The monetization model for free-to-play (F2P) has been built on one simple premise — the more players you get into the game, the more money you make. However, we’re seeing trouble here with acquisition costs soaring, leaving publishers and developers struggling to balance the books of marketing return-on-investment (ROI).
When you have to employ a 20-plus channel strategy to get your desired numbers, knowing which channels are bringing which users to the game is becoming increasingly important. But you could argue, so what?
While knowing which channels are delivering the most players is important, the real question is whether these folk are making me money and am I getting ROI from my acquisition costs.
The complex, chaotic, and resource-hungry acquisition marketplace has impacted costs to such an extent that is some cases the cost-per-install (CPI) can actually outstrip the lifetime value (LTV) of players. This has made it increasingly difficult to create profitable games – but there is a way for the economics of acquisition to swing back in the game makers’ favor.
Quality over quantity
In the rush to acquire new users in the face of unaffordable CPI costs, it’s essential that publishers and developers start thinking about who they are actually acquiring and focus on player engagement to build long-term relationships with their players to increase the LTV.
The truth is that many games suffer from poor engagement and fail to give new players a good enough experience in their first session to make them want to play again. At deltaDNA, we see on average across the industry that day one retention rates are between 20 percent and 40 percent, which means that the majority of players never return after their first experience of a game.
And so we have a perfect storm of expensive acquisition being poured into games that are not giving players the experience they want. This is clearly unsustainable.
The games industry is having to undergo a rapid transition, from knowing little about its players to being driven by data. But this goes way beyond metric dashboards. You need to understand players’ different behaviors and build responsive environments that drive player engagement.
Customer-relationship management has long been the focus of the finance and retail sectors who work very hard to make sure their consumers return. This is no different in the virtual world of the game. Understanding that all players are not the same and identifying different playing styles and behaviors is paramount to successful player-relationship management and the key to winning the CPI battle.
By thinking about the player experience clearly and by taking into account that players will always have different levels of competency, patience, momentum, and competitiveness, it is possible to maximize engagement.
Once engagement is improved, revenues will follow as players value the opportunity to maintain and deepen their gameplay. In turn, lifetime values increase and acquisition becomes more affordable. So instead of a downward spiral chasing more and more elusive quality recruits, the viability of the game is fundamentally changed.
This post originally appeared on VentureBeat.