The Strategy of Video Game Whales

Originally article from videogamemarketing.ca/2014/06/09/video-game-whales

Video Game Whales have been discussed frequently but with little insight to the financial nature of the “beast”. A whale is a user who is spending a significant higher amount on your game through microtransactions (MTX). The time old tale of “95% of your revenue comes from 5% of your users” is exactly what we’re talking about.

The Basics

You need to evaluate a whale based on the ARPU they are providing. I define a whale as the top 5% of users respective to ARPU. You really can’t define it based on ARPPUbecause unless you have a hybrid model (subscription and MTX) in which case you’ll just have your ARPU inflated by the subscription price. Based on this the data you’ll gather from identifying your whales, you can find the following important numbers

Whale Figures

Whale Centric Revenue / Total Revenue = Whale Revenue Ratio

This number should scare you. It is outlining what portion of your revenue you are earning from just your whales. Be realistic about how dependant you are on such a small number of users and take appropriate steps to ensure your prolonging the LTV of these specific users. I’m actually usually terrified by this ratio. In large mainsteam projects I’ve seen more than 60% revenue comes from 5% of the total users.

Total MTX Revenue / Total Premium Revenue = MTX Revenue Ratio

Whales are spending so much on your game by purchasing multiple copies, they are obviously MTX’ing like it’s going out of style. Looking at how much a given user base is spending outside of your original purchase price is a good indication as to how well you’re creating value through MTX. If you can get the average user to spend 10% of the premium price on MTX you’re doing something well.

Creating a Healthy Ocean

I feel gross at the idea of writing an article about how to get more people who are vulnerable to addictive behavior to be snared. The Whale concept might seem exciting or even humorous if you’ve never experienced it before, but when you find one user in your system who has spend $5,000 + on your game and logs on average 6 hours per day, your heart will start to crumble. This is obviously extreme of whale behavior but I do not believe it’s acceptable to try and create an environment where mental health issues can be exploited.

This all being said, I do want to discuss the dynamics of whales.

Let’s Start At The Very Beginning….

….a very good place to start. Does your game even have uncapped revenue potential? What I mean is this – Does your game have a maximum revenue amount that a user can hit or is the ceiling removed? You’d be surprised on how many of major studios I’ve worked with have completely throttled people’s desire to spend when the design which allowed for potentially limitless spending was present!

Commodities Lose Value

Buy enough apples and hey, you’re going to be sick of apples. Consider selling an experience over just an in game item. Think about HearthStone (I talk about this in my other article), where you buy a pack of cards, which are opened with the flashy surprise of what cards you receive. PLEASE go check out the game or at least a YouTube video of what opening a pack of cards looks like. The experience has flashy lights, sound effects and random little perks that just make it the perfect example of what it means to give an experience over just a commodity.

What Meta Are You In?

Pretend your playing NHL 2014 and you have a major online tournament coming up. If you had the option of paying $2 for an in-game perk which allowed each of you’re players to get 5% better stats for one game, you’d probably pay it! This is an example of a competitive meta that you’re MTX revolves around. There are basically 3 as far as I can see

- Experiential – Opening a pack of cards in HearthStone.

- Competitive – The NHL example above.

- Social – Have you ever seen people who pay $5 for an in-game hat, which doesn’t do anything? Regardless if the person cares how other players like the hat, this player is choosing to socially express themselves by differentiation (ie, a social function)

Figure out which user base you’re selling to and you’ll be on tract to properly learning what they want. Social buyers are interested in the staying value of a vanity item compared to the short term intense experiential buyer.

A friend of mine sent me the chart below – I hope it and the content above helps you on your fishing!