Unit Economics for Free-To-Play Games

If you don't have a model, then you don't know don't know you have a problem, right? So, you would just go in there. A lot of designers would just come out with a price out of the bum, right? And then try to calculate that when you're running a game. A lot of people will do this hobby where you release a game, put some price tag in there, uh calculate the monthly revenue, and like, well, this is what my game does, right? But it's not necessarily a business. Still a hobby because you did all of this without single calculation, right? So a lot of people would just price it like that because they're kind of more in the hobby uh side of of that bisuh hobby side of that game development. But if you want to transition to the business, you have to look at these numbers and say like how is this 3.99 plugging into my business plan, business model, right? And that that's where a lot of uh these

kind of uh uh light bulb moments will happen because you're like, "Oh, this cannot be $3.99." Right? Even if I change it to $9.99, I'm still not going to be able to cover the $12 that is the predicted LTV that will generate that 1.2 million um uh in annual revenue. Right. Hi everyone, welcome to another episode of AOI 101. Today we will talk about unit economy with Miho. Hi Miho.
Roman, it's great to meet you again.
Yes, our last episode with you. I think it was last year or even longer than that.
Yeah.
Is in our top three videos by
setting the mark. Yeah. very high. Um, and I really wanted to talk about unit economy because I think this is like kind of a baseline whenever you start

new game or even a business. And I felt like in context of games, you are the best person to talk about that because you're such a nerd, Mihel.
But tell us a bit more about yourself outside that you're a nerd about all of those numbers.
Absolutely. You're spot on. I'm definitely a nerd, but I kind of wear the extra extrovert hat sometimes, so it's uh easier to get the stuff out. But yeah, Mike Mikuel Tamchani. I'm Slovakian. I'm based in Slovakia. I've been designing free-to-play games for over a decade. And I love it. I love every single aspect of that. And I hope I can share some more information. I think like you mentioned the last time was really good and I think it's because of the content, not necessarily because my or your pretty face, but I think the

content is [laughter] I think the content is what people really love. So this one is is going to be also interesting.
No, I I'm sure I'm sure. And I'm asked Miho to prepare some slides. So without the further ado, just share the screen, go with the flow and yeah, I'll just ask uh random questions from time to time.
All right, thanks Roman. So let's talk about unit economics. So the first time Roman approached me with unit economics, I had to go and Google it because I don't use that term. what whatever term that is uh coming from uh I I do have a degree from architecture but generally I don't I I don't I have to use the terms that are simple for people because I think that helps a lot to understand that we're not we're we're doing gaming we're game developers not a rocket scientists here but some people try to

make it feel Like it's a it's a rocket science, right?
Yeah. And let's try to make it I'm not sure what's the opposite of rocket science. What is so simple?
I don't know, man. It's just fun, right? I mean, games are fun. So,
let's make it fun. Yeah.
Yeah. I would say it's a science about fun or fun science.
So, um cool. Let's uh let's dive into it. So, um, like I said, I'm MKL Chani and I, uh, design free-to-play games, and this is what it's what we're going to focus on. So, on this talk, I I just want to focus on free-to-play framework. So, nothing else in in terms of um, paid games or games for specific platforms. I'm not covering that. I'm just simply covering the free-to-play framework. Um, and the differences between uh when you're doing free-to-play as a

business and when you're doing a hobby. So, we'll try to determine whether your game is a hobby or what your activity in terms of game development is a hobby or or a business. So, so I do have experience in both. When I started in this industry was mostly because I liked it, but it wasn't really a business because because num numbers were really terrible. So today you're going to be able to hopefully let's uh let's make a deal Roman after this call after this talk um see if you can do unit economics and if you can then I've done a good job. What do you think?
Yeah I'm I'm not sure how we'll check that but I I'll create a spreadsheet. [laughter]
Cool. Let's try that out. Okay so what is unit economics? So it's very simple. You see it all the time everywhere. Uh uh the best example would be just look outside of uh uh game industry. Look outside anywhere probably reach in

your pocket and you'll see unit economics. And if you go to a conference when people pull up their phones that's when a variety of uh uh unit economics will appear right. So maybe you can start with uh really look at u Apple as a as a genius in terms of product but also marketing. So um as simple as that but let's relate that to gaming. So um we're going to define like for making games you don't need game economics. Okay. So anyone can make games or can try making games. um you know it makes them happy. So game developersh can be happy just by doing games and creating games and any kind of a games and sometimes they will just say like look I'm I'm turning it it's free now so it's free to play okay so it's it

can be like that um and then you just basically hope for the best and I think many of us have been in there if we ever made a game we just push it out there and hope for the best and I think this could be very easily defined as a hobby rather than a business. So game economics are really more specific for business. If you do gamedev as as business, if it if you want your game to generate revenue and you want to make a living out of that, you have to treat it as a gizm as a business. And um specifically when we're talking about business, you're you're going to look at how much are you are we going to make? How much money you going to make? how much money the game is going to make, how much money is the entire project going to make, and then how we're going to generate that revenue. So, how what is it exactly that that's going to make that money that we want, right? And if

it's a game, we need to specifically look at the um intricacies of every game that free that is free-to-play game and see how that revenue compiles together or compounds together. uh sometimes it's compounding effect and then of course every business needs to scale. So how are we going to scale? So for me unit economics is is this particular set of kind of traits and this particular view that I take. So we could summarize it as unit economics is a business model. I'd like to look at it that way and that is also what I am far more familiar with when we're talking about um game that should be making or generating money. Uh what kind of business model we have and then also freetoplay by itself it's it's just a one version of a business model. Does it make sense? Yeah, I think that's a very good distinction, right, between

like hobby, game as a hobby and game as a business. And this is a core difference.
Yes. So the game economics or unit economics, you could absolutely call it game economics because unit economics is far more applicable for product when you're u you know you have many units uh maybe different type of units but within the game itself game is a unit but also within the game itself you'll be selling units as well. So it's kind of a tricky
tricky term to use.
And by the way I'm not an economist. Um I have degree from architecture but math and design is what I've done a lot even at school but I just genuinely genuinely love that. So it's something that I have been you know the school of hard knocks is what my what my uh training is and

what my training continuously is being. So let's uh take some example. I've taken an example of just a regular game. Uh I'm playing this a lot and I thought like why don't I look at this game from a perspective of whether it has good game economics or whether it has a good business model. So right from a uh start I'll say uh it doesn't and it's a good example for many smaller studios that this knowledge will be applicable for because they could have um you know structure their model a little bit of a little bit different. It's not exactly a free-to-play but it's a free-to-play wannabe game. So uh I kind of like this example and we're going to shoehorn it to what we need today. So game as a business um what does it mean? So let's let's begin by where do

we start when we think about game as a business and then u uh there's going to be a lot of assumptions. So what what we must assume or what do we assume when we start thinking about game as a business. So what are these assumptions that we're going to have? And then of course once we assume something, we need to remove that assumptions with facts or data. But like I said, we're just simple dudes here. We're going to keep it simple and stupid. Stupid, not exactly, but in some sense for some people this could be stupid. So, um, with this business model or the model, um, as, uh, your business as a model or your game as a as a model, we're going to look at, um, how to actually model it, how to model your game into being a business model. And don't be afraid because it's once I show you the stuff, it's super super simple. So um you can of course expand

on that and make it far more complex but basics are fairly simple. So we're going to assume a couple of things. We're going to assume that we have a game or we have an idea for a game. We kind of have the idea how to build game. So we're assuming that the hobby part is taking the next level and we're going to turn that hobby into a business. Okay. So we assume that our game has some content and it's good for 90 days. Um we also think that we can convert these players into payers just like the game has done that it is free game right and our assumption is that we can convert these players to payers at some percentile rate and then what we're going to assume is that we can get more of these players. are going to acquire more players. Profit the important word mat. It's got to be profit. It's got to be a

acquisition profitably. So, we're going to do it. We're going to look at it how we can do it profitably.
Quick question.
What do you think is the best moment to do this modeling exercise? So, do should I do it before I've created my hobby game just to understand like how it will look like in the future how the business or I should just focus on the creative part do a game for myself as a hobby and then if I want to earn extra on the side then I'll start doing the modeling part.
Yeah. Um so so so there's many ways to do this right? Whatever makes you happy. So if you're you're in a company, you're not going to do what makes you happy. You're going to do what generates revenue, right? So if you're in a position where you have to do this as a

profession, then there's no question you begin with this. You don't start a game and then shoehorn the game into this model. But in often in many cases I have to jump into you know a project and I see that there's they they have no clue how to generate revenue because nobody has modeled or there's no particular uh even calculations in terms of how we're going to generate revenue. It's just a CEO or a founder who's like oh we're going to generate half a million dollar from this game and that's the idea. That's their model right? So it is not exactly specific model but there's some uh factors that that they have as a predicament for the model. So I would say start with this and if you already have a game it's not too late to look at your game and analyze whether there's a model or you know you have to build the

model and then somehow shoehorn the game back into the model. All clear. Gotcha.
Cool. All right. So, we're going to use the power of forecasting. And remember, the power of forecasting is that you're a god that can assume everything, right? You're at the beginning of your creation. And at the beginning, there was nothing. So, you're going to make assumptions. You're going to create everything as they call it, pull it out of your bum. Right? So we're going to pull thing things out of a bum. But if we have things already existing. So for example, we have a game. We're going to measure some things. Then we're going to plug those things already uh existing or a data that we already have. We're going to plug them into the model which gonna which is going to kind of supercharge uh the the model to uh be as precise as possible because we're going to be able to remove the assumptions faster. But if

we don't have anything, we're going to assume everything. So let's not be afraid here and we're going to be wrong. So everything that we assume might be 100% wrong and we're just going to uh dial it down, optimize it, and change it so that we arrive at a model that is functional so that we can prove whatever our model is trying to prove. And we're going to aim high. There's a lot of issues that that I see that the developers, especially in in free-to-play and and casual and and mobile games and the uh you know, the early indies, they price so low because they just do not believe there's somebody who's going to spend high or is going to spend huge amount of money in their game. And I think you should start high because later on you're not going to be able to increase the prices. So start really high. Aim high.

Just to confirm that's the price per uh in a purchase item, I guess.
Right. So that could be in a purchase item or it could be in general your model is aiming really high. So um I'm going to show you in the next next slides that um this can be really like aiming high is from the highest possible perspective you can have on your business. Uh and that could be oh well my business I want to run it for two years and I want to generate this kind of revenue this kind of profit. So you can look at it from that perspective like 30,000 miles above. Right. Right. And then you go down all the way to like I apps. How high do you price your I apps? Do they fit the model?
Gotcha.
Right. So what we're going to use here is an LTV calculator. And that's

probably all you're going to need here to get your model going. So a brilliant um calculator has been done by Suven. Um, you can, by the way, watch this video because I've done it's like a 15, 11, 12 minutes of going just specifically focusing on the calculator and running the calculations. But I'm going to show you what today like how to use that calculator. You can watch the video, but what exactly we're plugging into the calculator is far more important right now. Okay. So for the model, we're going to model how much money you plan to make or how much money our game is going to make or our business. If it's one game or multiple games, we want to replicate this model, reskin this model, reskin the game multiple times, use the same model, right? So we're going to make some assumptions. Three assumptions going to be made here that we're aiming to generate at le million dollar so or

million euros 1.2 two specifically from this calculation. I'm just copying what I have in the in the in the model. We're going to generate substantial amount of money as a profit, but we're also going to allocate some marketing cost. So, we know that we're going to have to spend some money in order to generate money. Now, any cost associated with development, we're not talking about here. We're not going to be talking about it for the rest of the talk. We're just simplifying the model right now. Any questions?
Yeah. So, we have three numbers here. Uh I'm sure you've came up with one of them first. Like, was it revenue?
Right. Okay. So, you you'll see how I came up with this numbers, but revenue was the first where I was like, look, um I'm going to model this, but just tell me what do you want to get out of it. Right? So as a developer, you will say, well, I want to make a game that generates a million dollars.

Exactly.
Okay. So that would be our our goal and that's a first assumption that we're making that we can generate with this game one $1 million or 1 million euros. So for the plugging into this calculator, what we need to do is assumption on all of these metrics. So we're going to assume we can do D1 retention, D7 retention, D30 retention. Like I said, assumptions. We're pulling things out of a bum. So we're just going to say we're going to do D1 retention at specific rate, right? And we're also going to make an assumption. And this is where a lot of people are afraid to assume their ARPA average revenue per daily active users. Okay? So, we we're going to make these assumptions based on whether we see it in other games, we heard it on a podcast, we've seen somewhere a number, or we can't we haven't seen the number, we're just going to plug one number in and see what the calculator spits out, right? And

then we're also going to say one thing and that is oh, I'm going to generate the revenue within a year time, right? because we said we need to know first assumption is is our rei revenue uh we want to make 1 million but time is also important so if it's a 1 million 1 million revenue uh in 365 days then that will be our assumption and then CPI I would just say like look whatever you're willing to pay for a player right so think about that number is like don't don't go into like three days of research what would be my CPI Just think how much will you pay for a player to play your game and the D1 return is like I can keep you, right? So if you say come I'm going to keep 40% of people then if you pay 50 cents for them you probably be okay it's fine I can let half of them go. But if you say my CPI is going to be 10 bucks, I'm not happy

to let five bucks just go, you know, uh on a day one or day two so on, right? So think about the number. Don't worry about what are the benchmarks. I I particularly don't use any benchmarks. Um if I use benchmark is because we already have a model that is proven. It's a game that generates revenue and we just want to make it better. So that that's the only time I would use benchmark. And then also marketing budget and profit margins. Don't worry about that. So say I've got 10,000 bucks to spend. Can I make a money out of a game? If I put those 10,000 bucks in the game, can I make money? Can I make a profit? So just kind of think about it in a very logical way. Does it make sense, Roman?
Yeah. Yeah. Yeah. I think uh the only thing I would add is to find friends.
[laughter]
Right. Um,
so your CPI is zero.

[laughter]
Not for that. Just to ask them, okay, you're running this puzzle game. [laughter]
I hope you have thousands of them. Thousands of friends.
Yeah. Yeah. Yeah. Exactly.
Cool. All right, let's move on then. So, our LTV calculator, let's zoom in and focus what is what it does, right? So, it's focusing this. This is a a model that I call aggressive. And anyone who thinks that these numbers are from specific game, uh they're not. It's just my imagination that I can imagine a game where this would be possible. So I imagine that the day one would be 45%, day seven would be 20% um and then our D30 will be 7%. Right? And I also imagine that every daily active user is going to pay $2 or it's going to generate $2 in my game. Now, that is very ambitious, but let's see uh what this calculator spits out for. And

then also, I'm predicting that on 45 in 45 days, we can generate profit or turn this game into a profitable business. uh and what it does it will spit out your uh lifetime value prediction. So it will tell you like how much can the game generate in in the lifetime. So for example if we say that 7% people are there 30 days. So those 7% people will be generating those 12 bucks $1260. Now LTV is on average. So we'll be taking all of the players but it will average it out. So you can get 1260 from a player. Okay. And in general, what you need is also to know CPI because it's accounting for the fact that you're acquiring users. So you're spending money and you're turning that money into revenue, potentially profit. So this this calculator tells us that in 45 days with these numbers that we imagined that

$2 on daily active users is going to give us in 45 days 2 51% rorowass and in a business terms we we're talking about return on investment. So it's going to be 150% return. Um in other words our profit margins are 150 gross 150%. Right? So this is very aggressive, very hopeful model.
I would just note like for everyone watching like just hit a pause, go to that LTV calculator that Miho has provided. Try to do it like maybe even try to do it with the same numbers for the simplicity sake. Just follow along what we are doing. I think this would make this exercise much more uh effective.
Yep. Uh, we'll also have a link in the description.
Exactly. So, we'll we'll put it in if

you pause this video and want to go in there and plug your numbers in there and just play around and see what your LTV and how the numbers move around. If you just watch my video, I'm doing exactly that for 12 minutes, just playing around with the calculator, figuring out what my numbers could be, what could be revenue, what could be a profit, and so on. So I think just having this this is a spreadsheet Google spreadsheet. Um now Swen has done um also a website where you can plug it in on website. You don't need spreadsheet. So and there's bunch of other LTV calculators out there but we're not we're not going to advertise them here right now.
Yeah. Yeah. We we like Swen too much. He was also a guest and we're finding the next video with him also about Python. So you can even
absolutely
make it more interesting. Uh what about the color code here, Miho? Is it on purpose or some specific? It's just colors I like or don't like.
Okay.
All right. Cool. So let's move on to the

other portion of that calculator and that will be okay. So now we have these numbers but we need to um dive deeper into these numbers because simply by looking at our ARPD dow it doesn't tell us anything about what do we do with the game right so we need to be able to take these numbers and then start playing plugging them further right so for example if we say like we have 500,000 marketing cost right um a marketing budget so we take that 500,000 and we're generating revenue 1.2 and then turning a profit 759. And so this this portion takes into consideration that our model can generate this. If those numbers that we plugged in are valid, then this is what the the the model is telling us that it's going to generate. Now what I'm doing is I'm taking this further because I want to know also is like what does it

mean in terms of player acquisition and the payers themselves. So we also made the assumption that we're going to be able to convert 5% of our players into payers. Right? So if we're running 100,000 acquisition, a campaign for 100,000 players acquisition, then out of that only 5,000 people are going to spending money, right? So those are the people that we're we're going to have to monetize, which means we need to now dive into how these 5,000 people will spend $1.2 million in a one-year time in your game. Does it make sense?
So far, yes. Okay. And so if they spend that much money, how much does one spend and we need to go even deeper not in just total but every week, every month and so on. Okay. So we're going to take

that revenue um average it out per paying user. So the RPPU stands for average revenue per paying user. So we started with the assumption per daily active user that gave us the revenue. Now we're need to go a little little more down and say well all all those people we're going to monetize through I apps right so that that's our model and we're going to do that at 5%. So those 5,000 people is going to have to generate all that revenue. Okay. So what is it per paying user? It's $251. And what it means on weekly monthly basis, it means that we're going to have to have um 3.2 or 3.9 purchases, almost four purchases a week. Uh and they're going to have to spend every week $40,

$39, right? And in order to achieve the revenue that we want, they're going to have to do a monthly purchase is 16.8 and in a month they will spend $167. Right? So this is what the model is going to tell us that this is how we plug the numbers and the model tells us now go into a game and set it up so that these purchases occur exactly how this model says. Does it make sense?
And we had a very aggressive model.
And we have a very aggressive model. Okay. So remember that we're going to turn those assumptions to facts. So our average purchase cost needs to be $9.99 and we need to have 126,000 of these uh purchases on average. Right? So if we just consider an average, then this is how we need to set it up. go there to

your game and ask your payers to give you 10 do $10 and they have to do it six times a month. Now let's go to plugging these numbers. Um now we had this game um we started with this game and we say we're going to shoehorn this model into this game. Okay. So, we have a um uh shoot a map uh the typical uh a game that uh would be easy to make, right? Even AI can make this game. Now, make it beautiful. That's probably going to take a little while, but let's let's say that this would be a fairly simple concept for a game. And now, let's look at what we've done with the ads. So we're looking at existing game and we're saying like okay look at the shop what are the prices in the shop. So what do we see that we have ads and we have inapp purchases but we

also have a inapp purchase that is removing ads. Okay so if we're going to remove ads from the game and the player is going to spend $3.99 the model is not going to be very happy because what it does it removes the opportunity for us to monetize outside of the payers. So now we need that model to be 100% because we're going to be applying aggressively that our monetization is exactly how the model says so that we generate all the money from payers no ads just payers right so if we say that that 399 removes the ads but our LTV for example our prediction is that Everybody in the game must spend $1260 and everybody removes the ads at $3.99 was still down. We were still not

generating the money. So what our assumption was that not everybody but just 5%. So remember our model was that we plugged in this 5%. So we're ultimately saying like only 5% is going to spend 3.99. Okay. But the 3.99 is not going to cover anything of that model. So we're already down by pricing the inapp purch uh the ads removal inapp purchase at $3.99. So that's a clear indication where the model is informing you that you're not going to be able to generate hit the goal that you want because your pricing is out of sync with the model. So if you don't have a model, you're like, "Oh, sounds good.$3.99 $3.99 is really good price, right?
Why don't you take into account other types of purchases from here,
right? Because that's not our model.
Uhhuh.
So our model is saying like let's h

we're only modeling that we need the payers to cover the 100% of revenue cost, right? So if our model is saying well no it's going to be 7030. Okay. Okay. So then you need to calculate that 30% as well that okay well if we're doing 1.2 million a year then the 30% needs to come from ads. So you need to start modeling how your ads are generating that uh that revenue. Okay. So, you probably need another calculation, another uh calculator to generate how much money can I get from ads and what exactly does it mean on um all the way down to daily impressions or uh reward videos, how much I need to make from every single uh uh video watched in order to generate the money that my model wants wants.
Got it. And like from your experience, Miko, like just out of curiosity, the

3.99 uh price tag, do developers do this kind of research first before setting the price or this is a bit random.
Yeah, I I think in general what happens is that if you don't have a model, then you don't know don't know you have a problem, right? So you would just go in there. A lot of designers would just come out with a price out of the bum, right? And then try to calculate that when you're running a game. A lot of people will do this hobby where you release a game, put some price tag in there, uh calculate the monthly revenue, and like, well, this is what my game does, right? But it's not necessarily a business. Still a hobby because you did all of this without single calculation, right? So, a lot of people would just price it like that because they're kind of more in the hobby uh side of of that business of uh hobby

side of that game development. But if you want to transition to the business, you have to look at these numbers and say like how is this 399 plugging into my business plan, business model, right? And that that's where a lot of uh these kind of uh uh light bulb moments will happen because you're like, "Oh, this cannot be $3.99." Right? Even if I change it to $9.99, I'm still not going to be able to cover the $12 that is the predicted LTV that will generate that 1.2 million um uh in annual revenue. Right? So you see indications once you start modeling you see indications on oh my pricing needs to uh reflect the model right or the model needs to be reflected in the prices. So if you have the model it's much easier to yeah
put the price tag on.
Gotcha.
All right. So probably what would be

essential in this game is to rethink the free-to-play model strategy in that game or in general the business model that this game has because I don't think these guys are thinking about it. So your LTV will look kind of like this. So you plug in uh the numbers at the top and then start playing around whether you want less you have less marketing budget. You don't need to generate $1.2 million. It's really up to you how you plug those numbers in. But the importance is that you have the entire picture of what that model does and how you take those numbers from the model and apply it to the game. So if it doesn't work like for example my model is aggressive and it doesn't work on this game what do we do? So two options you either change the model or you change the game. So you start

redesigning stuff in a game in order to meet the model. Now you can do both. You can change the model a little bit and change the game a little bit and see if they meet in the middle. So, one last thing would be you've also made assumption if you built the game, you've built the assumption that you're building it for somebody else who's going to pay. Uh, and whether they're going to watch ads or going to spend money in your game, you're working with the assumption that this game is for somebody else. is it's not just for you but it's and not just for your pre parents [clears throat] and friends and your family but actual uh customers who will decide whether they want to spend money or not. So you're making some assumption that there's a need in the market for your game. So what you're essentially doing once you have the model and building a game, you're

jumping to your hypothesis that there's a need and there's a there are players who will want to play that game and generate revenue for you or spend money in that game. So essentially it's this entire exercise is product market fit because your model may not be applicable to any anyone in that market right like I said I put it really aggressive right so there may not be out of 7 billion people anybody willing to spend money in that model now also what you're making assumption is that you're building the right game for the model so you could be like, oh, this game that we have, people are never going to spend on average $12 in this game. It's more like this game is kind of worth 99 cents because of the way it looks, because of the people who like that kind of mechanics in general.

That game fits different type of people. And what is the price for type for those type of people? You need to figure out. So the market fit really is through couple of things. So you're going to have your team trying to look for people and acquire those people, turn them into players, turn them into payers. And then your product team, which is a team that created the game, does not go out there and catches the people, acquires the people, but your team built the built the game itself. Now what the UA team tells the people or the type of people they look for may not necessarily be the the people that you need for the model and you need for the game, right? So that um unfitness could be creating the problem that this game just simply does not generate revenue. And so you have to look at both. You have to look at

whether you have the right people or can you even tell who the right people are or do I advertise sorry do I offer the right offers to the players that I actually have in the game or that I can acquire. Right? So, if this dude is a dude who likes watching ads and you have majority of these people in the game, well, they probably not going to spend on removing ads and certainly not a 3.99 and the 3.99 is not even going to cover your cost. It's not going to fulfill the need of that model, right? So, you're kind of unfit in many areas. But the importance is where are you looking to identify what the problems are and since you have the model and since you have the game and since you started acquiring users you have all you need to figure it out.

Explain the food on the left side. [laughter]
Right. So uh this is a instant soup. So the top is the packaging and once you open the instant soup, that's what's inside.
Dude, that's an expensive one. [laughter]
So yeah, I'm just uh uh I'm just trying to explain that uh what your UA team does and what your product team does needs to be uh synchronous, right?
Exactly. Yeah. Yeah. Yeah. That that's the thing that I'm seeing more and more in successful teams.
Yes. They all talk with each other. Well, that's actually what distinguish success versus
right
not success. You a team and product team working towards the same goal.
Yes. So no model is going to work if you're acquiring the wrong people. And

if you're if your only option is acquire those people then you have to change the model. You have to change the game. So you can look at it from you know from the perspective of do I know who our players are? Am I making assumption? Well, if I'm making assumption who our players are, it may not necessarily be possible to acquire them ever. Right? So is my business option right now limited to monetize the players that I have? If the answer is yes, then I'm going to pick the people that I can get in the game and try to monetize those. So I'll adjust the product based on the people that I can get into the game. So what are we getting wrong if it doesn't work? What are we getting wrong? Right? So if our ARP average revenue per daily actor is user is low, we can change the monetization or we can change the pricing. Right? That would be the lowhanging fruit.

So, like I said, if our model needs $9.99 purchase, then $3.99 is not going to cover it. You would have to acquire either cheap and low amount of uh huge amount of users to uh um to fulfill that need of that model, but it's likely telling you that you need to change the pricing. CPI is high. Well, if I'm spending a lot of money on the players and those uh players are uh not spending enough money in our game, I either change the UA strategy, acquire the users that I need or the model needs, right? Uh change the creatives or change the um again the first part would be change the game. So change the monetization or the pricing. Now if our retention is very low, that's the trickiest part. And I would uh send everybody to watch the video we did last

time about retention because it's far more trickier to fix retention. But in general, two ways to fix retention. You can have unfit traffic. your UA team, like I said, will be sending people who are not going to spend any money or a game. They don't want to be in the game because it's likely that they're faking some stuff that is not in a game, right? So, they're sending unfit traffic and that unfit traffic will lower your retention. So, you can't reach the right audience. That's also possibility. You can't reach the right audience, your retention is low. Second thing is like, well, it is what it is and I have to adjust the game. So, we're going to change the design and it's likely the three things that gameplay, content or progression would be causing low retention. Now, again, we talked a lot more about that on the last video. So, everybody wants to go deeper about retention. Watch that video. But in general,

our model is there for us to begin with and help us remove assumptions. If you don't know what we assume, you can't remove the assumptions. And that's it.
Yeah. Yeah. Absolutely. I think it's a very good thought exercise. Even if you're not going to use this model in your business, it will make you ask the right questions about all the things that you actually covered like the price of the item, do I have enough audience, is it the right audience and so on so forth. So it's opening opening your eyes towards whether you're running a business or you're gambling or it's just simply a hobby. Now it also tells you a lot about stuff that you need to know in order to turn the game into a business or turn your company into a business because all

of this stuff is absolutely must. It is not. Um, if you see this stuff and you're like, I don't want to be doing this, then you're probably in the wrong business.
Uhhuh.
Yeah. It's getting harder for the smaller guys. It's getting harder with every year. So,
right. But we're making this knowledge available to everybody. It's not rocket science. It's just the numbers. Plug them in. um make a lot of assumptions and remove those assumptions and you have a successful game.
Fantastic. Like very good last words for the video. We'll ask everyone like to try the model. Make assumption, ask questions, put questions in the comments to this video or maybe you want to share your model. Why not? Um
give us a like if you want to see more videos like this.

[snorts]
Um Miha last question where people can find you.
So you can go to uh my website takes you directly to LinkedIn or you can find me on LinkedIn. Uh most of time I'm active talking in the comment section posting stuff. So you'll definitely find me if you search for my name. You'll find me on LinkedIn.
We will leave a link anyway in the description. Um yeah thanks Satan Miho
Raman. Thank you very much for your time. Talk soon. Hope this hope this does really good as well.
Okay, we'll model it. All right. [laughter] Cheers, man.