80% data, 20% luck – How to make profitable games in 2019

all right thanks everyone for coming out this morning what I want talks about is really how I think everyone in this room can agree and I mean yeah it's called the growth track for a reason that mobile games have been growing phenomenally in the last you know five ten years even the last two years which I'm going to talk a lot about in this and so is this this is my clicker to cool and so what I want to show is that kind of data has been the driver behind this and it's not just you know better use of data across the industry but it's also within individual publishers and with individual games how people are using data to make a more sustainable model for growth right I think that's that's the key difference between modern mobile games and more traditional kind of games has been people are not looking for a big boom game anymore there's not sort of a scattergun approached to marketing and to bring games to market

it's much more let's build games into the same way where we can predict success and hopefully with something starts I'm going to show you I can prove that you this morning but just as always some Vandy stats that a lot of people here will know but it's an interesting to put it in context is that you know mobile games now is a 60 billion dollar industry so that's half of all gaming revenue is now coming through mobile games now this is the numbers that I find really astonishing which is that there's more than 2 billion unique players on mobile every month which is just a crazy number to think about this is like you know a quarter of the population of the earth is playing mobile games now right most people will know and there's different ways you can measure this but it's a slight majority female audience on mobile and then the really interesting numbers are on the age demographic so the median age of a mobile gamer is 30 but that's just because that's the median age of people that are mobile devices right there's actually as many mobile players over the age of 65 as there is under the age of 24 fact there's a real efficiency of live teenagers playing mobile games and so I mean what I find really interesting

about this is that everyone is a mobile gamer when you think about people who play mobile games it's not this narrow audience that you kind of associate with core traditional games anyone can play a mobile game and what I like to think about when you flip that around and you start to say well how did we get here from the Jains audience like 20 years ago you know rough numbers again and you know people can argue with me about this if they want to the traditional games industry is about 200 million players you can just add up the number of consoles and gaming pcs in the world and you get to roughly between 200 and 500 million so the total market for PC games and console when almost of stuff is only around that kind of number right so what that means is that about 80 percent of people that are playing mobile games are not PC games in fact they've never been PC gamers or console gamers or any of these people that you naturally associate with the games industry and so that's what I find astonishing I mean there's some other numbers here like it is 60% of all phones of all smartphones sold will have a game installed within

the first week and so when you start to think about this and how we got to where we are I mean what you're seeing is that mobile gaming has brought gaming to the masses and it's done that by taking core game mechanics the games that people play on mobile are not fundamentally different from the games that existed in the past but what they've done is they've taken the core mechanics they're taking mechanics said that traditional game is loved and and that core is love and they've made the mass market and my argument would be that they've done that through the use of data they've never take these kind of cool things that you work for a small narrow demographic 20 years ago and be able to make it accessible to everybody which i think is an amazing achievement and that's what's growing the games industry from a few hundred million to billions and billions of people so that's I mean that's the good news the slightly bad news of course is that actually if you're an individual games developer in this room you know you're not you're not feeling like you're well you may not be feeling like you're the richest person in the world right all

this massive growth that's happening in mobile gaming but still most get publishers are really under the pump right that's because you know we know the biggest games in the world are entrenched to the top of the charts if you look in our panty or anywhere you can see the seven of the top 10 grossing have been there for more than two years I'm even some of the press you would have seen on on Pocket Gamer dot days recently isn't all about our clash of clans is jump straight back to the top again because they've introduced some new monetization mechanics and so you know you are really fighting with in trench games that have much bigger budgets much more reach already a big established play of these so that's one problem the next one of course is that you actually need to actually build the game to begin with so you know it's a lot of investment at the start the early stages to get yourself up and running before we even see a single dollar coming in and then of course the real big challenge as many people here be aware of is that you have to scale through page UA that the kind of dream of the Democratic app stores where people just find your game organically

and you won't have to pay for marketing that's long gone and so you know what we see on our platform is actually less than 30 percent of games are a role as positive so is there good news and and I think there is so what I did as an interesting exercise adult DNA for those that don't know is a mobile engagement and analytics platform - we track data on thousands of games hundreds of anma you on the platform and so what I could do is I could compare revenues per game in 2016 to revenues the game in 2018 what I did is I matched up the revenues from the games to their rankings in the store the idea here is to understand what's the distribution in revenues across the store beyond say rank hundred right and what was really interesting is when you compare 2016 2018 there's kind of like a 30% growth in the whole revenue in the App Store this is just these numbers adjust for iOS in the US to avoid any complications around other regions growing and what was really interesting

is in 2016 85% of all the revenue was in the top hundred and in fact sixty-one percent of all the revenue was a top ten this is massive concentration of revenue in the top game so basically in 2016 if you weren't in the top 50 games or something like that you're really struggling and one of those interesting is when you look at 2018 actually it's not so concentrated in fact there's only 34 percent of the revenues in the top ten what you see is that that games that are out of ranked 500-600 a thousand I've actually been able to increase their revenues by many many factors like you know two to 10x basically I think what's interesting about this is number one it shows that you don't have to be a top game anymore to actually generate meaningful revenues but also a lot of the growth that's happening is outside of the top ten which which kind of makes sense right we know that the the MA use and the revenues of the biggest games like your your County crushers and your clash clans and these kind of games have been

fairly static for the last few years but the industry is still growing it's growing in this mid tier and that's kind of what a kind of showing here is that actually the number of players in the US has not changed very much actually opt outs haven't changed very much what's really changed is that basically people are playing longer and in that longer period of time that's they're able to make more transactions right so it's a much more heavy focus on engagement over just aggressive monetization I think the other interesting thing is also to look at how people generated revenue so this was all sort of peyote revenue but what is kind of fun is when you compare again 2016 to 2018 you'll see that in 2016 actually those 10 apps in the top hundred growth were paid premiums we're there's only one in 2018 which is minecraft but then you can see there's other growth in in so you know as the pay premium model is falling away and there's been more focused on IPs and

and yeah then the other thing has happened as close as the growth in ads and so we see that you know the average game in 2016 maybe made 25% of the revenue from ads whereas in 2018 it's more like 30% betting more interestingly the number of games that are totally ads what it is doubled in the last two years and I think the really interesting thing when you try to dig down this and understand how does this impact the strategy that people come to market with so this is a bit of a complicated chart here on the right but I'll walk you through it so what I did I looked at full of the games on our platform what was the kind of mix of organic and paid installs from launch right so the the dashed lines on the right here are 2016 and the solid lines of 2018 so you look at 2016 so that months there are big organic peak which is the Purple Line floods but also the paid traffic is peaking at the same time so you know you launch lots of organics big pile in on on page UA and

then it is the boom-bust that ever not familiar with right time six months you're not getting that many installs what's really 2018 we don't see that anymore that's not the predominant way people launch games the way they launch games of course they get an organic peak at the beginning that's the lot of energy people are interested in your game so they're coming and installing it but actually people aren't kicking in with paid acquisition until a few months after launch right when they start to really understand which segments of players respond well to the game they've got a lot of data built up so they know how to target people efficiently so they're not just throwing money out there to bring in low value installs they're not gonna actually generate them any revenue I think this is a really really fundamental change in the strategy that people use to launch mobile games rather than just going big and then hoping that it's gonna grow spirally and then they can have a massive hit people are much more about sustainable growth right let's launch

the game let's not spend all of our money at once and then have to shut down the studio let's you know actually figure out who likes this game and then grow it to the size that it's meant to be and then once we understand how the machinery works in terms of buying that we use is we can do that for as long as we like I think the really cool thing is at the end of this you can see again in our data only 40% of games launched in 2016 actually survive more than six months by that I mean they had more than like 10,000 Mau whereas 64% of games launch in 2018 because they're using this more sustainable strategy we're able to survive and so I want to change gears a little bit to talk about you know those are the starts name I I mean I firmly believe that people have bought and smart about what does that mean in practice so what a well they actually been doing which is smarter you know and I think it's much more about using the data to understand who the players are what the value is and operationally having access to stuff in and a quick Turner so you can actually make

effective decisions as a business right so starting off with with you a so really understanding words you need to come from in 2016 what we saw on our games was that how many people are running like maybe three campaigns at a time so you knew at that you a at that point was just let's go to our favorite partner and just give them you know millions of dollars and hope for the best right now actually we see that the typical game is what we're running with so 10 campaigns at any time right they're using a whole variety of different content so it's rewarded eyes and stitch bills they're doing a lot of work to optimize the creatives and also they're doing a lot of cross promotion so especially when you have more casual games you might have a portfolio of you know six to twelve games you can you can more you can get a lot of very valuable installs just from cross promotion with your own games which is essentially free now this is kind of an example of the kind of data that people are looking at on a daily tracking you know exactly where

the users came from how many installs they got what the CPI was and so they can make effective decisions every day on where they're gonna keep to spending their marketing dollars the other thing which we're seeing a lot more is the growth of as I said cross promotion so in 2016 was interesting in average portfolio on our platform so an account would have maybe three games on average so most people what they were doing was they'll focusing on one big title and then sort of hoping that you know maybe it was like number two and number three behind it right see I it was that your games last for six months you got the big one you focused on after six months you do version two after around six months to version 3 and so on so forth right what we're seeing now actually is people trying to run many titles of one so maybe six maybe even more for Hyper casual games there might be running 1520 games at once and using cross promotion to actively push people around until they find the game that they really like and they really engage with the other thing which is really important when especially when you're paying for you a is to understand if people are

responding you're getting the kind of onboarding experience that you like one of the challenges can be when you bring people into your game is you've got to match the expectation of you know what made that person go to the store install it with the thing that they get in the first 60 seconds because obviously I mean people will be familiar with with these kind of funnels but just in terms of rural starts you know 78% of organic traffic what we see in two games on our platform will play more than two minutes right so you're instantly losing over 20% of your players and that's just pure bounce right they they thought it was X and they got Y or they didn't you know they just couldn't get it to download or something about it they didn't like right I think you know as an interesting kind of art here and as well as science because obviously the numbers backing it up that you have to make sure that when people come into your game they're getting you know they're getting experience they thought they were gonna get and it's kind of nice and smooth and there's nothing blocking them right so you know quite often when we see people

using our platform this is kind of an example of what they might see in terms of the data you might see that sort of organic traffic $0.78 people are coming all the way through for playable x' maybe that's even better because because they're playing the game in the ad they've got a good idea of what it's going to be like but then of course in this example rewarded Bo is not good because the video didn't really show them any gameplay and maybe they'll incentivize to click on it and stuff like this right so you know this is the toy example but this is kind of stuff that we see people using our platform to do every day to understand when they're spending money on marketing is it actually bringing people to their door that are getting the experience they think they should now obviously once you sort of figured out where you want to spend your ua money that the next part of this is to understand what the value of that is right and so I think what's interesting when we look at players coming into our games and our platform a lot of conversion happens very early now you

can look at this two ways obviously games are very motivated to get people to convert quickly but it is unfortunate reality of free-to-play mobile games that people most of the people who are going to be your biggest value players spend early whether it's on day zero day one so 30% of all conversion that we see happening happens on day zero and 70% of it happens in the first week so you know that this is good and bad news I mean the good news is that because so much of its front-loaded you can't quite quickly pick up on whether you're getting value through your channels similarly when you look at ad monetization so what we see is about 50 percent I'd really like Marmite four players actually I'm in the wrong country if we're talking about Marmite but anyway but yes so basically half of players will just vehement ly hate rewarded ads and never click on them and the other half will and go and sort of watch multiple hours a day what's really interesting is I don't have in this this slide deck but I do it in another presentation that the very strong

relationship between AD engagement and the reward that they get like the real-world value of the world the reward you give them and basically it's about five cents if you can't don't give something worth five cents we're watching a reward video they never will and again this meant an example of like you know when you're looking at his friend channels how you would measure really quickly what the value of those different channels is and finally LTV I think I'm not you know I could give a whole talk on LTV modeling but it's way too early in the morning and I'm a little bit too jet-lagged for that so what I was gonna say is a really interesting relationship between how the best games grow the LTV of the players and so here on the right what I've got is basically three curves which are different percentiles in terms of total LTV and so 90% I was like you know the most valuable game you know 50 cent L is the median game that we see what you'd see if the LTV curves is especially on our platform across all

the games we have is that the names are generating the most value basically continued to grow quite aggressively as they head out to like past day ninety a hundred hundred and twenty right whereas a typical game will get most of its value in the first 50 days and then they don't get much after that I think this is where you start to see the really big difference between the people that are focusing on engagement and you know having nautical loops that can engage in mature players as well as new players and all that kind of good stuff right where they're getting a lot of value later on in the player's lifespan and I mean what's really interesting is I pulled the stat out says in our player who converts on day one is twice as likely to play on day one eighty then one that converts on day zero and this kind of goes a little bit back to us saying before that if you if you kind of if people get deeper into the game then they and then convert they will kind of little bit long because of a better understanding of the game so I'm almost

out of time so I'll just I'll do my crystal ball one because the conclusions are boring so I'll just say they said looking forward to 2020 obviously this is a talk about 2016 vs. 2018 so what's gonna what's the world going to like in 2024 mobile games my my kind of forecast is you know the big games will still be in the top ten right they've got massive budgets they got huge revenues coming in there's actually no reason why they wouldn't continue to invest in them so you'll still see your clash of clans and these big games your garden skates and those guys up in the top ten I think the gap between the hunt of thousands grossing game will not be a thousand like it is today it'll be 10x you see a lot more democratization of the App Store and I think that's because it goes back to I was saying the beginning because gains in our mass market and there's so many different niche areas that you can focus on rather than trying to make the biggest baddest game with the player base the size of your people will start to focus on small areas but then get wins and the average game will have an Mau of a few million players rather than 200 300 million plus

and I think again the final point areas and more successful people will be the ones that grow their players not their games ones that focus on their player base and try to to contain their games and focus on how they're going to keep those plays in their ecosystem longer rather than just trying to pop more and more and more users in and I will leave it there because I'm at a time thank you I think I might sneak a quick question if anyone has one they want to shut their hands up before and also ask a quick question if not I will actually asked one anyway so one things I love about what you talk about is this whole idea that and you're seeing that there is a democratization of the way the industry which is counter to what we were saying like three or four years ago maybe slightly longer what is it it builds to me but it's services that are driving that the fundamental kind of

principle that it's the understanding of live operations and then how we then use that live operations to feed the community that is driving that longer term engagement down the line or what do you think yes I think I mean what I tried to show here is what practical examples of how people would use a service like ours so yeah it's services right but I mean I think that it doesn't matter whether you're paying for are you doing it yourself it's the idea that you know you can't just launch a game and hope for the best right you gotta track the players you got to understand what they like what they don't like and then you've got to be able to deliver on that right and deliver on it quickly not have three months cycles where you go oh please look like they like this thing let's develop it and launch it you know next quarter because that's too late so and do you only way to do that is to have the technology behind it now you can pay for it or you can build yourself but you have to be able to do that but it's also having the mindset as your own company to be a service to your yes well this is again it's the maturing of games and servers people actually understand what that means now as opposed to yeah back when I wrote my book thank you very much