Monetizing off engagement: thinking in terms of experiences

Lifetime revenue and engagement

Last week EA shared its Q1FY19 results (herewebcast especially worth listening at for the Q&A). There was little mention of anything mobile – aside from encouraging early signs from FIFA mobile in China. YoY mobile net bookings decreased 2% (again, despite Fifa mobile in China), but still accounted for $147M net bookings. Mobile accounted for 21% of total digital net bookings. But if you assume Ultimate Team accounts at least for half of Live Services (18:53 in the earnings call) – so $225M+ in net bookings for the quarter – that might partially explain why there was little discussion about the mobile segment in this call.

There was an interesting comment during the Q&A – something that can be directly relevant to mobile, and that introduces potentially new ways to think about a title’s performance (for me, at least). At one point discussing the tuning of Live Service – between aiming for monetization and aiming for engagement – Andrew Wilson mentioned how he was looking at lifetime revenue, but also lifetime engagement (32:08 in the earnings call).

Now to me thinking purely in terms of engagement makes sense for a publisher like EA – especially since the streaming and subscription model is something they want to work towards (incidentally, that’s something super exciting to think about). But I feel like a vanilla concept of lifetime engagement has limited potential – unless you are in a pay-per-play model or you want to have a sense of the lifetime server costs per install (or plan to go the subscription route). It’s pretty standard to graph lifetime revenue from the perspective of days since install. Chances are if you were to do the same for lifetime engagement (after x days since install, what is the average time played by each user) then you would see a very similar curve – and that’s mainly because the bulk of your install does not return to your game enough to add to your cohorts’ playing time. And that’s not even mentioning the issues inherent to considering average times in general.

revenue_and_engagement

So, this way to approach lifetime engagement doesn’t really help understand how engagement and monetization are interrelated. And I feel that for people focusing on the mobile space it’s crucial to think about engagement from the perspective of monetization. Unless you’re operating a game that directly integrates monetization into gameplay itself (some idle RPGs or hyper-casual games do a good job at this with ads) I’d argue that while you should be concerned with engagement, you shouldn’t assume that monetization will automatically derive from engagement. More specifically: you shouldn’t assume the best ROI to increase monetization is to increase engagement.

If you were to look at arpdau (average revenue per daily users) alongside arpdhp (average revenue per daily hour played™ – you divide your total revenue of the day by the total gameplay hours by all users on that day) then I’ll go on a limb and say you will probably see both increase and decrease on the same days.

average_revenue

But that would be because the daily spikes in revenue are not correlated with increases in average time played. It’s an increase in daily conversions or arppu that will help you get your revenue up on a daily basis. And you probably don’t monetize the most on days when your users play the most – if anything it might be the opposite (if more casual users are playing your game on the weekend they are presumably playing less). Unless you make more money the days your play time increases (and because of that), then you probably need to be thinking about monetization and engagement in a slightly more elaborate way.

revenue_and_average_time_played

About monetizing experiences

Later in the investor call (52:20 in the earnings call) it’s mentioned how users are playing Star Wars: Galaxy of Heroes for 90 minutes a day. Because of the wording I’m not 100% sure of what that number refers to (what’s the “core part”? is it 90 min average? median?). But given that it had been announced in the Q4 FY17 Earnings Release that the average daily gameplay time per player in SWGoH was 162 minutes, I’m going to assume that 90 minutes figure refers to something similar.

This brought back memories (read PTSD) for me. I played SWGoH for a long time in an engaged alliance. By the end, it was taking me so long to complete all my daily requirements that playing the game had become a chore more than anything else. Retrospectively I think there were two reasons why I got so engaged. First, there was the social pressure of being part of a group of real people. Even though I didn’t know anybody outside of Discord, joining the alliance meant I implicitly agreed to cooperate and contribute. People were counting on me and I had given my virtual word. Second there were great advantages to being in an active alliance. The rewards I received from being in an active group were levels of magnitude better than what I could ever hope to get being by myself. Because of this, I was spending a lot of time each day completing actions that helped the alliance perform better. And by the end it was simply too much for me. The day I finally got kicked out (because I had been slacking too much for too long) that came as a huge relief.

So why am I bring this up? SWGoH probably had (and still has) very respectable LTV and arpdau numbers. But users need to play the game a lot to generate those revenue numbers. If you were to think about how the experience itself monetizes – the $/time played ratio – then it’s maybe no longer at the top of mobile games. Some games probably generate the same amount of revenue with much less gameplay time. This to me is where the main question about engagement and monetization lies: how well is a game monetizing engagement. It’s not just about the blind attempt to increase time played – it’s about monetizing that time played as well as possible. For every minute of gameplay (every minute a user experiences the game) how much revenue is generating the game? In absolute terms SWGoH – or any RPG for that matter – might have high revenue numbers. But when we bring that back to time played, there might be other titles or genre that monetize engagement better. If digital entertainment is about competing for an audience’s free time, and because that free time is finite, then maximizing time played is key.

Thinking about $/min played seems like an interesting way to consider engagement and monetization side by side. More importantly, it helps us anchor monetization in gameplay considerations. It’s no longer about how a game monetizes – it’s about how an experience monetizes. If you were to map the lifetime revenue per time played – and no longer per day since install – then that would highlight how the experience itself monetizes over time.

ltv_per_min_played

So in the above example after 300 minutes of play, a user in game 2 has spent more than a user in game 1. But because the $/gameplay ratio is better in game 1 than game 2 (the curve is steeper) that means game 1 monetizes engagement better (in this example, it just doesn’t start off as well). The long-term benefits of an increase in engagement are greater for game 1 than game 2.

Looking at lifetime revenue per time played highlights how engagement – activity – translates into revenue. And because it’s specifically about actual gameplay it can help assess the monetization health of your game. The ratio can be linear (as in game 1), but it’s more likely the curve will flatten after a given period of time. Game 2 and 3 start off monetizing at a same rate, but then branch off. Looking at how the experience changes after 60 or 120 minutes of gameplay can help improve overall performance. Identifying the moments where the curve decreases can help you make an informed gameplay change – whether by looking at difficulty tuning, progression or content unlock.

You obviously need users to play your game to monetize it – but all engagement is not created equal. Trying to get a sense of how your experience monetizes is probably the best way to design accordingly. Having a game that monetizes engagement well means you can ask less in terms of how much time a user must spend in your game. So next time you think about your game and monetization, you should think about how often are you putting your users in front of monetization moments and offering them opportunities for immediate gratification. Games that do not monetize engagement well will need to rely on delayed gratification and grinding mechanisms to make sure users will stick in the game long enough to get those revenue numbers. I’m not convinced that the best or more sustainable way to go.

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