How to design annuities for your mobile game

[Music] hi my name is Ted Ronnie I'm headed to Summit for scientific revenue then I talk about how to design annuities in your game seumas ation is something we think pretty deeply about in the company when I think about a daily basis really so what we do the company science revenue is we do a machine learning based technology that allows us to dynamically price in-app purchases in your game so the idea is we are sending different prices to different people so this game for example farm animals revenge it's not a real game so I'm sorry you cannot download it don't steal the idea but the idea here is you know what is the in this case the large human bridal worth frankly it's worth what someone is willing to spend for it it's a digital good there's no marginal cost of production for the large human and Bridal you can't sell it to someone else

so that is the right price so for one player $0.99 is the right price for another player dollar ninety-nine the point is they're both happy to make the purchase at the right amount but the next $1 you're getting from player be like go straight to your bottom line so that's a we're going to talk now about annuities when we set the stage a little bit of background here so this is a typical game 95% of the games out in the marketplace right now probably has two and a half percent and a three percent conversion you probably believe one quarter to one half for your purchasers are going to buy something probably in the first couple days now but fully upwards of two thirds of players in the game are never going to go in the coin store at all they're not going to make a purchase at all so a lot of people and you guys better than I do game developers allows people to be making parts going to play your game we highly engage enjoy the game and not buy anything at all kind of take that for granted right we expect that we swear we can write them off as their have any money to spend in some cases that's true

you know where we can say that and they they just like liked the game enough and that might also be true but also perhaps the wasn't the right offer form right you know that's another way to think about it is because you know some of those people actually do have money and they might be willing to spend the challenge is how we offer the game I tend to offer and we build a game first of all we want people enjoy playing the game and at some point well we hope they really like the game a lot to actually buy something within the game and that's all great but the way we present pricing and offers is generally just for impulse buyers right some subset small subset of players going to come in your game when you're buying the first day and we love we hope that you know we want more of those people another group of players is going to need more engaging the higher level within the game in order to make that purchase but how they but they're also making them pulse purchase right there either at a level and they really want to get the next level so I'm going to buy some coins to push me over the top right where you present is some sort of sale yeah buy now promotional offer in order

for them but still you're getting tapping into that behavior of the impulse purchase and then a whole huge group of people long-term players are grinding it out and not going to buy anything at all right and we again we sort of you know dismiss them but that's we want to reach them so we think in terms of player psychology and how do we reach players I don't buy on impulse and that's the focus of this annuities conversation so for inspiration we look at behavioral economics and we look at specifically the theory of price discrimination and that's the idea that different people behave differently and already respond differently to different prices it's important point because some person might be I need something now I'm going to go to a corner store I don't care if 7-elevens more expensive I'm going to buy it someone else is going to go I'm going to go a little further up to the Walmart because I know it's cheaper to buy the same thing for a lower price right that's the planned behavior willing to put some extra time and effort in order to get a better deal similarly coupons right coupons is a

perfect example you know I'm willing to if you remember for generations people been doing couponing right you know you might remember your mother taking up scissors and cutting out in the newspaper coupon saving them in a later date I'm going to go and make that purchase tonight can we save that for the end that's actually a pretty meeting your very good question we get that every day and I'll be here afterwards but I would like to get to the meat of the matter and yell and so how do we look backwards sorry another further inspiration is daily login rewards right you know if you are doing these already right now you know how effective they are if you're not doing a daily log and reward highly recommend you do that if you want some you know the first article the Gamasutra is something that we wrote you can find it in our website under our blog section pretty thoughtful piece on it why you should do a login reward we also

provided some deep background to a Wall Street Journal article on that subject but the point of a login reward is you are you know it is evidence of that planner behavior that I was just talking about you know someone is going to come to your game every single day and to get a small amount of coins and keep coming back in order to get more and use this right that is the planner behavior we want to tap into that so what is an annuity it's such an extension of the daily login reward and this is really the rest this talk is actually built off of this article that we wrote how to design annuity again available in gamasutra under Bill Grasso it's also on our website under a blog section so pretty thoughtful detailed piece but I'll talk about that by use this to the definition annuity is a purchase of currency or goods and as delivered over time the annuity payments and the actual purchases in a lump sum paid at the beginning of the annuity so in effect we're going to sell coins in your game up front it's a large amount at a very

steep discount and then we're going to deliver those out over a fixed period of time and slowly we have been very popular in Asia for a long while annuities I'm just beginning to get more popular in the West and we've been working with a lot of people doing this right now one great example is Nitro Nation by creative mobile they have in their game the ability to get an annuity they call it the gold path so you can get 30 coins on a daily basis for $2.99 for 30 days so it fits the criteria right you know so 30 coins less the smallest you can purchase it 100 coins for a dollar 99 so again the smaller amount you wanted a hundred coins with the new you have to wait four days to get it and also a good deal right you can buy 250 gold coins for $4.99 but my new 'ti actually I'm going to get for $2.99 at 900 coins so such as a good deal of a fabulous deal Samuel but yeah so now how do you design this oh you know you want to do annuity join design

UT first point is a key goal here a little no cannibalization right so actually this can happen even with your login rewards right so you wanna be key you want to be careful when you offer a daily login reward so that you're not getting so much currency for free to wear at the end there's nothing for them to buy right that's the important point similarly with annuities you should not replace your regular AP spend done properly the goal is to convert your grinders into spending spenders and then properly the goal is to actually stimulate demand for them purchase more goods and services right you know we're tapping into people who weren't going to make a purchase we're offering a really good deal they buy that not the training effect now they're going to come back to actually going to purchase some coins to get an idea of the value they can get from purchasing it the pleasure they get from within the game they're getting the next level hopefully they're going to come in and purchase more so doing well we're adding to the conversion pool we're also adding to retention pool so here's an example the simplest

annuity that you can do very easy and I'll talk about a more complicated one a little bit later first kind of a key requirement you don't have one already implemented a logging reward this is also the good thing is actually the code you can use for daily logging reward it's more or less can be reused for your annuity or your VIP whatever you want to call it then you want to make sure it works right you know so you want to make sure your daily log in real work works here and it keeps people coming back if they're not coming back for free currency I'm sure they're not going to come back for parents they purchase right they're not going to buy anything there too and similarly you want to make sure it doesn't cannibalize revenue right you don't want to have to say if I'm giving you 50 coins in a daily basis and you have no incentive to purchase after that then again you know it's going to be hard to make a sell your annuity but they get through that criteria then what you can do on a selective basis is just double your daily log in rewards so if you're giving 50 coins away for free call it 100 and then offer for a fixed price to people

who are likely highly engaged within your game and you want to target now that last part is actually little difficult and that's what we do from using machine learning technology that allows us to a few segment out players indentify you know people are going to purchase very quickly an impulse versus people who are going to be planning your purchase and one more time you know and need a special offer and we're going to do it but you want to be able to figure out to do this yourself you know as well that's the simple I know you know we want you know like you can do that but you know your game is a complex of different monetization schemes you know how you want to do a more complex annuity so the get you know so the idea is a charge when you like what do you charge for your annuity and the virtual currency on itself so it seems kind of a complicated question right but the good thing is that you already have all of the information at your fingertips it's already in your game so but some things you need to know about your game is first lifetime spending caps is it possible to actually buy the game what I

mean here is you know what is you only take you know a long term player what's the maximum I'm going to purchase within the game if there is that amount it's a relatively smaller mouth then it's going to be harder to actually offer an annuity for the player similarly how difficult is it to obtain currency by playing right if you can just grind it out and get enough currency just by playing that's been useful for you to buy stuff that you want within the game sometimes can be very hard for you to be able to charge MIDI but satisfying that criteria now we move to minimum and maximum values what's the amount that I want to offer on a daily basis to people in my coming into my game minimums easily found your daily Roggin log and reward right so whatever it is that you've offered for free as a daily log in the word call it 100 you know coins that's your minimum you can't tell 100 coins sorry you can't get away hundred coins for free and then sell 50 right there's no point unless you actually have lots of little pieces of content that you sell for say 50

points and then maximum value also is easily found right you know you just need to ask yourself what is your average daily spend in a game now what's the medium purchase amount for players in a game if you know that information and you know that so an average player in my game is going to spend 200 coins and you got the information you know if I'm going to stay on you know if that's I'm going to spend then you don't want to go above that amount ideally you want to go below that right they should go through the net amount to get an annuity exhaust that amount of coin and then ideally go into the coin store and purchase some more so between the minimum maximum is what you want to offer then once you know the amount some design considerations for your annuity how long you offer it what's the duration of the annuity period in here well it needs to be long enough to delay most rewards so again we're trying to segment out your players trying to hit those people who are a planner behavior to really need to have a good deal in order to make a purchase separating them from the impulse people theoretically

you could have a newly last forever this would be highly selective it's probably for only for quail who's very far into a very deep game and you would offer for a very large amount it's a rule of thumb a recommendation 28 days 28 days is a good number for annuity it's a very nice long period keep it all coming back but you can offer it for as little as say 14 days you know as well so 14 between 14 and 28 days you only want to go below 14 days because again it's sort of it's harder to segment out the behavior for people in Franco 3-day annuity makes no sense at all conformation you need to click something to get the reward so here's some aspects is slightly controversial you'll want because you can go a couple different ways of it one would be you could you know you know click it or lose it right so you're giving them them say 50 coins a day you know you're purchasing you need to force them to like to do login yet the force them to come in in order to get it or they don't get it right do

you risk a little bit of a consumer backlash there so we kind of recommend to let them accumulate but you still need to force them to come in and click it then either yell and ideally none of you one very good option I guess is to even have them go to a coin store in order to collect their annuity right now it's a training effect right we're sending people a coin store we're letting them go in there and find see other things they can buy they're letting know where they need to go to purchase again can lead to some friction your game so a little bit depends on your game design around monetization deliverables so you can off a lot you could offer a virtual currency you could bundle up with some items that come in with your annuity Frank their point of view makes it a little bit too complicated simpler is better in this case let's just offering virtual currency you know make it simple and easy on a daily basis I come in I get virtual currency in terms of delivery schedule here again simples better you know you could have a progressive matrix you know you know you can imagine scenario to where you're going to keep putting back in I'm going

to give you know the really big annuity in the back end of things to our point of view again simple is better you know give me 30 coins on a daily basis just like Nitra nation did earlier discount level so what would it be a charge for an annuity what's a specific you know point amount this is this is an important piece here and you need to get it right first of all it needs to be substantial discounting rid of that so you look in your coin store what's the best value so you can take the lowest single currency amount and then you know offer it for 1/5 to even 1/3 of that amount right so has to be really good deal because I'm buying a lot of stuff up front I'm going to come back and click so it's really got to be a fabulous deal like the earlier Nitro Nation example as I said with 900 versus you know 250 you know coins another good way if you did a Black Friday sale that's actually nice way to find your price too if you did a Black Friday sale and it worked well for you then you actually have your price right there you can take that and apply it to the the

quantity you're going to offer and then availability of your annuity that's important consideration so first of all you know we already said we want to make it's not should not be available with people who may purchase regular I ApS not going to be available to us people motivated to be make an impulse purchase it's just the planners but also even within that planner segment right once I've given you an annuity should not offer annuity right away at the end of it right you won't just keep them getting an effective subscription we'll keep buying discounted rates so ideally they've now enjoyed their annuities they've bought some stuff they're higher level in the game we'd rather than go I am the coin store and purchase at regular price now if they don't you can bring back the annuity you want to bring in a selective basis so the point is make it intermittent on a randomized schedule and then over time you want to decrease the frequency of when they know you become available to that player then stackability it's kind of related to the same point but you know you could you could conceptually sort of stack up

unity to top each other again a very bad idea you don't wanna let people purchase or receive multiple annuities simultaneously take them out of time you're convinced okay the zeros is misleading that's not so I can run through a quick example for you it's sorry wrong way a very quick example kind of pulling all together is you know as I mention you already things already known your game in a maximum value so you very quickly were able to determine that one hundred thirty hundred ninety three coins is the right amount I'd like to give we always want to make things look psychologically friendly under ninety three is a weird amount to give so we call it two hundred what's the cost you know well okay we know we're gonna do 200 coins on a daily basis you listen to scientific revenue we said 28 days sounds good so you have 5600 coins in total and then like my earlier example I said black right sale work well for us so let's use that as a pricing point so in this case my charged point port and since before they

actually a Black Friday sale currency that's per single coin apply that to the 5600 coin is going to purchase we come to $22.40 that also looks weird so we went down to 1999 because psychologically friendly and we're in America and we like to end things in 99 cents to take it under $20 even it's not hardly and that's you do it oops so that's it but you know we have we like I said we do think a lot about monetization this is on our website - we have a blog section so we do put some long-form content like this annuities articles available two weeks ago Gamasutra you can find a gamma suit or you can find it under a blog section we also you know tweet about monetization we don't just do commercials ourselves but if we find news information interesting you can follow us there resources with this presentation will be on a resources site as well as videos we have and then some other people you know excellent mailing

list if you don't already signed up GSB video games as well as getting insiders or our two lists so highly recommend that you sign up for it thank you and I'm here both days so I think I ran out of time if you want time we were all that much good question all right on I love it when you come on because I would learn something and I think I know everything about manipulation and the annuities thing I used in Dyneema occur to me to time box I've talked about generational time but that's the amount of time box in that it's just stunningly clever and I think in particular it's interesting it's you didn't go down the route of subscription tied pieces of matter my instinct was always that you would but we'll be interested to know why he didn't go down that route I don't know but like you I came from the carrier Java days beginning and yeah that was the model right but then you know you got like $2.99 and months and we were kind of quietly happy that Azorean playing I'm getting paid right it was great next time of course we both know that free-to-play gaming's one really took

off yeah in terms of revenue so we want people to purchase at regular price right you know this is designed so it is like a subscription you can X present it as a subscription but we do give it a for a fixed period amount so get them hooked get them you know enjoying your game and then having to buy something regular price if they don't buy offer it again okay make up sense me you [Music]