No conversation about performance in mobile games can avoid the question of monetization. And in conjunction with that, few conversations about monetization avoid the (direct) monetization vs. retention debate. The increased pressure on UA ROI has only exacerbated that conversation. A prevailing opinion is that no game can have commercial success without top tier retention. That’s not quite the case. Of course any game will perform better with stronger retention vs. weak retention. Just like any game will perform better with stronger monetization vs. weak monetization. But there are many scenarios where the business outcome of your game can still be positive with subpar retention. And where the ROI of your efforts will be greater if you focus on monetization instead of retention.
There are a few reasons why retention is not always the alpha and omega of game performance (I’ve discussed it here and here).
1. Success metrics vary by business model
One has to do with how you define success – for your game or your company. Depending on company goals and the relevant timeframe for you, success can be defined in terms of top line (revenue) or bottom line (profit). And although focusing on the bottom line is what appears as the most fiscally responsible and is what has currently driven a lot of the recent changes in the funding landscape, there are cases where a focus on the top line can be genuinely valid and legitimate. If you define success as $2M EBITDA per fiscal year, $50M yearly spending in UA, or $500k revenue for the entire lifecycle of your game, the retention/monetization equation won’t be the same. The equation also won’t be the same if you divide or multiply the numbers above by 5. And as I’ve argued elsewhere in some cases a game that has low/poor retention can still end up being a commercial success depending on how you define success, how efficiently you monetize your users, and where your game is in its lifecycle (are you in the growth phase or harvesting phase?).
2. Your monetization strategy and audience
Another important aspect concerns your target audience for monetization. The monetization/retention equation won’t be the same depending on whether you plan on monetizing wide or deep. By wide think a larger % of converting users spending lower amounts, and deep a small % of users that will spend large amounts of money. A game with a 5% d90 conversion and $20 d90 arppu will have the same LTV as a game with 2% conversion and $50 arppu. But the way you design your game to get there – and the importance of retention in getting those arppu numbers – will vary greatly. And this will also have a direct impact on how much your prioritize retention or monetization. Again, this is not about aiming for high or low retention – there are no scenarios where actually pursuing low retention makes sense. It’s about focus and getting the best ROI for your dev & product efforts.
3. The Two Models of Monetization
The other reason I want to discuss here is that monetization works differently depending on the type of game. More specifically, mobile games monetize along 2 main archetypes. And depending on how your game monetizes, the importance of direct monetization – and the critical nature of retention to your business success – will be very different.
There are 2 main models of of monetization, and this in turn has a huge impact on how you build your game, and how you will model success
1. Monetization tied to gameplay/progression
- • Monetization prolongs the core gameplay loop
- • Spending is triggered by gameplay bottlenecks
- • Monetization is capped by how often players reach key moments
2. Monetization tied to the acquisition of content/items
- • Players spend to acquire content (characters, items, etc.)
- • Spending is often disconnected from immediate gameplay
- • Monetization is frontloaded and less dependent on long-term play
On one end of the spectrum, there is a model where monetization is intertwined with gameplay. The 2 main examples of this could be puzzle games and hypercasual. But there are others – resource management and social casino games can for the most part fit in this model. In this case, the game is all about consuming content – and monetization reflects that. In puzzle games, a vast majority of the monetization will come from extra moves (and to a lesser extent extra lives). What players will purchase is the ability to complete content and progress further – not get items that exist outside of gameplay and allow them to experience the game differently. More importantly, monetization is directly capped and correlated with players experiencing a specific moment of the game. Players can only spend when they reach a specific point in the gameplay loop. In other words, monetization is “capped” by the “out of moves” moment of gameplay.
If you want to monetize consistently over time, you need to optimize the game to ensure players are exposed to that moment the best way possible. You need players to play many games over the longest period of time possible. This has a direct impact on how you need to build the game to maximize product performance. And in this case, retention is indeed critical – especially if you’re looking at a 1 or 2 year payback window for your UA efforts. You need players to play the game to be exposed to this ‘out of move” popup consistently over a long period of time.
This model is even more obvious for hypercasual games that monetize gameplay via ads. In this case, there is a direct correlation between time played and monetization. Because you shoot an ad at your players every x seconds you can actually put a dollar value on every minute spent in your game. In the case of hypercasual games, the focus on retention (engagement might be a better indicator here because it reflects time in game) is key because monetization will directly result from playtime. You’re probably not focusing on d90/180 retention like a puzzle game because the game’s lifecycle and the way you define success are not the same. But monetization is directly tied to your ability to keep players engaged with the core loop.
On the other end of the spectrum is the “item acquisition” format of monetization. Think character in an RPG, car in a racing game or sniper in a shooter. In this case users will spend to acquire items that will allow them to experience the game differently. The best practices here is also to introduce a progression stream that in more or less independent from gameplay and progression.
There are a few obvious differences with the gameplay model of monetization. First, the purchase moment is totally decorrelated from any aspect of gameplay. Theoretically, a user could log in, make a bunch of purchases, and quit the app without having ever played a single minute. Although that’s not the most common scenario (you still kind of need a fun game to motivate players to spend to engage with it), players have the ability to spend without engaging with the gameplay. And that’s simply not possible if you only monetize when players are confronted to the “out of moves” pop up.
The fact that monetization is decorrelated to gameplay means that the commercial success is not as tied to retention as the gameplay model of monetization. Getting players to spend isn’t directly tied to your ability to get them to play for extended periods of time. For example, it’s quite common to see a significant portion of d0 converters not retain d1. In the case of item monetization, focusing on monetization over retention can make a lot of sense. In these cases, creating pure monetization moments and offers can have huge ROI not only for cohort performance but from the title’s perspective.
So when thinking about monetization vs. retention, don’t ask which is universally more important.
Ask: What is your monetization model — and where does ROI really come from?
Final Thought: The Content Treadmill is Real — But It Varies
One thing to keep in mind here. In both bases, the success of your game depending on implementing an efficient and compelling content treadmill. The illusion of pure game balancing in perpetual equilibrium is a pipe dream that is motivated by an aesthetics of game design rather than actual performance and the realities of operating a live game (see here). But there is a key difference. In the case of gameplay monetization, that treadmill will be gameplay content (i.e. level). In the case of content monetization that treadmill will be item content (character, parts, etc.)
We all keep being prompted by using AI to write posts. Since I haven’t written in a while I wanted to see how AI could rewrite the post above and optimize it. If you’re curious check it out here and share your thoughts
Alexandre Macmillan 
One comment