The importance of dynamic IAP pricing

[Music] so thank you for coming today uh it's going to be a little bit of a different talk um you know what I'm going to be going over is uh some of the basics of why you should care about pricing um and my slides are there but not there ah we're still working on it okay so the core of this talk is you know unlike a lot of the uh presenters I'm not looking to acquire customers here um at the end of the day uh we're a machine learning platform and most games that we support are large uh they require you know a couple hundred thousand da at a minimum in order to effectively do statistics so this is really about knowledge sharing and as part of this you know I I walk the earth I talk to lots of game companies and they constantly ask the same questions you know should I have a

$99 price point what should my conversion be uh Etc um and so we did a study we put it out we ran it for about eight weeks uh a a survey on the web we did it in conjunction with Pocket Gamer um you know they promoted it uh there's a summary of it on Pocket Gamer Biz right now and uh we found out a lot of things so it's really interesting and you can download it there um if you want to you can put your email address in but I would encourage you to just download it and then email it to all your friends so obviously uh most of the people who responded to our survey use iips interestingly enough um 90% use iips 68% use ads and that means that most people are using both inapp purchases and ads at the same time so that's kind of fascinating I hadn't really fully understood that but then we ask this question um at what point in development do you decide pricing tiers so how how much are you

going to charge and you'll notice that roughly half the universe decides their prices in beta um so not once they're launched and certainly not you know regularly and so on um some decide their prices in early design and then most people do not offer different prices to different users so the combination of that is really interesting to us it's I'm going to set my prices in beta and then I'm going to offer the same prices to everybody globally and I'm not going to adjust them and that one's really interesting I'm going to set my prices in bait I'm going to offer everybody globally the same prices and I'm not going to change my mind once the game launches um you know and and this is you know an interesting thing and so I have 20 minutes to convince you that you should at least pay attention to conversion and actually I only have like 16 minutes left 17 so this talk is about conversion and why conversion is much

more important than you think it is even though you probably think it's important um is anybody here unconvinced of the importance of conversion cool so uh this is a picture it's from one of the games we have under management the left hand side is sessions in a given day and you'll notice that you know large portions of the world are black um generally speaking the populated Universe plays this game um if you look on the right hand side most most of those people never wind up paying uh it's really kind of interesting when you start looking at New Zealand which is completely populated by payers or players and yet has nobody buying so who here has done this sort of analysis on their game and noticed that conversion rates dramatically differ worldwide few people um maybe more in the back but the lights I can't see you uh so anyway so this is an obvious thing right people have different levels of money people have different levels of appetite for purchasing puring iips um

but if you go back a slide where people are offering the same prices worldwide and then you go to this slide you kind of go hm that's really interesting um and this is a chart from a different game um countries versus percentage of users so this is an Android game I believe us is the most populous then Brazil then India then Mexico then Russia then Thailand then Turkey um Indonesia Vietnam Spain and I give up I don't remember what IR is but you if you look at this this is really interesting as well it's the flip side of the previous chart it just says by percentage where is your traffic coming from and this is common across Android um if you're running an Android game and you're focusing on the US and Western Europe you're losing about two-thirds of your traffic on the other hand about 55% of your money will come from the US so it's kind of dramatic and it just reinforces the point that con conversion rates are different globally and

monetization rates are different globally so first fact um people who buy stick around so people who stick around also buy you know if you like the game then you're going to both buy and stick around so that's true but it's also true that the active buying encourages people to play longer and retain it actually improves retention uh you can actually do the causal analysis and in two games randomly chosen it was roughly a 2X and in general the pattern exists so people who buy on Days 1 through three retain at about a 2X rate over people who don't buying days one through three when you measure on D14 or D7 so who knew that okay cool new knowledge great so what does that mean well if you sell I AP and show ads that means if somebody buys you can show them more ads it's kind of interesting right when people buy they stick around if you can

get them to buy once they're going to retain at a twice the normal rate and that means that if you're using ads as a monetization strategy you're going to show more ads as well so that first conversion it's valuable not only for the money they spent but it's also valuable for the ads you get to show later on second thing who here has measured their second purchase rate cool what is it [Laughter] zero okay I'm sorry I should know not to have asked that question um so get the same games that I had in this one second purchase rate uh 36% in game 1 29% in game two in general for most games with a tuned economy um you'll have a 20 to 60% second purchase rate uh most people don't know this number most of our customers when we go on our initial

sales call and we ask this question they say why are you asking that and then they say we don't know uh and it's they opened up their wallet they took out their credit card not really they entered their password into a dialogue box but they bought they're going to buy again assuming that you had any sort of reasonable value prop they like the game they bought something in the game unless you sold something that was the entire game like a DLC pack for the extra levels you're going to get a second purchase more often than not oops sorry and that means if you sell I AP and show ads somebody buys they stick around you show them more ads and more often than not you're going to get a second purchase so that's really interesting um you know we call that the triple dip you get the first purchase you get the incremental ad revenue and you get the second purchase um and by the way um the third purchase rate is usually between 10 and 30% so there's actually a quadruple dip

here which is pictured this way uh if you're a sports fan I should have used a triple crown or something like that or but I went with ice cream cones but that's an interesting thing right you start with you notice that different groups of people segmented in various ways have different purchase patterns um this purchase pattern is a global Geographic dispersion pattern there's also the same pattern with respect to device quality um you know everybody likes to talk about how IOS and Android monetize very differently from an inapp purchase level perspective but what really happens is expensive phones monetize differently from cheap phones or low priced phones I should say um this exact same picture but not a map but you know around phone qualities like dots per inch or secondary storage or stuff is also true and every time you figure out somebody who wasn't going to convert who was unlikely to convert and you adapt prices for them you get all three pieces of the

ice cream cone and that's all I want to say today well I'll answer any questions you have but the point was really to just say when you look at a number like conversion what happens you take it apart you slice it around and then you wind up realizing that increasing conversion is a lot more valuable than it appears at first plus so open questions oh got some questions at the front here you can see better from here yeah yeah I actually this is much better wow cool sure I'm men IOS and Android um you mean so for like DPI and things like that what is the disc between Android inms ofion puras um so iOS in general converts a lot better um yeah we I me we all know that but I guess my question is like what does it look like

right so in 2016 um an iOS you know in the games we have that are both IOS and Android iOS has about a 4 to 5x conversion uh uh differential so an Android game that converts at 0.5% will convert around 2 to 2.5% on iOS um at the same time if you then start taking your Android population and breaking it down by device so if you look at Samsung high-end devices released in the last year those perform very close to iOS um it really is that level of differential um there are other thing you so DPI is a huge signal for likeliness to convert um secondary storage is a huge signal for likeliness to convert um believe in the United States Verizon versus T-Mobile is a huge signal um and you start saying I have a device that is iPhone equivalent in terms of capabilities and was bought in the last 12 months and is on a high-end bandwidth provider or occasionally on a Wi-Fi and you wind up essentially with an iPhone um it really

does work out that way um what Android does is Android brings like 10x the users to the table but unfortunately they all live in Vietnam and have you know four-year-old phones us at oneth the conversion um they also buy smaller packages how do you uh what's the impact of uh kind of the double dip showing ads against the time purchase rate um so you know I mean you can show ads in such a way that you really just horribly calopiz your I AP purchases um generally speaking by driving users away as they get that full in the middle of the game experience video ad um you can also do it in ways that don't um so it really depends on how well you do it um we have customers who have decided that you click more coins and up Pops a dialogue saying want to watch a video and you have to say no in order to get to the pay wall that actually hurts sales um but there

are ways to do it that don't um so it's really game dependent yeah how you you how you guys approach into dat in terms of framewor fur down because you know I guess all the industrys of what are your kinds apprach so so one of the things we do is we mostly don't measure uh the common metrics or we do and we use them on our dashboards because people look for them uh but they're not really what we're looking for uh what we're looking for Behavioral indicators um time to purchase uh you know time is a very important component to this uh how many people have any idea what their Tuesday purchase rate versus their Friday purchase rate is

okay you should go look it's dramatically different um and you know your Tuesday 4: a.m. joiners if you actually do that segmentation I'm willing to bet you'll never see a spend people who join at 4:00 a.m. on a Tuesday don't buy people who join at 5m on a Saturday due um it's just a fact of when people are playing games and when they're thinking about games and so on insomniacs are cheap um anyway um so what we do is we're Gathering a lot of data you know in order to do what we do we install an SDK um and then you know we're getting terabytes of data and running you know fairly complicated machine learning algorithms over it that's why we're not really appropriate for smaller games um but what we're doing is we're essentially viewing the user as a set of events and then viewing that as a Time series and so time to certain events is actually key and then location is key and you know time of day Etc analysis it winds up being about 400 different numbers

um oh sorry um you're pointing to who at the back at the so did somebody in the back over there raise their hand right here oh there oh I'm sorry uh I was just wanted to know what is the single most important indicator of if a player is going to be a monetizing player or not uh it depends on game to game actually um there is no number one um you know one of the things we do with our customers is you know two weeks into it we you know basically show them a graph of the ones that matter the most for their game um frequently it is join time join day join hour um that's usually uh you I've got five minutes less okay so um when people join is actually a huge predictor quality of device is a huge predictor um engagement is a huge predictor um you have to separate out uh day one from day day two from day three from past day three um

and past day three the most important predictor is engagement so if you're looking for who's going to buy on day one that's a little bit harder if you're looking for who's going to buy on day seven but not on Days 1 through five you know it's various convolutions of time and game turn out to be the most important predictor other questions sure how did you guys come up um so I was the CTO of a company called live gamer um that does payments processing so we did uh global payment methods for microtransactions and so I spent from roughly 2007 to 2012 watching games launching microtransactions and sort of just staring at it um it's you know we built the platform for we process the payments and you know just you just

watch it over and over again and then you realize like you know I mean the fundamental question is you know suppose somebody told you your arpu dropped what would you do and the answer is it's a non-predictive indicator right it's it's it's you know the patient is sick but not how to heal them um and so I watched it for a long time and then we sort of gradually built this platform to do it um you know and it it's it really is a lot of sifting through lots and lots of different things and it really is different on different games so to some extent the other thing we did was we took basically all the folklore and there's a ton of it right so who here has read um any presentation by Emily Greer cool so Emily runs congregate her name is G re R about three times a year she gives great presentations on what congregate sees in terms of player patterns so you take all of those you take Nick lel's freet to- playay toolbox you take everything that Eric soyer's

written you take and you just say okay you know what are the common fields across all of these and you wind up with 300 or so and then some more just to sort of boil out as you're doing [Music] it