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Improve your revenue with the GAMESbrief free-to-play game forecasting spreadsheet

By on October 6, 2011

Forecasting revenues for online games

I am a great believer in the “Keep it Simple” principle. I am often asked which metrics I consider most important. Clients and developers seem to expect me to rattle off a list of dozens, scores, maybe even hundreds of metrics that they should be tracking, analysing and tweaking.

The problem is that very few companies have the skills, resources or discipline to analyse this much data. They might capture it, but they are unlikely to use it. It might as well not exist.

Enter the GAMESbrief online games spreadsheet. It’s a simple, top-down approach that identifies the Key Performance Indicators of an online game that lead to revenue. It follows the funnel from users to revenue. It identifies the key steps along the way. It acts as a guide and as a development tool. It can become the heart of your business.

The metrics

I focus on six key metrics (Note that these links are to posts that will go live during October-November 2011 so you may get a 404 error at the moment):

  1. Monthly Active Users (MAUs)
  2. Daily Active Users (DAUs)
    • Engagement rate (DAUs/MAUs, derived from MAUs and DAUs)
  3. Retention rate
    • Churn (derived from Retention Rate)
    • Duration (derived from Churn)
  4. Conversion rate
  5. Split between whales, dolphins and minnows
  6. ARPPU for whales, dolphins and minnows

The objective is to keep the spreadsheet tracking the fewest number of KPIs that still enable you to get a good grasp of your business. I could add more (in particular, CPA and virality are notable omissions), but I’m not yet convinced this would help most people. The six metrics I’ve identified will help you identify where your game is performing above market benchmarks and where it is performing below them. The value of the spreadsheet lies in its simplicity.

How to use the GAMESbrief online game forecasting spreadsheet

When you download the spreadsheet, you will see that your online game is forecast to make $3 million in year one (because all online games can). You just need to go through each major metric and adjust the assumptions to reflect your own reality. Some of the metrics will vary by platform. (MMOs often convert better than social games and have better retention rates, but fewer MAUs, for example).

Improve the revenue of your game

Once your game is live, come back to the spreadsheet and compare live, actual data with the forecasts. Check which KPIs are above the market benchmark you would expect for your type of game and which are below market. The next step is key. Ignore the metrics that are above their relevant benchmarks. You need to focus your development team on fixing the areas where you can make the biggest difference fastest. So identify the problem areas and work on those. This is where the bad news starts. I can’t tell you exactly what is wrong at this point. You might, for example, see that your retention rate is very low. I have many ideas for how you can improve retention, but I don’t know what exactly is wrong with your game. Areas that might be an issue include:

  • High bounce rate: Lots of people land on your game, take one look at it and conclude “this isn’t for me”. (More common on, for example, a Facebook game where installation is easy than on a free-to-play MMO with a client download)
  • Early drop-off: Traditional game designers often use tutorials to set the scene. Casual/social gamers get bored and leave before they’ve even seen the game
  • Interest peak: The game can keep people interested for a week, but no longer

This is where you need to move from the GAMESbrief spreadsheet (which is a management/forecasting tool) into your live data. I’ll be writing further posts on how to dig deeper into your data, but the principles are:

  • Identify a problem (say, low retention)
  • Come up with a bunch of hypotheses (like those above)
  • Query your data to see if the hypotheses are true (e.g. if 80% of people take one look at your game and leave, you have a high bounce rate; if 50% of people don’t get to level 3, you have an early drop off)
  • Spend your next Agile development period fixing those hypotheses that are confirmed by your data
  • Repeat

Month on month, you should start seeing improvements to these metrics. All of these metrics point to revenue at the bottom line, so if your metrics are improving, so should your revenue.

What are the benchmark metrics are for social, mobile and online games?

That’s where GAMESbrief comes in. I get a lot of data about different games metrics. Whenever that information is public (revealed at a conference, embedded in a Slideshare deck, referenced in an interview), I’ll link to it. Each of the key metrics will have a reference page here on GAMESbrief. Every time a new datapoint is made public, I’ll add it to the page. Over time, I hope to build a comprehensive set of benchmarks that show, for example, what conversion rate to payers you might expect for a Facebook game, for a browser-based casual game, for a free-to-play MMO, an iPhone game and many more. You’ll be able to get a rapid sense of how you should be benchmarking your game by checking these pages regularly. (Oh, and I’m not arrogant enough to think I’ll capture all of the public references. If you see something that you think is relevant, add it in the comments or email me at [email protected]).

The numbers will be wrong

The numbers that you choose to put in here will be wrong. Being wrong doesn’t matter. Give it your best shot. When you launch your game, some of the numbers in your forecast will be above benchmark; others will be below benchmark. Your job over the next 6-12 months is to refine and iterate until every metric is above the market benchmark. That’s what this spreadsheet is for. It is a tool to help you reach profitability. It is not a magic formula that will tell you exactly how much money you are going to make. Otherwise every single online game in the world would make $3 million in the first year. And we all know that’s not true, don’t we.

Where to go from here

You should download the spreadsheet, and read the rest of the posts about the metrics – linked below. It will be a valuable addition to your arsenal. I hope you find it useful.


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: