The Verdict on Super Mario Run

Nintendo’s Super Mario Run was December’s hottest mobile game release. The high-level stats looked great, reviews were very positive, and the business press has been positively giddy.

But here’s our take from a deeper look at the numbers: Nintendo left a ton of money on the table.  Tweet: According to @GamingOutLoud, Nintendo left a ton of money on the table with Super Mario Run #mobilegames https://ctt.ec/7cj6U+

The headline stats look great. Since its December 15th launch, Think Gaming estimates that Super Mario Run earned roughly $36MM in gross revenue on ~80MM installs since launch. It spent 1 month as the top free iPhone game in the U.S. And, it remains in the top 10 as of February 2, 2017.

But Super Mario Run started with two unique benefits: top tier IP (the Super Mario Franchise) and unprecedented promotion from the App Store. Remember Apple’s September 2016 event? Nintendo’s Super Mario creator Shigeru Miyamoto took the stage to announce Super Mario Run after Tim Cook’s company update? This was followed by the first-ever pre-registration promotion, and the app was featured extensively after launch.

Real success as a top grossing mobile game means a high lifetime value (LTV). That basically breaks down into two questions:

  • Is the game sticky?
  • Does it drive players to open up their pocketbooks?

Super Mario Run only spent 1 week as top grossing game and is currently hovering around #60 on Think Gaming’s charts. Generally, games in the top 50 grossing games make at least $5.00 in 1-year customer lifetime value. Our current estimate of the LTV of a Super Mario Run player is quite low: $1.18.

What went wrong? Retention looks fairly good, so it’s a sticky game. And the conversion rate of 4.5% to the $10 paid offering is in line with other well monetizing games. The big problem? Nintendo capped their revenue per user with a single $10 in-app purchase. Games like Pokémon Go, Game of War, and Clash Royale make much more money from their super fans (aka their whales).

Compare Super Mario Run performance to this summer’s hit Pokémon GO. During the 7 weeks immediately following launch, Pokémon GO earned $100MM in revenue and had 45MM installs with 9.4MM Daily Active Users. One of the most successful mobile launches ever. And it has proven to have staying power.

Just since Super Mario Run launched (December 15 to February 2), Pokémon GO earned nearly $30MM in revenue — 1.5x what Super Mario Run has earned. And this isn’t just the case of having a larger base of players from which to earn. The LTV of a Pokémon GO player is dramatically higher.

From Think Gaming’s perspective Super Mario Run is not the hit Nintendo wanted or needed. If we were in Nintendo’s shoes, we’d evaluate whether the Action genre was the correct genre to pursue with IP as valuable as the Super Mario franchise. The Action genre accounts for 12.4% of U.S. iPhone game installs BUT only 3.6% of revenue. This simply isn’t the type of game that drives tremendous in-app purchases.

We’re keeping a close eye on Nintendo’s new iPhone release Fire Emblem Heroes to see how well it performs and whether it can be a meaningful driver of in-app purchases.

 

Interested in learning more about Think Gaming? SCHEDULE A DEMO.

 

What lifetime value do I need to have a top grossing game?

What does it take – in terms of lifetime value (LTV) – to have a top grossing game? It’s a topic of interest to game developers and publishers. It helps them benchmark their newest games against the current crop of winners, understand the competitive landscape for marketing spend, and forecast payback on marketing spend.

Since Think Gaming provides LTV and retention estimates on thousands of games, we looked at the distribution of LTV on the top grossing charts (US/iPhone). We looked at ~300 games that were in the top grossing charts in January, where we had LTV estimates [Some details on methodology at the bottom of the post for the wonky]. We divided those games into deciles and published the mean LTV for each decile in the chart below.

 

 

LTV distribution for Top Grossing Games

Lifetime value by decile

 

A few things stood out:
1) As in everything app store related, the rich are really rich. The top 10-20 games make a ton of money per user. Interestingly, though, these aren’t necessarily the top games on the charts. Some of the best monetizing games are in niche categories where the average revenue per user (ARPU) is very high but the market for new users is fairly small.
2) There are a surprising number of games succeeding with LTVs that don’t support buying users via paid advertising. Some of these are games that were once huge and are in decline, but others have managed to acquire an audience without having to compete with the Supercell’s and Machine Zone’s of the world. These tend to either be viral “gimmicky” apps or licensed IP with built-in audiences.

Hope you find this interesting!

Updated: We’ve added a graph showing the percentage of revenue earned by games in each decile. ~75% of revenue is earned by games in the top 50%.

Perc_Rev_by_Decile

A few notes on methodology:
1) This is gross revenue, prior to the app store’s 30% cut, and it is in-app purchase revenue only. We recently started estimating ad revenue, but it’s not included in our LTV calculations yet.
2) We estimate LTV as the revenue earned by an “average” player over the course of 1-year.
3) These lifetime values are much higher than “average games”, as these are top grossing games, even more so because this analysis focused solely on US/iPhone, one of the richest markets.
4) Generally we need to know the game’s genre and have 90 days of data to make accurate estimates.

Mobile Acquisition Unlocked

Mobile Acquisition Unlocked is an upcoming conference focused on – you guessed it: mobile acquisition. If you’re a game developer or publisher interested in acquiring lots of players profitably, you should pay attention and get to Las Vegas on June 10 & 11.

The days where getting featured by Apple could make your game a hit are gone. Today’s top grossing games are almost entirely driven through paid installs. Mobile Acquisition Unlocked is assembling some of the smartest folks in the business to reveal how they drive profitable growth for their companies.

Jay Weintraub previously founded LeadsCon and puts on one of the best shows in the business. Most conference blather through the same basics – Jay creates programming that is insightful and relevant.

Even better: we have a special offer to get game developers to the conference for free! MAU has agreed to sponsor 5 game developers to attend the conference for free. Reach out to us with your details and we’ll make it happen.

We are also looking to find publishers, game media buyers, or similarly situated folks that will agree to do a “media mentoring session” for game developers at the conference. Please reach out and we’ll share details on the opportunity.

Blogging about mobile freemium

With the launch of Scouting Reports, we’ve seen a ton of new traffic coming to the site from game developers and publishers. When we talk to them, almost all of them are looking for ways to make better games, get recommendations on analytical tools that can help them make more money, or best practices from fellow game developers. So we’re going to be ramping up our blog activity.

We’re also looking to cover these topics from different perspectives, so are talking to a select group of guest bloggers. If you’re an analytics provider, game publisher, ad network, or industry consultant, let us know the topics you’d like to cover for our audience, and we’ll consider a guest post. We’ve got tens of thousands of game developers who are interested in real insights about how they can make better games and/or more money.

Contact us here if you’ve got ideas for a topic you’d like to cover. If you’ve got suggestions on what you’d like to see, leave us a comment!

 

 

 

Is Candy Crush Cheating? Will it matter?

We heard an unsubstantiated rumor this week about how King.com maximizes revenue for Candy Crush Sage. It’s juicy enough to be a great idea for monetization but we’re not sure how we feel as gamers.

Our source – who is not a King.com employee – claimed that the Random Number Generator (RNG) that determines how candies are distributed within Candy Crush Saga is non-random and is, in fact, rigged to promote better monetization. This either leave the player “just shy” of completing a level, or makes it harder to win when you’re running low on energy.

How does this work? Our source didn’t know, but if we were designing the game, we’d think about one of two strategies:

  1. Re-use the seeds of levels that led to monetization. The seed for a RNG determines how candy will be distributed on the board. By choosing seeds that had preceded monetization in the past, you’d be likely to find levels that left the player with no energy, but only one more move to complete the level. This would juice monetization significantly.
  2. Re-use seeds of levels that are impossible to complete, draining players of energy. This is a similar strategy, but this technique ensures that players will run out of energy faster. It’s unclear whether this would be more or less effective than strategy #1, but easy enough to test.

This wouldn’t be unheard of. Many RNGs are rigged, sometimes in favor of the player. Tetris, for example, uses a semi-random process to ensure the distribution of pieces is more even than chance would allow. Many in-game coin flips are actually rigged in favor of the player, because people complained too loudly about the “bugs” that must exist because the coin would never land on heads 10 time in a row. Slots are similarly programmed to dish out small wins at a frequency that encourages long-time play.

Freemium games are a new animal, with lots of experimentation happening. While we’re not lawyers, this appears a totally legal approach to game design. So if it’s true that this is part of the Candy Crush monetization magic, we expect we’ll see the tactic spread.  The real question will be whether gamers revolt.

Secrets to Game of War: Fire Age’s monetization

Game of War: Fire Age is a relatively new game from Machine Zone that is quickly moving up the top grossing charts. We’re not in the forecasting business but wouldn’t be surprised if we saw Game of War as a challenger to the #1 top grossing game in the coming months.

So what are the secrets to Game of War’s monetization success? Almost nothing about Game of War is brand new. It borrows heavily from MMOs like Kabam’s Kingdoms of Camelot, but takes that winning formula to new heights. Iterating on a formula ensures a big target audience and reduces the risk that ARPU won’t support support paid user acquisition.

That said, we think there are three things worth noting:

  1. Depth for big spenders. For many freemium games, the largest spenders represent more than 50% of total revenue.  It’s not enough to secure a one-time purchase. Top grossing games need to create demand for larger virtual coin purchases ($99+) and the best of them create demand that continues over time. The two best ways to do this are lots of strategic depth and great multiplayer. Game of War: Fire Age has created a ton of strategic depth that will allow for months of gameplay. This tends to be expensive to develop, but will pay off in spades for Machine Zone.
  2. Great multiplayer. Everyone loves playing games with friends and competing with them. Game of War’s multiplayer is native to the game, and promotes both cooperation and competition. You are placed directly into an alliance, where you’ll cooperate will up to 100 other players to take on the rest of the world. Lone wolves who try to play alone are fat targets, and my alliance has been stuck in a week-long war against another one from the UK. Wars create lots of spending.
  3. Great in-game messaging: Game of War does a great job promoting their in-game currency – see one sample screenshot. They run limited-time sales on their in-game currency, creating a sense of urgency.  And they add lots of small bonuses to their bundles to increase the perceived value.  We’d expect this makes them 25-30% more effective than simply making their currency available for sale.

image

Only time will tell how Game of War trends, but we expect the best game developers are taking notes and we’ll see new iterations on a great formula. We’re excited to see what it brings.

 

Jelly Splash vs Candy Crush: it’s all about virality

Jelly Splash is a very fun new puzzle game from Wooga that’s rocketing up the charts. It’s a cross between Candy Crush Saga and Dots, both known for their insanely addictive gameplay, and Jelly Splash doesn’t disappoint on that front. You’ll be hooked – we promise!

jellysplash

Michail Katkoff has a good post highlighting the monetization improvements Jelly Splash implemented vs Candy Crush’s implementation. Michail highlights Jelly Splash’s use of virtual currency as a major reason they’ll see better monetization. This is spot-on, and explains why 85% of the top grossing games use virtual currency to monetize, and you should too.

But monetization isn’t the full story, which is what will make the Jelly Splash / Candy Crush battle (Skirmish of Sweets? Clash of Confections?) worth watching. Freemium success is a combination of Retention, Monetization, and Virality, and there’s a very complex balance.

Candy Crush doesn’t monetize particularly well on a per user basis. It has a below average ARPU index, Think Gaming’s measure of how well the game retains & monetizes players versus an average top grossing game. There’s lots of opportunity for improvement, and they wouldn’t dominate the top grossing games without something else.

Their success comes from the fact that they are a regular chart topper on the top free games list, which we estimate as 150,000-200,000 new installs daily (US/iOS). While some of this paid user acquisition, we think the more distinctive factor is the strong virality built into the game.

Candy Crush has smartly baked viral engagement into the core of their game, allowing non-paying gamers to avoid paying by sharing the game with their friends. Put differently, viral sharing and monetization are fungible. So while King takes a monetization hit, they are able to get tons of new users through viral means. In a world with steadily rising user acquisition costs, that can be a very smart formula.

Note that there’s lots of speculation here, and Jelly Splash has some great virality baked in too, which is what will make the Skirmish of Sweets so interesting. The results should provide some good data on the right balance of monetization and virality. Stay tuned….we’ll post updates as data flows through.

The myth of mobile gaming consolidation

Talk to smart people about mobile games for long enough, and a common refrain is that the days of the small mobile game developer are numbered. Gameplay standards are rising, which means it costs more to develop artwork, sound, and game play. Discoverability is a crapshoot, which means most games need to buy distribution.  And there is a long-list of post-launch tasks to tune retention and monetization that require both technology and in-house experts.

All of this is true, and logic would tell you that giant publishers with big budgets and armies of analysts should be steam-rollering the market. Cue evil laughs in fancy glass skyscrapers.

The problem with all this smart logic? It’s not happening.

The 300 top grossing games are made by 161 different publishers, and only one of them has more than 10% share. Supercell has ~11% of US daily revenue between Hay Day and Clash of Clans. King.com has 9% with Candy Crush Saga. EA has lots of titles that add up to a measly 5% share of revenue. 158 publishers split the remainder. Not only is that a ton of fragmentation, but it’s fast turnover: the top two players weren’t around 2 years ago.

So what’s really happening? Our guess is that it’s a combination of a few things:

1) Google & Apple promote fragmentation. The app store providers have a big economic incentive to ensure that no one publisher gains too much leverage. We’d expect that there’s some bias towards promoting diversity in both publishers and game play styles. As gamers, we like this too. Keeps everybody honest.

2) Authoring & monetization tools are cheap and improving fast. Unity provides authoring tools to build high-fidelity games in less time. Think Gaming provides a monetization platform to turn that can quickly turn developers into sophisticated self-publishers. As e-commerce platforms and web frameworks drastically lowered the cost of building a website, so too these tools will allow great games to get built faster & cheaper.

3) The freemium and mobile waves are changing the publisher playbook faster than anyone expected. Everything is happening fast, with 82% of the top grossing games using virtual currency to monetize, and 93% using a freemium model

Our prediction: none of these factors are going to change fast. Instead of the relentless consolidation of the giant publisher, we’ll see several years where smaller development shops look like web startups, deploying great new games at a breakneck pace. A new publishing model may emerge, but it will happen over time.

Long live the indie developer! Cue a nerdy giggle in someone’s garage…

 

Math: The Soul of the New Games Publisher

Eric Seufert has a great blog post in which he provides advice for the typical indie game developer he meets. The post is solid gold for an aspiring game developer, outlining the necessary steps required to get a great game to the top grossing charts.

Eric’s central point is that while making a great game is essential to success, it’s no longer enough. Developers also need to tune their game for both retention and monetization, then use that information to launch intelligent acquisition campaigns that acquire users profitably.

This is time-consuming and expensive, requiring both a technology platform and experts who know how to interpret the huge volumes of data you can create. Eric also outlines a few alternatives, such as working with a publisher or emerging development partners like Tilting Point.

Think Gaming’s take: we’re seeing the emergence of a new type of publisher, one that uses math to create value. Finance and advertising have seem dramatic shifts to quantitative approaches in the last decade. Expect to see the same in free-to-play gaming.

How to maximize in-app purchase revenue in games

Emily Greer at Kongregate has a great presentation from Casual Connect on maximizing revenue from in-app purchases:

She brought some great statistics from Kongregate’s games, a broad enough sample to see how differing strategies impact ARPU. A few things that she highlighted that we see come up repeatedly:

  1. Low entry prices don’t work. $0.99 in-app purchases don’t entice more people to purchase, and simply drags down the average purchase price and ARPU.
  2. Big spenders represent 50%+ of revenue for high performing games. While they are less than 10% of users, they are critical for overall monetization. You need a strategy for how a user can engage
  3. Prices of in-app purchases are usually inelastic. Put differently, great games can raise prices on their in-app purchases and increase ARPU. (connect this to #1 and #2 for more justification)
  4. The highest earning games are all about retention. Games with great long-term retention keep the interest of big spenders and create an in-game economy that continues to provide reasons for them to spend over time.

Emily backs it up with lots of stats from Kongregate and some case studies. If you want to read about how to make more money, go read the piece. It’s full of gold nuggets from her hard won experience.

When you’re ready to put it into action, integrate Think Gaming’s SDK. We make it easy and automatic to uncover your own gold nuggets.