How is your game doing? Number of game downloads have peaked and now at a steady rate each day. Money is coming in as batches from Paypal or Apple. All is good. Well, not really.
Downloads, New users, In-app purchases and other traffic stats are vanity metrics. They are good for your ego but not for actions. Read more about the difference in this post by Eric Ries on the Four hour blog.
When we look at our games we need to see learn about the driving forces behind a) getting new users onboard and b) getting these users to pay. There is a massive difference between freemium games and games were you charge a download fee or subscription fee. I will focus on freemium in this post.
Retention – Are the users coming back?
You’ve heard this one before. But what does it mean? It’s how many people that sign up today, come back tomorrow, the day after and the week after. This is enough for most games. It’s very likely that if they are not back after the first week, they will not play your game ever again. You should aim at somewhere between 20%-45% of the users returning after one week. If it’s lower than that, you need a better game.
But hey that sounds like a vanity metric, right? Well not really. We use this data to pinpoint when users are most likely to adopt our game. It’s also useful for marketing bursts and testing new features. Will adding a Facebook login increase or decrease returning users? When do we push notifications or emails to the users?
User Acquisition Cost AND Average Revenue Per User
If you are serious about growing your game, you will most likely pay to get more players. The only time it’s valid to pay for users is of course when you can get a return on that player. It’s really quite simple.
User Acquisition Cost < Average Revenue Per User
For calculating Average Revenue per User (ARPU) you need to have a comprehension of the users Lifetime value (LTV). The opinion differs on how you define LTV but I believe it’s not the time that passes until your user dies. It’s the lifetime the user spends with your game, and this usually reaches from 2 to 12 months, depending on your game. Say maybe 3 months for an average iOS-game. What money will you get from your user day 1 to 90 and why? To increase your ARPU, you can tweak and test what you charge for and try to pinpoint when the need for these goods are the greatest.
User Acquisition Cost (UAC) varies between different sources. Advertising networks for mobile and web are usually based on a Pay per Install basis. That’s fine and rather easy to enter in your spreadsheet UAC. Social networks like Facebook and Google offers this measurement too but usually charges per click, which add one level of complexity to your calculation, but it’s still doable. We try to separate the paid acquisition from the non-paid acquisition, as it is not as easy to measure. Non-paid user acquisition comes from virality (people telling their friends), PR and people generally discovering your game in directories and such. The art of creating a viral game is left for another blog post.
Please note that both UAC and ARPU need to be calculated on the entire user base, not just the 25% active players. As acquisition costs are based on all users, the paying users need to pay for this cost and hopefully some profit.
These are the most important metrics we try to tweak.