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Refining my first monetisation strategy

By on June 19, 2012
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This guest post is cross-posted with permission from Nicolas Godement of Majaka


Hi again ! Thanks everyone for the kind words. Let’s now look at Ski Champion’s financial performance (or lack thereof), how we explain it, and the lessons we learnt for our next titles.

In the course of over 2 months since its release as an IAP-supported free app, Ski Champion has netted Majaka a grand total of (drum drum drum) …  450 € ! Yup, not missing any K there, that’s 566 US dollars for our American friends. Not the best ROI for a €22,000 project? Well, read on.

Weekly sales, installs and average DAU

We set out to make Ski Champion with the following goals in mind :

  • Key goal 1 : release a game quickly to test the iOS waters
  • Key goal 2 : get as many installs as possible
  • Secondary objective : maybe make some money if we could

From that perspective, Ski Champion exceeded our key expectations (shipped in 2 months, 230K downloads), but didn’t meet the secondary objective.

Our company business plan never accounted for any revenue from Ski Champion, though we certainly did hope for better in our wildest dreams. Because we knew we would make mistakes with this first game, we kept the feature set to a minimum in order to ship quickly, and elected out many possible revenue streams to save on development time.

Let’s now look at our monetization strategy, and have a closer look at how revenue was spread.

We sold playtime and levels

Ski Champion monetizes through In-App Purchases of Coins packs. These Coins can then be used by players for 2 things :

  • Purchase extra Ski Passes : every race costs a Ski Pass, much like Hearts in Diamond Dash. We also give out Ski Pass for free (more on this later)
  • Unlock a Slope : there are 2 ways to unlock a slope, by getting medals or by purchasing it for 12 coins

We kept the store to a bare minimum. Players purchase Coins packs with real money. They then use Coins to purchase Ski Pass.

The key idea with the Ski Pass system was to sell items that were both simple to implement, and consumable. We meant to give fans of the game the opportunity to spend large amounts of money if they ever fancied it. A fixed price-point sets 2 barriers, and the power of free-to-play is (in theory) to lift them both: price as a minimum barrier to entry, but also the high cap to how much a player can spend.

We added the option to pay to unlock a slope, because why not, but never expected much from it. As it happens, we have no reliable way of knowing whether the few players that purchased Coins actually used them for Ski Passes or Coins (though we suspect the former). We did set that up in our Flurry analytics, but actual paymentswere flooded into a sea of fake payments from jailbroken devicesHere we were, thinking piracy would not be a concern since pirates would have never turned into payers anyway!

Freemium is no silver bullet

Now, although we’re okay with Ski Champion not bringing in any significant revenue, it’s fair to say that our monetization strategy didn’t work at all.

With 258 Coins packs sold for 230 000 downloads, Ski Champion has a payer conversion rate of 0.1%.

So there you have it, a warning to our gaming peers. Beware the industry myth according to which, in a freemium game, 1-5% of players will end up spending money. Those are the numbers you typically hear at conferences or in the press hereherethere too, and hey look even in software too

Good games can definitely reach those metrics. But farm a product out to fast and brace yourself for disappointment.

Of course, we always knew that Ski Champion would monetize poorly. We just thought that meant edging closer to the lower end of the 1-5% interval. How naive. 

We realize now that it can be a dangerous misconception. Does it stem from the fact that many f2p developers never actually purchase virtual items ? Do we have such a hard time understanding what goes into the mind of a payer, that we just assume an average 1 to 5% of people are crazy enough to spend money pretty much regardless of the game they’re playing?

In retrospect, of course not. This is far from a rant against free-to-play, or against the press. I am glad those numbers are shared. But to reach that 1-5% conversion rate, the game has to be awesome, it has to engage & retain players over a long time, and virtual items have to bring amazing extra valueI hear you : “duh, obviously!”. Well, it was far from obvious to us when we set out to make Ski Champion, and I strongly suspect it still isn’t to many aspiring free-to-play developers.

Freemium is nice but you have to do it properly

Here is our explanation of why Ski Champion monetized so poorly :

  • Our main monetization channel, the Ski Pass, does not add any value to the game. Rather, we removed value by artificially limiting playtime, so spending money simply makes up for it.
  • Retention is low . The difficulty curve was rather poorly balanced at launch. While the base gameplay is rather addictive (we think), it gets old quickly due to lack of polish and features
  • We chose to be very generous with our free Ski Passes, perhaps to a fault : the player starts with 100 (we’ll test 50 soon), can easily get an extra 40 (rate App and subscribe to mailing list), and 15 refill every hour once you get down to zero (we’ll test every 3 hours soon too). Most players never even use their initial 100 Ski Pass.

So all in all, it was down to a mix of a flawed system and poor implementation. We will definitely apply those bits of learning to our next game.

One thing that *did* work : revenue followed a power curve

IAP prices ranged from €1,59 to €79,99 at launch, and were later halved with no noticeable effect on revenue.

As said earlier, 258 In-App Purchases were made by players, for a total of 450€ in net revenue for Majaka (after Apple’s cut). While these numbers are certainly too small to carry statistical evidence, it’s interesting to note that ~20% of payments accounted for 60% of the revenue.

We take this as proof that it’s important to give players the opportunity to spend as much as they feel.

Could it have gone better?

As with download numbers, there are many ways of monetizing Ski Champion that we intentionnally left out:

  • Upgrades : sell faster skis, cool outfits, etc. Those are not consumable and would have made balancing the game more complicated
  • Bonus items : consumable items such a “miss gate once” or “turbo boost” would have turned Ski Champion into a more arcadey game, and with more features to develop than we could handle within the timeframe.
  • Slopes sold as extra content that cannot be unlocked through gameplay : we thought we’d rather give slopes for free (non-consumable) as a playground for players to happily use and hence purchase lots of Ski Passes (consumable). Here’s an analogy I  often use (jokingly) :  if the price of oil keeps going up, it may become profitable for the likes of Shell or Exxon-Mobil to give cars away for free (the App) and build lots of highways everywhere (the levels) so people buy more gas (consumables).
  • Display ads for other apps : perhaps we should have tried. We’re about to experiment now. Back then, we thought ad revenue would be marginalcompared to revenue stemming from in-app purchases. Our plan was to update Ski Champion with cross-promotional ads only.

Final verdict

We spent 22K€ making Ski Champion. Most of that money was spent on programming and art, things neither myself nor our Creative Director Gaël could do ourselves. The way we see it though, the project brought us much more than €450 :

  • What do you know, we can treat ourselves with a nice meal or buy an iPad3 ;)
  • We got Majaka off the ground and began to make a name for ourselves
  • We reached 200K+ players
  • We made mistakes and learnt a lot in the process

Such was our plan, from the beginning.

What are we on to now? Why, of course, make more games. Our next title will have a much more serious focus on generating revenue, and will introduce a cool, innovative monetization channel that we can’t wait to try out live. So stay tuned and be sure to follow me on Twitter (@NicolasG_B) or Majaka on Facebook to be kept posted !

About Nicolas Godement

  • Lam Ho

    Thanks your sharing so much! I known the feels when we make a game with many investing but we get very few

  • Cristi Badea

    This is by far the best article I read this year

  • Zero dollar but a lot of time writing PR, newsletter, animating the facebook page, etc. 
    Not that I would recommend against a marketing budget -we just did not have one for this test-project.

  • Hi Bingo, you’re definitely right that our sample rate is too low for the analysis I’m making about our types of payers (low spender, medium, big). I just thought it was interesting to note. 

    There’s already plenty of data about success stories if you look it up online.The key point I wanted to put across was that not every f2p game will magically have a 1-5% conversion rate. 

  • Hi Timofey, thanks for the nice words. The main reason why we’re not going back to Ski Champion right now is that we have a rev-share agreement with our developer for our next game, while it would cost money on Ski Champion. Also, we feel it’s better to move on for the time begin. At some point we may do a SKi Champion 2013 or something but there isn’t anything planned at all yet. 

  •  I’m not sure I agree. If you only look at success stories, your dataset can become skewed pretty quickly.

  • Bingo Mcmanis

    Sample rate too low for the data to be of interest. $560/day would be just about ok but $560/2month?…. Would love to hear more success stories, might actually learn something.

  • Timofey Bolgov

    Thank you for an interesting insight on conversion rates 😉
    Seriously, though. Why don’t you try fixing your mistakes with the same app?
    Just tweak the IAPs a bit and go on a marketing spree, posting epic stories of your hard work. It won’t give you much profit without FTE improvment and some gameplay changes (the game really lacks goals), but it’s quite a cost-effective way of getting sales experience with this game. That is, of course, if you have any kind of tracking system.

    Oh and please, contact me when you go post-production with your next game. I’d offer you a $50k-100k worth test marketing campaign for a revenue share, because I’m so sweet and because I like to work with people who understand what they do 🙂
    I’m t.bolgov at google mail.

  • Nice article, i wonder how much have you invested in marketing?

  • George

    Thanks for posting and sharing!  Definitely very interesting. 

    Nicholas – can you comment at all about how Majaka looks at / estimates / calculates lifetime value (LTV) for customers?

  • Good article! And i was going to say your doing the exact thing you should not do, but later in the article it seems you understood that. But as you say, you are limiting the players ability to play which i would say is a big no no (unless it’s a social game like Farmville etc) also unlocking slopes by paying is good but should also be possible to do by playing (if not possible already)

    Also it seems you have ideas on how to improve the game with upgrades etc. Also as you mention ad’s are good. I would suggest you contact W3i and implement their ad system. They are really nice to work with and we are working with them on our soon to be released game MEGATROID. http://www.facebook.com/megatroidgame (if interested) 😉

    Also feel free to contact me if you want an intro to W3i.

  • Thanks for the nice words! We don’t educate the players to spend and there’s no proper FTE (hence the low numbers ^^).
    Not sure what you mean about pricing, but we basically set several packs : 10 coins, 30 coins with 10% off, 70 coins with 20% off, 200 at 30%, 450 at 40% and 1000 at 50% (roughly)

  • Pepe Cantos

    Super interesting article!

    Another thing I’m curious about is the pricing. I have checked the numbers and the unitary prices don’t seem to be aligned. Did you work some pricing-tests or just decide to give a shot?

    Going to install the game right away, really interested in check the FTE and how you educate the players to spend.

    Congrats! This really rocks!

  • Excellent article.  Thanks for sharing this info with us.  

  • Yeah I thought about that too shortly after writing the post. You’re probably right 🙂
    In that case our conversion rate would be even lower, closer to 0.05% if I remember correctly. 

  • Pepe Cantos

    awesome!

    One thing that I don’t get regarding Conversion. You have calculated Conversion by dividing the # purchases by the total installs [that’s my guess, correct me whether I’m wrong and skip the next question :)]. Wouldn’t be more accurate to do that calculation on a daily basis and dividing # of paying players/# active players?