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[Gamesbriefers] Are mobile conversion rates really this low?

By on March 25, 2014
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Question:

Last month, Swrve released data suggesting that only 1.5% of players spent any money at all on mobile games, with 10% of those (i.e. 0.15% of the audience) representing about 50% of revenue.

Do these metrics match with your experience? Do you think that these pose a challenge for the industry?

Answers:

Oscar ClarkOscar Clark Evangelist for Applifier

Well I’ve seen a range of things…

Back in 2011/12 games like X-City with 50k daily active users were getting 15% paying and 4% paying over $100/pcm with an ARPU’s of $10

However at the same time other titles (I can’t name for fairness reasons) even with big names were getting 0.6% paying and no-one paying over $100 (ever); most of the revenue coming from advertising.

More typically I see socialised games getting 3X the revenue (and retention) of non-socialised. However, I don’t see the books of enough games to be able to prove that assumption. We also saw more revenue on consumables than permanent or durable goods; but that these latter types were often gatekeepers to ongoing spending. The trouble is every games’ revenue balance is different so its hard to prove causality or to talk in general.

The reality is that these numbers are almost meaningless. Its not the % of payers that matter its the overall monthly revenue and the retention of the game. If the game earns more money than it costs its a success. We don’t all have to aim for $bn valuations.

That being said there are still too many games relying on the ‘Time’ or ‘Fuel’ mechanic for monetisation and this leave players with a sense of walking a minefield (always having to avoid stepping on the monetisation or facebook share bombs). That’s not healthy.

What really matters is how much the game delivers utility to its players and I stand by my view that if we stop worrying about squeezing money and instead focus on delivering value; then the possibilities will speak for themselves.

Simon OliverSimon Oliver Designer at HandCircus

Above all else it feels like a missed opportunity. It suggests that while many games are able to service their most dedicated fans, there is very little to attract the vast majority of the audience. It also presents a risk that the game will continue to be tuned to keep that tiny proportion that pay happy, further alienating the non-paying audience.

Ben Cousins1Ben Cousins Head of European Game Studios at DeNA

Seems about right.

How could it be a challenge for the industry when these spending mechanics are driving all this growth? In think it’s very old-world thinking to consider these numbers bad in some way.

I was surprised it was even a news story. All they did was share some standard mobile spending distribution data.

tadhg kellyTadhg Kelly Developer Relations at Ouya

I’d be really interested to know the difference between the median and the mean when it comes to those figures. My gut instinct guess is that the more actively engaged – but often smaller – games tend to do much better than the mean for example.

harry holmwoodHarry Holmwood CEO of Marvelous AQL Europe

The numbers sound about right.

I think it does pose a challenge in that my worry with f2p’s direction is that it’s likely the same , relatively small number of people who pay, across multiple games – it’s not that most people pay on _something_, it’s that most people don’t see the need to pay at all. While, of course, Candy Crush has a different paying customer from a hardcore CCG, most customers are getting everything they want for free, so why should they ever pay? Pay/convenience walls, hard or soft, are becoming less effective as less engaged players can choose to play a great new game every day (or indeed hour) so we need to embrace more interesting monetization methods.

The question that has yet to be answered is whether we can convert those non-payers into payers, with the right games. If not, the growth opportunity in mobile isn’t as exciting as some might perceive. The console business only hit, say, 200m consoles in its biggest generation, but all the players paid. If we are only seeing 1.5% of people paying now that’s actually a much smaller number of paying players, even with multiple billions of smartphones out there.

The danger is we end up in a position where everyone’s chasing (and spending to acquire) the same few million players who spend, while the wider world considers games as something (like music, news and, increasingly, TV) you don’t have to pay for.

It’s very easy to say the answer is to provide better games, with more compelling reasons to pay, but. I worry that that’s analagous to the music business saying ‘if only we write better songs, everything’s going to be just fine’.

Of course, those who get it right will continue to reap the rewards, but we all need to be thinking way beyond our current models and practices if we want to enjoy the true growth opportunity mobile can still offer.

Mark SorrellMark Sorrell Game design consultant

One interesting question is if these are the same players across several titles or if people are paying for one title while playing a few. The truth is probably in the middle.

To what extent are players who don’t currently pay, opportunities? Prospects waiting for the right game to come along?

We are, after all, competing for attention first. Money is a sub-set of attention. If play time is filled more and more with either free or pre-paid play, what room is left for potential paid conversion?

I don’t think these numbers are surprising or unexpected or even that useful (the mean/median comparison is very much needed here for starters, as Tahdg says) but that’s not to say that a mature F2P marketplace won’t throw out some unexpected behaviours or conditions.

One thing I am quite, quite sure of, is that we have a lot further to go in the path of game-design discovery than we have already travelled. So I’m not that concerned quite yet. We have much, much better mousetraps to build yet.

pecorellaAnthony Pecorella Director of production for virtual goods games at Kongregate

These numbers do line up fairly well with what we’re seeing on the Kongregate web platform, so it’s not just a mobile phenomenon. We’re actually even more big-spender heavy in revenue, but that makes sense as we’re also heavy in highly-competitive, core games. I don’t see it as a worrisome figure at all though, but instead one to keep in mind as you design your games.

It should not be surprising that the vast, vast majority of players of free to play games decide to play the game for free. That’s the whole point of the model – we’re trying to reach a huge audience, create network and social effects, build competition, and let those who want to pay, or who are willing to exchange time for money, do so. The big lesson to keep in mind here is to make sure, especially for competitive mid-core and core games, that players can spend thousands or tens of thousands of dollars in a meaningful way. If the business is currently heavily driven by big spenders, you have to have a game that opens up that possibility for them, otherwise you’re missing out on opportunity.

The comparison to consoles is interesting, but I think not directly applicable. Yes, the console market is currently a lot bigger than the paying smartphone user market, but the spending habits are also very different. In F2P games you will see individual people spend tens of thousands, and in some cases hundreds of thousands, of dollars on a single game. There are not many people in the world who have spent more than $30k on a single generation of games (just the software, I’m not counting equipment), if for no other reason that it’s nearly impossible to do so in any reasonable way. There are lots of people who have spent more than that on a single F2P game. F2P and retail models are fundamentally different, and it’s part of the reason that we’re seeing retail games starting to embrace variable pricing through DLC, season passes, etc.

Teut WeidemannTeut Weidemann Online Specialist at Ubisoft

Lets first synch what we talk about here. Do we talk about conversion rates from active players? If yes how do you define them? Is the 1.5% monthly or lifetime? Depending what you pick and how you define this value jumps a lot.

From my talks & classes people know that a healthy f2p title does 50% of its revenue from 90% of the payers, the other half from the 10%. So yes, this is right and a good guideline. Why?

If you rely too much on few spenders (whale oriented) then any change in user behavior does huge changes in your revenue.
If you rely too much on the large spender group (i.e. fewer whales) your spender lifetime might be shorter and ARPU lower, making user acquisition even more difficult than it is.

That’s why the middle ground is best.

Bernard ChenBernard Chen Director of Product Management at KIXEYE

I mostly see data from web games, but I’m surprised that so many of you agree with 1.5% conversion.  Twice as high or more seems like a better estimate of actual lifetime conversion. …Unless mobile has more play-and-dump tourists than web, but that seems unlikely.

Teut WeidemannTeut Weidemann

Bernard, I agree, mobile conversion is ultra low compared to web games – which are lower compared to client based games.

A guidance I tell my people:

Facebook & Mobile: <5%
Web based online games: 5-15%
Client based games: 15-25%

If your game doesn’t fall within those bounds then you’re either an odd exception or you can improve.

Btw Supercell claims 10% conversion on their mobile games.

Ben Cousins1Ben Cousins

Conversion increases as audience size drops (hence the hierarchy you detailed below). Supercells games don’t have the huge audiences of a Candy Crush, so this would make sense.

However the 1.5% is most likely a daily conversion number and the 10% lifetime. If you have good retention (which Supercelks games have) the difference between daily and lifetime is greater.

I have to say, I find I get very very little insight or learnings from looking at the metrics of other companies. Everyone defines things in different ways, they obscufate data to get across an agenda, and every game is different.

If you are a F2P developer, what matters is maximising your own game(s) and the limits of how far you can take that optimisation are 100% defined by your game and 0% related to what anyone else gets.

People need to stop obsessing over everyone else’s data, IMO.

pecorellaAnthony Pecorella

A big problem here, as Teut pointed out, is that we have no definitions in place. So 1.5% can mean a variety of things based on how one defines “user”. On Kongregate, we define it as a registered user who has loaded the page. This is probably the loosest possible definition, as it doesn’t even guarantee that the play has loaded, or can even play, the game. Other companies will define it as accepting the game permissions, or fully installing the game, or registering for an account, or even completing the tutorial. These all swing the numbers substantially, to the point that the numbers without that context are basically numbers without units – they’re somewhat meaningless.

That said, I said they line up fairly well with Kongregate’s numbers because they are in the right ballpark. A small percentage of users pay, a tiny percentage pay big, and those big spenders account for over half of revenue. The exact numbers at a philosophical/design level don’t really matter, it’s more about what they are conveying about the audience and their habits. As Ben said, you can optimize your numbers, but comparing between games without knowing you’re measuring the same thing doesn’t tell you anything.

ben boardBen Board Senior Product Lead at Boss Alien

I also see no reason to worry about those numbers. What percentage of people in January saw an ad on a bus stop for holidays to Greece, then actually book to go?

If anything it makes me all the happier that our games entertain such a gigantic number of people and require nothing in return. These are tough stats for F2P cynics to swallow. The 98.5% are clearly failing to be ‘gouged’, are immune to the ‘mind tricks’ and so on. The rest are spending what they think it’s worth.

Perhaps downward trends in conversion reflect a maturing audience that’s expecting more for less. Well, that’s our market (and many others). Up to us to continue to produce conversion-worthy content to fund our businesses, even if that bar is rising. We just need to keep improving our craft.

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