November 8th, 2012 New York Gaming Meetup's NYC Gaming Conversation

On Thursday, November 8th, 2012, OLC attended New York Gaming Meetup's NYC Gaming Conversation: Monetization at Baruch College. A panel of three—plus a moderator were present at the event and gave short presentations: Wade Tinney (CEO, Founding Partner) of Large Animal Games, Glen Nigel Straub (Global Monetization Solutions) of Millennial Media, Deepa Muralikrishnan (General Manager, Global Payments) of Live Gamer, and Paul Canetti (CEO) of MAZ Digital.

Wade Tinney introduced himself and his company, Large Animal Games, as a social/mobile developer/publisher. The company is a team of 35 working on building and maintaining four to five games. "The part of the business is maintaining and licensing games," Tinney said. The company was founded in 2001 and started with work for hire. It moved to casual downloadable games and its business model was "try before you buy." Four years ago, the company moved to the Facebook platform and adopted a new model—free-to-play. Large Animal Games focuses on self-publishing, but also using publishers to bring games to market.

Tinney gave quick definitions of terms that are frequently used when talking about monetization. "Customer acquisition is about getting players to your game," he said. "It could be viral, organic, or paid [advertisements]." Next, he defined ARPDAU/ARPU/ARPPU, which stands for Average Revenue Per Daily Active User/Average Revenue Per User/Average Revenue Per Paid User. PPP stands for Percentage of Paying Players. LTV stands for Lifetime Value. "It's easy to come with looking at data. Trying to project it forward is difficult," he said. Arbitrage is "trying to acquire players for less than the LTV." Retention Engagement is "the statistical measure of quality of the game."

Deepa Muralikrishnan presented Live Gamer as a company, which serves over 100 publishers with 150 games. It currently boasts 95 million users in 150+ countries. The goal of a majority of publishers is to increase revenue per user. Performing digital economy optimization is key to increasing revenue, such as using e-wallet platforms like PayPal.

Muralikrishnan looked at the market trend and she observed that PC online and mobile users “see largest growth." There are three-tier gamers: top-tier are core gamers, middle-tier are broad-market gamers and bottom-tier are players and not players. Live Gamer focuses on the bottom-tier. Muralikrishnana also discussed virtual economy. "Success factors in free-to-play games," she said. The conversion rate depends on understanding customer behavior and access to data and right tools. Providing right payment options and understanding the risk profile of the end user, as well as knowing the territory, local method and testing emerging markets will help in increasing revenue.

"The best-selling items are consumables, extra game levels, virtual currency and avatars/heroes," Muralikrishnan said. "The price depends on how long the items are useful. Level up sale items can be sold at maximum price with earned currency. Eng-game base units can be sold around $20, weapons and upgrades can be sold around $10-15, enhancements at $3-7 and consumables at .50 and $1.00."

Muralikrishnan looked at data concerning payment methods and found that the US market is dominated by e-wallet platforms like PayPal, coming in at 70%. In Europe, mobile payments came in at 30% and credit cards and e-wallets took up 20% of the market respectively. In Latin America, mobile payments dominated the market, whereas in Southeast Asia, coupons and pre-paids dominated. In the rest of the world, mobile currently is the market leader in payment methods.

Millennial Media is the largest ad network in the United States. Glen Nigel Straub described Millennial Media as "bridging the gap between publishers and mobile." He explained that "a majority of publishers are in the gaming space and Millennial Media makes it easy for them to enter it." Publishers can start monetizing on the first day with using SDK on a platform provided by Millennial Media. The company works with performance marketers to improve app downloads. "Video ads give you most bang for your buck," Straub said. "It does command a high price, though."

The presentations moved to a conversation between the moderator, Paul Canetti of MAZ Digital and the three panelists. "The idea of monetizing a game is novel," Canetti said. "Internet and mobile and tablets influenced this. It shifted, but it hasn't finished. Where are we now?" Straub answered first. "Snacking has influenced gaming culture," he said. "You want to be able to do something—everyone has a device. It's been a boon to the snack feature of gaming. It's very accessible and because everyone has a device at all times, it adds to the distribution." The conversation moved to connectivity and monetization, as it would not be profitable to run advertisements on devices that have no service. Tinney said: "We think about free patterns. New York developers need to think about location. New York has pockets of no service. Play patterns are important. 'What patterns are we marketing?' is something that should be considered. We do casual games and because it's casual, it can be short. It allows for people to play them in places like subways where there is no service." Muralikrishnan also answered: "We do see publishers develop games for both online and offline. I see that more and more." Tinney added, "I'm pretty sure the genesis of that came from piracy in Asia. A way to protect against that is to put games on servers. The logical next step is to give some sort of monetization for competition. You need offline play to give some sort of validation."

Canetti took the chance to ask another question. "Relating to connectivity, monetization is an ongoing process. We're seeing more and more games released that aren't finished. Is it worth it in monetization?" Straub answered, "In free-to-play games, loyalty is tough. Console games, .99 cent games in App stores have a natural retention rate. Free-to-play games need constant updates to retain players." Tinney added, "It's a service business. The majority of consoles are one-time business models. It's a very metrics driven. You need to come in knowing that." Muralikrishnan asked Tinney, "Do you do AB testing for games?" He answered, "We do AB testing all the time, but we split test the economy of the game."

When asked about newer models becoming influenced by older models, Muralikrishnan agreed without hesitation. "Absolutely," she said, "console hardware dipped, but the consoles online are going up. Trend is going high and users aren't just playing offline, they're moving online." Straub confessed that Millennial Media was not in the console space. "We're getting into television because tablets are becoming more and more incorporated into the television space to control it," he said.

Canetti asked if there was any merit in offering a product in hopes of getting many users worth the trouble. Tinney answered, "As a developer, you're not going to get very far if you don't think about creating a sustainable business. You'd better have a plan to monetize these players." Canetti asked about the best methods of user acquistion. "What we've seen some publishers do is launch across different platforms," Muralikrishnan said. "Once they've had enough users on the game, they take it off the platform. Typically new games go on these platforms." Straub said, "Being able to brag or share with your friends on Facebook—these are features and don't cost any money. If you think about your game and the world, it's a world where everyone overshares, so it's important to add that feature to your game." Tinney concluded that it's a good idea to plan for the next day. "Give a reason to have the user come back for more."