| Making games for mobile phones is a bit different to creating them for other platforms. For PC and console games your player will usually be buying your game before they download it. In the world of mobile gaming players generally expect games to be downloadable for free. The term used for a game that costs money to buy is a premium game. Most mobile games are released as free-to-play games and can be downloaded on to the player's device for free. It is only when the player is actively playing the game that the publisher can make money from the game either by in-game advertising (ads) or from in-app purchases (IAP). |  |
When publishing mobile games it is much harder to get people to pay a premium to buy a game. That could be because mobile games are seen as lower value than PC or console games, or it could be that the number of high quality free to play games hit such a critical mass that premium games cannot compete. Either way successful premium games are rare and are usually based upon intellectual property (IP) that is already well known.
Unless you have a good strategy that will allow you to release your game as a premium game, you're most likely to be using a free-to-play business model. This will affect every decision you make when designing your game as it will have to have natural breaks where ads are appropriate and good incentives for players to make IAPs.
Unlike a premium game where how much a player plays makes no difference to your revenue, with a free-to-play game you will make more money the more they play and the more engaged they are whilst they are playing. The concept of keeping players playing for as long as possible is known as retention and is a critical statistic in determining if a free-to-play game is going to be successful.
Mobile game publishers will be interested in a number of retention points to measure how well the game retains players. These points are Day 1 (D1), the number of players that keep the game installed on the first day, day 7 (D7) , the number of players that still have the game installed after one week, day 30 (D30), the number of players still retained after a month. Some publishers may also be interested in D90 as well, but the day/week/month measurement points work well for casual games.
A successful mobile game will need the following retention metrics to be successful:
D1 retention - 35% or higher
D7 retention - 15% or higher
D30 retention - 8% or higher
Those figures represent roughly break even levels of profitability, although many factors are involved including how well optimised your adverts are and how attractive your IAPs are.
A quick aside here, to get retention statistics you'll need two things: Firstly, a way of capturing the data such as including the Google Firebase analytics SDK* in your game and, secondly, you will need a number of players that you can measure. Getting an initial cohort of players to measure can be difficult, but can be done organically though smart app store search optimisation, or failing that by running a limited paid user acquisition (PUA) campaign using something like Google Ads. For some guidance on app store search optimisation see this previous article.
There is a golden principle in the mobile games business and that is "retain, then monetise and finally acquire." What that means is your first priority is to make sure your game is retaining users. A game that is losing 75% of it's players on day one has a retention problem that needs to be fixed first. When your retention is fixed, your next priority is to make sure you are monetising your game effectively. If you have lots of players but they aren't watching adverts or spending any money then you aren't going to even cover your development costs. Finally once you are retaining players and you are monetising them effectively, only then should you think about using PUA to scale up your player base.
So how do you monetise your game effectively? As mentioned in the first paragraph, there are two main methods, in-game ads and in-app purchases. Let's look at in-game ads first. To put adverts in your game you will use an ad network such as Google Admob (there are many, many ad networks to choose from) and you will include their SDK* into your code. You can then set up a number of ad formats to use, the most common being:
Banner Ad - The small adverts you see at the top or bottom margins of apps and videos,
Interstitial Ad - A full screen advert that you show to a player during natural breaks in the game such as level changes.
Rewarded Ads - Full screen video ads that the player must watch to the end to receive some kind of in-game reward.
The amount of money that you make in revenue for showing ads is measured as standard as ecpm which stands for "effective cost per mille" with mille meaning 1000 ad impressions. You can expect an ecpm of between $4 to $10 for video ads and less than $1 for banner ads. Those figures vary a lot depending upon the demographics of your player base. Observed ecpm will be much higher in first world countries than in developing regions for example.
Including in-app purchases in your game is a great idea, even if it is just a single IAP that allows the player to play the game without having to see any adverts. The most profitable games on mobile will usually have some sort of expendable commodity that is used up as play continues and then can be replenished either by waiting for some time, watching a rewarded video advert or by making a purchase. Your analytics tool will record how many of your players make purchases (the buyer rate) and also the average revenue per paying user (ARPPU). These are useful stats for the next step.
When you have a good idea of your figures for player retention, ecpm and player purchases you can fairly easily calculate the average lifetime value (LTV) of a player of your game. This is the total amount of revenue you can expect to receive on average from a single player. It's probably the most important stat you need to know before deciding whether to invest money into advertising your game. Luckily, in the distant past. Google produced a tool for calculating LTV for mobile apps and it still works very well:
developer.android.com/distribute/ltv-calculator
Once you have a figure for the LTV of your players you can make a straight comparison between LTV and cost per install (CPI) on a paid user acquisition (PUA) campaign. There is a trap here in that to compare like for like you must make sure that you're comparing the same demographic of players. It's not going to work comparing the LTV of players from the USA to the CPI of players in India for example. Given that, you can set up a Google ads campaign for your game and if the reported CPI is $0.75 and your calculated LTV is $1.25 you can be quite confident that you'll be making about $0.50 profit per player that you acquire through your ad campaign.
If you have firebase linked with your Google ads they now offer an alternative a campaign measuring and optimisation strategy based upon measured return on ad spend (ROAS) directly. These campaigns seem effective but not massively more than just comparing LTV to CPI over the same demographic. One thing that you might find with ROAS campaigns is that they appear to base their percentages on the gross revenue before any app store percentage is taken, so your real ROAS may be smaller than that indicated by the dashboard.
* An SDK or 'Software Development Kit' is code provided by an organisation that allows you to hook into their services.
Unless you have a good strategy that will allow you to release your game as a premium game, you're most likely to be using a free-to-play business model. This will affect every decision you make when designing your game as it will have to have natural breaks where ads are appropriate and good incentives for players to make IAPs.
Unlike a premium game where how much a player plays makes no difference to your revenue, with a free-to-play game you will make more money the more they play and the more engaged they are whilst they are playing. The concept of keeping players playing for as long as possible is known as retention and is a critical statistic in determining if a free-to-play game is going to be successful.
Mobile game publishers will be interested in a number of retention points to measure how well the game retains players. These points are Day 1 (D1), the number of players that keep the game installed on the first day, day 7 (D7) , the number of players that still have the game installed after one week, day 30 (D30), the number of players still retained after a month. Some publishers may also be interested in D90 as well, but the day/week/month measurement points work well for casual games.
A successful mobile game will need the following retention metrics to be successful:
D1 retention - 35% or higher
D7 retention - 15% or higher
D30 retention - 8% or higher
Those figures represent roughly break even levels of profitability, although many factors are involved including how well optimised your adverts are and how attractive your IAPs are.
A quick aside here, to get retention statistics you'll need two things: Firstly, a way of capturing the data such as including the Google Firebase analytics SDK* in your game and, secondly, you will need a number of players that you can measure. Getting an initial cohort of players to measure can be difficult, but can be done organically though smart app store search optimisation, or failing that by running a limited paid user acquisition (PUA) campaign using something like Google Ads. For some guidance on app store search optimisation see this previous article.
There is a golden principle in the mobile games business and that is "retain, then monetise and finally acquire." What that means is your first priority is to make sure your game is retaining users. A game that is losing 75% of it's players on day one has a retention problem that needs to be fixed first. When your retention is fixed, your next priority is to make sure you are monetising your game effectively. If you have lots of players but they aren't watching adverts or spending any money then you aren't going to even cover your development costs. Finally once you are retaining players and you are monetising them effectively, only then should you think about using PUA to scale up your player base.
So how do you monetise your game effectively? As mentioned in the first paragraph, there are two main methods, in-game ads and in-app purchases. Let's look at in-game ads first. To put adverts in your game you will use an ad network such as Google Admob (there are many, many ad networks to choose from) and you will include their SDK* into your code. You can then set up a number of ad formats to use, the most common being:
Banner Ad - The small adverts you see at the top or bottom margins of apps and videos,
Interstitial Ad - A full screen advert that you show to a player during natural breaks in the game such as level changes.
Rewarded Ads - Full screen video ads that the player must watch to the end to receive some kind of in-game reward.
The amount of money that you make in revenue for showing ads is measured as standard as ecpm which stands for "effective cost per mille" with mille meaning 1000 ad impressions. You can expect an ecpm of between $4 to $10 for video ads and less than $1 for banner ads. Those figures vary a lot depending upon the demographics of your player base. Observed ecpm will be much higher in first world countries than in developing regions for example.
Including in-app purchases in your game is a great idea, even if it is just a single IAP that allows the player to play the game without having to see any adverts. The most profitable games on mobile will usually have some sort of expendable commodity that is used up as play continues and then can be replenished either by waiting for some time, watching a rewarded video advert or by making a purchase. Your analytics tool will record how many of your players make purchases (the buyer rate) and also the average revenue per paying user (ARPPU). These are useful stats for the next step.
When you have a good idea of your figures for player retention, ecpm and player purchases you can fairly easily calculate the average lifetime value (LTV) of a player of your game. This is the total amount of revenue you can expect to receive on average from a single player. It's probably the most important stat you need to know before deciding whether to invest money into advertising your game. Luckily, in the distant past. Google produced a tool for calculating LTV for mobile apps and it still works very well:
developer.android.com/distribute/ltv-calculator
Once you have a figure for the LTV of your players you can make a straight comparison between LTV and cost per install (CPI) on a paid user acquisition (PUA) campaign. There is a trap here in that to compare like for like you must make sure that you're comparing the same demographic of players. It's not going to work comparing the LTV of players from the USA to the CPI of players in India for example. Given that, you can set up a Google ads campaign for your game and if the reported CPI is $0.75 and your calculated LTV is $1.25 you can be quite confident that you'll be making about $0.50 profit per player that you acquire through your ad campaign.
If you have firebase linked with your Google ads they now offer an alternative a campaign measuring and optimisation strategy based upon measured return on ad spend (ROAS) directly. These campaigns seem effective but not massively more than just comparing LTV to CPI over the same demographic. One thing that you might find with ROAS campaigns is that they appear to base their percentages on the gross revenue before any app store percentage is taken, so your real ROAS may be smaller than that indicated by the dashboard.
* An SDK or 'Software Development Kit' is code provided by an organisation that allows you to hook into their services.
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