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What’s the lifetime value of a social game player?

By on June 25, 2010

The Virtual Goods Forum over the past two days has been packed full of useful statistics. The most useful came from Vikas Gupta, CEO of Social Gold, and I’ve embedded it below.

The key takeaways are that not all users are created equal. Social Gold has defined its users into five categories:

  • Kings: Have a lifetime value (LTV) of over $1,000)
  • Lords: Loyal repeat users who have a lifetime value of $250
  • Knights: Spend meaningful in the first month only, LTV of $47
  • Commoners: make only one purchase, LTV of $12
  • Peasants: never spend any money

(A note on methodology: Social Gold did a cohort analysis taking everyone who signed up for any of the games that Social Gold serves in a two month period and worked up the lifetime value in the next four months. So for the purposes of this analysis, the maximum life time of a consumer was six months, which means that the figures are likely to be on the low side).

There are a number of key points:

  • A Lord (a loyal repeat user) is worth 20x the value of a Commoner who only makes one game purchase. But once you have persuaded someone to make one purchase, it is generally easier to make them pay up again. What are you doing to convert Commoners into Lords?
  • A King is worth 20x the value of a Knight, yet a knight has already made multiple purchases. What are you doing to help your Knights become Kings.

There is a lot of very valuable meat in the presentation so check it out. But the key takeaway for me is that not all users are created equal, so make sure you cater to the free-loaders AND to the high rollers.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com