Calculating what a Player is Worth
I’m in the marketing phase of my game. I have to make decisions on how much advertisements are worth to me. This requires me to define what a player is worth to me. Since most formats are cost per click or cost per impression, having a defined value of what that is worth to me will help me make decisions on how to spend my hard earned money (and hopefully profit not lose).
Something I haven’t really shared about me is that I have been working in the business information industry and actually still do as a contractor (this keeps me afloat). I’m sure my experience in this field is why I am so interested in diving into this data.
My game is freemium and monetized via ads and IAPs. The ads will run after the player has been playing for 5 minutes and dies or starts a new level. All of my IAPs are $1, except for one character which is $2. Ads can be disabled for $1 (which I think is fair since a single user’s ad views would unlikely ever earn that much). In total, a user can only spend a max of $6 on my game and there are no consumables. I made this decision because I hate the current lootbox/game breaking monetization trends. At this juncture, when I need to make decisions about how much I’m willing to pay for a click, I’m realizing maybe predatory monetization has become a necessary evil in this industry?
I’ll be using Unity Analytics to gather some data. I’m going to pick a specific 7 day period of time after release of my game. I launched on 5/22 and once everything was live, I asked everyone on my Facebook to download the game. Most of those people are people I am actually friends with and have worked with professionally. Many of them aren’t gamers. I had a pretty rapid user dropoff in the following days which I attribute to those non-gamers removing it shortly after download.
My selected timeframe is 5/27 to 6/2. I can see my new daily users and daily active users has stabilized at this point. At this point in time there has been very minimal advertising (I boosted a Facebook post for $5 which had negligable results), so any new users were organic store finds or by word of mouth. As a note, this timeframe is short and aggregates become more meaningful with more data. Due to the small amount of data I have so far, this is the best I can do.
I’ll be brutally honest with my player numbers here… we all know the struggle is real.
Average Daily Active Users: 13.7
Average Daily Ad Revenue: $0.06
Average Daily IAP Revenue*: $0.20
Total Average Daily Revenue: $0.26
iOS 1 Day Retention**: 50%
iOS 2 Day Retention**: 50%
Average Retention***: 1.5 days
* This one I gathered from Apple and Google dashboard reports since Unity Analytics will report IAPs made during testing and doesn’t reflect actual revenue after each company takes their cut. In this case, I had one $.99 IAP during this week.
** Apple reporting did not have enough data for later dates so this reporting comes from May 25. I won’t use Unity Analytics retention data due to the way it is calculated (it won’t be accurrate until a greater lenght of time has passed).
*** This is a bit of a leap of faith but we can assume if a player plays the game for awhile and then removes it on day 1, they still will contribute to the daily average ad revenue. This is also conservative in assuming 2 day retention is the maximum player life due to a lack of any extended data. So basically, 100% of players played on day one, 50% played on day two.
NOTE ON REVENUE: This does not include paying taxes. After Apple, Google, and Unity get their cut, I still need to pay taxes on these earnings. Thusly, all user value estimates will be lower and continue to be reduced as the earnings and tax bracket rise. Since I’m still running at a loss, it’s not a factor at this point in time.
Now that we have raw numbers, I’m going to try and come up with some meaningful numbers.
Value per daily user: $0.018 ($0.26 / 13.7)
Value per user lifetime: $0.27 ($.018 * 1.5)
Ad Revenue value per daily user: $0.004
Ad Revenue value per user lifetime: $0.006
This confirms my gut feeling that paying per click or per conversion is a poor model for my game (unless someone is willing to pay a penny per conversion). Paying per impressions is even worse since the ratio of impressions to conversions is so low. The best model for a game like mine would appear to be a flat rate model of advertising. For flat rate I would want to use a custom link so I can track conversions from that advertiser to see if it’s closer to that penny per conversion.
One last note is that this is valuing a user based on raw data… but what about the unseen player value? At the moment, my game is basically completely unknown (but I am amazed that 13 people in the world are playing it every day). I know for sure that word of mouth contributed heavily to my daily installs. Therefore, each conversion may lead to more word of mouth conversions… and then those new users lead to more word of mouth conversions… and the trend continues to cascade from there.
In summary, I still have a lot to learn about marketing.