.64% $ 78 $ 2.83

Page 20: 4 Years 300 Games - What We've Learned About Free-to-Play

Keep Going, Keep LearningWe struggled for nearly a year (two including development) before we saw any success.

Your first game isn’t likely to do well either. Free-2-play is hard, and many important elements are counterintuitive. But once the elements come together the improvement is exponential

Page 21: 4 Years 300 Games - What We've Learned About Free-to-Play

Die EndeTo learn more/find links to other talks visit developers.kongregate.comTopics include:

• retention • big spenders• item pricing• promotion management• more

For web games contact us at [email protected] you’re interested in mobile publishing it’s [email protected]

Follow me on Twitter: EmilyG