monetization strategies: ios + android

Monetization Strategies: iOS + Android

John GrotlandGrotland New Media

Grotland New Media LLC

Y2010 Y2011 Y2012 Y2013 Y2104 Y2015 -

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

3,500,000,000

4,000,000,000

4,500,000,000

OtherMicrosoftRIMSymbianiOSAndroid

Smartphone Growth by OS: 2010-2015

Source: Gartner, April 2011

Tablet Growth by OS: 2010-2015

Y2010 Y2011 Y2012 Y2013 Y2014 Y2015 -

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

900,000,000

1,000,000,000

other cumula-tive

Microsoft Cumulative

iOS Cumula-tive

Android cumu-lative

Source: Gartner, Aug. 2011

Laws of Game Monetization1. It’s the game, stupid.

Laws of Game Monetization

1. It’s the game, stupid.

2.Monetization = part of game development strategy, ≠ the game development strategy.



3.Better to develop monetization plan at concept phase, not at beta or beyond.




4.Proper monetization = commitment




4.Proper monetization = commitment

5.Monetization is more than how to price

Revenue ModelsFour revenue models dominate iOS/Android

Pay per download (PPD)FreemiumFree-to-play (F2P)Advertising/Offerwalls

Auto-renew subscriptions not there yetodds are it will happen—likely Android firstApple—polite “no” for now

Most rev models not new, just implemented with great rapidity in iOS and Android

Pay Per Download (PPD)

Original monetization method on iOS, AndroidYou buy it, you own it

In general, becoming a more difficult propositionCompetition, price sensitivity = revenue curve

droppingFree games with IAP intro in 2009 skewed market

heavily towards freemium/F2P$0.99 PPD game now seen as “investment”

PPD: Pros and ConsPros

Simplest game to buildStill can work for strong brands, console ports

Customers know what they are getting and understand the valueBut there are “non-branded” games still make it

work—AB, CTR, etc.

ConsDifficult to make non-branded titles successfulUnless a well-known title (console game port), low

pricing key to successNot many tools for keeping rank highSuccess these days typically requires extended

commitment to title

Plants vs. Zombies

Final Fantasy Tactics: War of the Lions

Freemium

Freemium games are free to downloadBut can only play to a point before you have

to buy/unlock the full (“premium”) version or discrete components with IAP

Can include other monetization features, such as virtual currency

Added to iOS in Q4 2009; added to Android in Q2 2011

Freemium: Pros

Low barrier to entry for customer; great way to get a mass audience to try a new game

Well executed Freemium game can generate 2X-4X revenues of PPD

Works well for non-branded titles and new IP

Freemium: ConsConversion dependent on branding and pricing;

non-branded titles can do less money than if they were PPD

Necessary to balance how much free gameplay before conversion

Like PPD, not many tools for rank support

Like PPD, success enhanced by extended commitment to titleFrequent feature updatesSustained marketing effort

Free To Play (F2P):High Replay Value = Stable Revenue

• Currently generating ~50% of all games revenue on iOS; rapidly growing on Android Market– 16 of top 30 App Store grossing apps are F2P games

(11/14/11)

– Free to play games are free to download titles that have high replay value

– High replay value combined with in-app purchase can create a more stable revenue base than PPD games

Free To Play (F2P)

• F2P games allow players to play for free if they either will work for items or VC, or if they complete certain tasks effectively– But certain items/features only available to buy with

VC

– Successful monetization typically comes from small percentage of large base buying VC

– 3%-5% conversion percentage typical for very successful games

F2P: VC, “Social”Almost all F2P games use Virtual Currency (VC)

Players use VC to pick and choose items within the game

Typical to give greater value in VC the more real money spent

F2P games often put in same category as “social” gamesBest when lots of people playing at the same timeBut direct player interaction not necessary for

successmany F2P games on iOS/Android don’t require

customers to interact with each other—e.g. some of the more recent Glu games.

F2P: ProsARPU typically much higher than the standard PPD

or freemium games (up to 3X-4X)

Works well for non-branded titles/new IP

Low barrier to entry for customer; great way to get a mass audience to try a new game

Social aspect, plus persistence on device deck, add a viral marketing component

Often have a much longer revenue lifecycle than other types of games

F2P: ConsMore expensive to develop than PPD and

Freemium titles (initial dev cost ~2x-3X more expensive)

Requires back-end systems and servers, particularly for multiplayer and cross-platform games

Consistent need for game feature updatingRequires direct marketing to be involved in

development process to help with social/viral marketing aspects

Zynga Poker

Vegas City iPhone: DL vs. Rev

Ad-Supported Games Currently important on Android, where app stores not as

successful as iOS Angry Birds: $1MM/month ad revs on Android Q2 2011 Glu = many forms in Android games; some in iOS

Classic advertising (banner ads; jump out of game when clicked, CPM/CPC models) are still used, but…

Newer incentivized advertising/customer acquisition models becoming huge—higher CTR, revenue per CPM/CPC/CPD “Rich Media” ads (like iAd) Offerwalls (TapJoy, Flurry, etc.) Video ads

Incentivized ads in Freemium, F2P games becoming important—can be traded for items, VC, etc.

Ad-Supported Games Pros

significant source of revenue if implemented properly and creatively

No barrier to initial consumer adoption

Useful to monetize freemium titles until conversion F2P games for consumers who don’t want to

shell out $$

Continuing revenue stream

Ad-Supported Games Cons

Angry Birds Android exception to rule typically very low revenues relative to PPD for average games

(10%-30%) Success requires massive download numbers Massive download numbers require serious, sustained

marketing push Classic banner ads likely to become less

relevant as Offerwalls, Rich Media and other forms gain popularity

Poor reviews if not properly implemented Requires partnership with ad provider,

inclusion of SDKs, etc.

Mix-n-Match!

More games coming out now with many monetization methods on iOS, Android

Can be very efficient, creative in maximizing revenue

Mix-n-Match! ExamplesChair/Epic—Infinity Blade: $5.99 to buy, includes a VC system--

earn or buy “Gold” to buy virtual goods, XP to level up, etc.

Rovio—Angry Birds:iOS: $.99 to buy, regular updates + added levels free to players,

discrete virtual goods to purchase via IAP (plus Rio—sponsored)Android: free with advertising

Glu—Contract Killers (iOS and Android)F2P with VC system to earn and buy credits, discrete items, XP, etc.Banner advertisingIncentivized Offerwalls (Android) , incentivized video ads (iOS)Incentivized cross promotion of other Glu games

Infinity Blade

Gun Bros

Pocket God

Developer Considerations

Success on iOS/Android means embracing the “Long Tail”“Fire and Forget” game projects less

commonNeed to support 3-6 months after launch to

determine tractionSuccess could mean years of consistent

supportPost launch development, updates on titleAnalytics, analytics, analytics!


Business, Process Structures have to changeClassic designer + producer roles driving game

development not enough—new skillsets neededNeed to add Business/Data/Monetization Analyst role to

drivers of game development processDriving how to incentivize, monetize gamesHow to track, analyze customer behavior, make game

tweaks to maximize player satisfaction, revenue

Development team structure must changeNeed “live teams” to quickly, efficiently make changes to

games based on user analytics


“Long tail” strategy can change nature of relationship with publishers on work for hire projectsTurns game development into more of a

partnership; greater risk sharingAgreements need to reflect that, with

relationship beyond game launch spec’d outNeed to be more wary of partial upfront/rev

share deals on one-off titles in this new environment

Final Thought

Ed Dille of Fog Studios (quoting Clint Eastwood):

“A man needs to know his limitations.”

So, know what you are good at and focus on those things.

Partner, hire and/or acquire for the things you aren’t.

Thank You!

John Grotland

Grotland New Media

[email protected]

+1 (201) 757-2453

mailto:[email protected]

monetization strategies: ios + android

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