Secret Playbooks for F2P Games

Randy'sF2PGameIcons

Icons from F2P games I’ve worked on.

A student asked me “why do companies hide their monetization numbers”? It is a perfectly good question and this is my response.

Throughout the game industry, almost every studio and publisher has a secret playbook. A playbook is a collection of tricks and superstitious mumbo jumbo that they think gives them the competitive edge over someone else. When Zynga was making big money on Farmville they actually sued people who revealed their playbook and many consultants would go around claiming to have the Zynga playbook and if you just hired them you too could be filthy rich. Almost everything they knew was common sense to anyone who actually had a F2P (free to play) game running and spent any time trying to optimize the KPI (key performance indicators). But as long as it is shrouded in mystery some consultants will continue to make money and companies will keep it from their competitors.

In F2P, the common wisdom is that 1% to 4% of players convert from free to paid, and the life time value (LTV) of that customer is about $5 to $10 on average. I know that many games fall short of that by a long ways, and ultimately those games are unsuccessful. As you know I worked on F.A.S.T. which started pay to play, at $10, and I helped convert it to F2P. F.A.S.T. was fortunate enough to have a conversion rate much higher than 4% and an LTV much higher than $10 – in fact it was higher than that per weekend. That was in the days when a million players was a lot. We did quite well until management stopped making new content to focus on new games. More recently Flappy Bird had 50M players. I find it difficult to fathom how much revenue a game like F.A.S.T could bring in these days… but if you look at Clash of Clans they claim over $3M per day when they consistently remained in the top 5 free games ranks.

The real cost of publishing a game is the CPI, or cost per install. The CPI for iOS games can be around $2.50 per install currently but can go as high as $7.00 per install on holiday weekends. If you want 100K installs you will pay more than $250K to get them. If a game company makes public their tricks for reducing those numbers or increasing the LTV they risk being bumped out of the bidding for new ads by someone who has more money and knows your tricks. Apple says 5000 games are published on the App Store every day. You simply can’t expect anyone to find your game without advertising on iOS – which is why Android, OUYA and even Windows Phone looks so much better as a small studio these days – let the big spending publishers have iOS until your studio can afford it.

There are all kinds of useful sites to learn what all this mumbo jumbo means. I suggest GamesBrief – sign up for the spreadsheet they share about ROI on F2P games. All my buddies in the industry use that site and that spreadsheet to build out their F2P business models. But remember, his numbers are only typical. You have to know a lot of people and a lot of backdoor secrets to get any real numbers for your competitors and games in your category.

There are sites like Flurry, Distimo and App Annie that will publish reports on trends – but they don’t usually provide the kind of detail you’d be looking for to properly build a business case for your specific game. I attend an awful lot of conferences and sit in long presentations to collect tidbits here and there. Many of those I share with colleagues and clients… as part of my consulting business at LudusLabs. For most studios I can directly show them ways to improve their game that will result in better than 20% increase in revenue by simply following some of what I call ‘best practices’. Still, many studios are reluctant to spend money to fix the problems and continue to suffer. It does cost money to run a game as a service and without continued investment in new content and new discovery all F2P games will languish.

With Steam announcing developer set pricing, there is a concern that the race to zero on PC games is here and soon all game budgets, regardless of platform will be in the $100K to $300K range and many games will suffer because they do not convert well to F2P (story games, puzzle games, adventure games, hidden object games… the list goes on and on). Those kinds of non-F2P games will have to use Kickstarter or other crowdfunding to fund their projects and adjust their budgets accordingly. I also don’t know that many indie game developers who really understand how to run a game as a service… they can make a great game, but have difficulty running the business side. This drive toward free could be a way to drive indie gaming back out of the publishing market and into the art games space again, or at least up to Kickstarter. I’m worried enough about non-F2P games that I pretty much had to decide to adjust my development style to match F2P – fortunately I came to that conclusion in 2008… before F2P even started on the iPhone. That gave me several years jump on most of the industry… with the exception of Matt Mihaly/Iron Realms and some South Korean developers like Nexon.

I chased the “secret formula” and buried myself in all the of mumbo jumbo until GDC 2013 when I heard some very successful F2P game makers like NimbleBit mention that what you really have to do is focus on making a great game that people actually want to play and give them a way to show their appreciation by purchasing useful content in your game. Don’t make them buy stuff like some of the more aggressively monetizing games (CSR Racing) – make your game engaging enough players want to spend on it. That actually makes much more sense to me… and is my advice to you.

“Make your game engaging enough players want to spend on it”

Game Design in a Nutshell [infographic]

infographic
Game Design in a Nutshell

While preparing for the new school year teaching Game Design at SF Academy of Art, I made an infographic I’d like to share with everyone. I wanted to give game designers some of the techniques I’ve found most useful over the years when it comes to designing a new game. I look forward to your comments and suggestions for upgrades.

 

 

 

RPG Meta-Game Slides

On September 17, 2012 I was invited to speak at the Game Design Conference in San Francisco. It was a terrific event an certainly gave me a chance to catch up with old and new friends and learn a few things.

I was on a panel with some of the best designers in our industry “How Do You Create Your Next Game?” and also spoke about “RPG Meta-Game” – “From table-tops to computer games and from action to social, how the mechanics of RPGs can be used in all games to encourage a deeper and more engaging player experience.”

I’ve put my slides up for all to see RPGMeta-Game.zip

Cheers,
Randy

The Aftermath of Apple vs Samsung

Is Apple a Bully? Is the Patent System Broke? Should the FTC be doing something about this?

Apple Logo 1976 to 1998
Apple Logo 1976 to 1998

I have to say that having just read the verdict in the Apple vs Samsung trial I am more than a little disappointed.

MSN Money: Apple wins $1 billion award in patent case

VentureBeat: Apple vs Samsung Verdict

The summary judgement is pretty interesting, with Samsung owing over $1B to Apple for damages. With an almost $12 stock price increase after the announcement Apple’s market cap also increases by over $1B. Does that mean I should blame Investors? Nope, but maybe I’m a bit envious that I can’t afford to be well invested in a stock that monopolizes its market and is protected by the legal system.

I’m not particularly blaming the jurors – who I’m sure followed the 100 pages of instructions and answered the 700 questions in their summary as accurately as they could in less than 3 days.

I could be disappointed that instead of a proper trial the parties were forced to race along against a 25-hour limit clock, like a chess game, forcing them to skip cross-examination and prioritize evidence in a way that no other trial has ever been done before.

Bloomberg: Apple, Samsung Get 25 Hours to Argue Their Case  

I could be disappointed in the way evidence was not allowed, or prior art was ignored.

I could be disappointed by the fact that the CEOs were not able to look past their differences and settle at the last minute as instructed.

I know that it scares me and my wife that a corporation is allowed to use patents to block competition and effectively monopolize a market, limiting distribution of Samsung’s products in many markets. Where is the FTC to limit Apple and force fair trade and competition? Why attack Microsoft in the 1990’s and yet allow Apple to bully developers, book publishers, musicians, the movie industry and now the competition.

Wikipedia: United States vs Microsoft

You will notice that many of the complaints raised by other software companies against Microsoft are pretty similar to the way that Apple is being anti-competitive now.

People laughed at Samsung when the iPhone vs S1 document leaked.

Scribd: Samsung Relative Evaluation Report on S1 & iPhone

Just to be sure, this is the kind of competitive analysis report that any product manager is required to do to justify the work they oversee. You must analyze your competition and make judgements and comparisons. It doesn’t mean you are cloning your competition. It is hardly a smoking gun… but if it is to be judged legally as a smoking gun then it calls into question the very essence of product development and how companies make software… including Apple themselves.

For all the things that I could blame I’m very disappointed that the patent system allows this kind of abuse and has not been revamped to keep up with the rapid progress of technology. The patent system that has become useless and now is demonstrating that it is hurting more than it is helping.

CNet News: Fixing a broken patent system

SFgate: Google lawyer – Why the patent system is broken

There are folks who believe that the Patent System isn’t broken – referencing all the good it has done throughout history.

Forbes: No the Patent System is Not Broken

I don’t think people are saying the Patent System WAS bad… just that it has become a way to monopolize a market and deter competition.

Insert Patent Rant

My views on patents probably come from my experiences as a young engineer making soil and moisture instruments with computers in them – before the term “embedded systems” was even coined. I had already made software that was Computer Aided Engineering (CAE) before that term was coined, and few people know that I left my college studies to join the computer industry and become part of the innovation (Does that put me in the company of Bill Gates and Mark Zuckerberg… maybe). I’d learned everything I needed to help invent the computer industry and didn’t need to run Cobal programs on punch cards again just to get a grade when I could program every kind of computer available at the time in either Microsoft Basic or the actual machine language of the computer. My boss at the time, Bill Mancuso, paid to have me continue classes in a variety of topics and from time to time I’d find myself back in a software engineering course with the instructor asking me “Why are you in this class? You should be teaching it.” Bill also taught me to keep everything I did written in bound composition notebooks (the kind kids keep journals in for school). When I asked why, he explained that we need to know your frame of mind and process you use to reach the conclusions you do and if you happen to invent something really important we have the work all recorded for posterity. I asked if that meant patents… his answer was that from time to time patents are important and necessary, but you should use them only when you actually have improved something to the point of it being truly new, not just built on the stepping stones of those before me. Throughout my career I’ve had the opportunity to patent many of my software and user-interface innovations. Solved problems that many thousands of people before me could not… mostly what I’ve found is that most innovation is simply clever application of principals in other disciplines, and not actually the “world changing” event that would require patenting. Long before others used “soft-keys” on cell-phones I had made them available on those embedded systems I developed. When folks needed a way to compare their instrument results with other peoples results I found a solution that was challenged by academia and soil scientists world wide… until they relized that the equation was really as simple as one of electronics basic building blocks “Wheatstone bridges” and that with simple ratios I had solved a problem with a solution that others ignored. Could I have patented it… sure… but I didn’t need to because it wasn’t actually a new solution… just a clever application of a different solution. BTW – it was only during the writing of this blog post that I found out that Sir Charles Wheatstone actually used his circuit for measuring soil properties… I think he’d be proud of what I used it for.

I share a lot of secrets… my tricks and techniques for years with people I mentor, in classes I teach, or blog posts I write. I hold a few cards close to my chest because I still want to be paid for what I do… but mostly I’m willingly share a lot of what I know.

Unfortunately for Apple the trial also revealed many of their secret plans – I wonder if that means a ripple effect on what they release and ultimately affects their stock price.

WSJ – Apple’s Secrets Revealed at Trial

Are Apple’s patents really innovative?

  • Icons arranged in a grid (as humans we naturally align and arrange things into grids).
  • Rounded corners (product designers round corners so things don’t break when you drop them… and have for hundreds of not thousands of years).
  • Home Button (simple designs are the very essence of good design… reaching one button is awesome… reaching no buttons is amazing).
  • Rubber-banding or “bounce scroll” (this effect mimics real life devices like drawers, windows blinds, etc. Oh, and rubber bands).
  • Multi-touch scroll gesture (pretty original since multi-touch is pretty new, but there are lots of people using it… did Apple do it first???).
  • Green Call button with phone handset (the phone handset was invented by Bell Systems and is used on every cellphone as the “call button” – most feature phones have a green one to take a call and a red one to end a call).
  • Shape of buttons/icons (Pretty much copied straight from membrane keyboards, including the highlight to simulate that they are bubbled up – as far as the specs of Apple Icons they are directly copied from the Atari 400 keyboard).
  • Scroll bars (they been around for a lot longer than the iPhone… is it worth a new patent just because they fade out???)
Inspired?
Atari 400 Keyboard & iPhone Settings Icon

 

Consulsions

So some people will say that I’m bashing Apple… and might wonder why. I learned a fair amount by programming my first computer the Apple ][+, and consider Steve Wozniak one my role-models… especially when it comes to software engineering and hacking code in innovative ways. I was President of the Diablo Valley Apple Users Club in the 1980’s and actually had breakfast with Scully (that is a long story, and doesn’t really reflect well on Apple). The iPhone revolutionized the mobile industry and has been my bread and butter for many years now… I’ve made money and made Apple a LOT of money with their 30% of each game item purchased in my free-to-play mobile games. My concern is that Apple has grown up to be everything it said it wouldn’t become when it was the BEST computer company in the whole world. Now Apple thinks it is better than everyone else, it can hide behind and abuse the patent system, and can’t do anything wrong… but what it really can’t do is anything without bullying a whole group of people (competitors, developers, musicians, Hollywood, book publishers…).

  1. Is Apple a Bully?
  2. Is the Patent System Broke?
  3. Should the FTC be doing something about this?
  4. All of the Above

I love the old Apple, but…

 

 

 

Game Industry Lessons Learned

I’ve been invited tonight (4/26/2012) to speak at the YetiZen Game Design Workshop. My topic is essentially the insights I’ve had in my career as a professional video game developer.

I plan to go into specifics about game design, project management, investors, studios, mobile game business. As usual I will try to keep the subject matter fun and full of multimedia goodness.

I’ve put the slides up on the download page as well GameIndustryLessonsLearned.pdf 3.5MB

Analytics & Metrics in Game Design

Some of my buddies in the video game industry have been asking me about what has changed about my job with the new Free-to-Play (F2P) social and mobile games. My focus for the last 4 years has been games for smartphones, the last three of which has been all about making games free and charging players for items or In-App-Purchase (IAP) and new levels or adventures in the game or Down-loadable Content (DLC). Unlike old games where you designed and then built and released it, these new games ship and then iterate constantly for the life of the product. Part of that process has been learning the ropes of Analytics and Metrics and how to fine-tune your game designs based on how players are actually using your game.

During development we add calls from the game client code (the software on your smartphone) to the game servers (where the persistent data, leaderboards, shop data, etc. are kept) that track how players are playing the game. This is called “instrumenting” your game. This tracking data is used by the project managers and game designers to make effective decisions about what is working or not working and what can be done to make the game better. This tracking is called collecting metrics. Then you analyze the metrics of many players for statistical properties using analytics to optimize your design and iterate for greater enjoyment. When players are engaged and having fun, the value of making an IAP or buying DLC makes sense. Going from a free player to a paying players is called conversion – and ultimately leads to the financial success of the game.

Like the casino industry, games have begun to call the converted players “whales” (big spenders) and when analyzing the spending habits new categories have emerged like “minnows” (small spenders) and “dolphins” (medium spenders). There is another important lesson from casinos that many game designers fail to recognize: “whales” come to a casino when there is a lot of other people having fun in a social setting – when there is a party going on the value is there. Games with lots of free players have a party going on, and the “whales” will come.

Like websites that use hit tracking to tune UX/UI design, we can track which game screens are visited and which interactions the players select. If players take too long in the tutorial they may leave before they enjoy the actual gameplay, we can shorten or redesign the tutorial reducing friction that the players experience getting into the game. If menus are confusing we can prioritize the buttons based on frequency of use to optimize the menu design. This process means tracking and analyzing many players gameplay behavior.

While building our Item Shops we can price items and track which ones are used most and which might be priced too high. Over time we can tune these values so the functional power and IAP price reflect the kinds of economic behavior we want the game to have. Not too easy to play, and not so challenging that players never experience the content we design.

I like to keep in-game money earned while playing the game (Grind Currency or G$) separate from the in-game money people spend to buy IAP and DLC (Premium Currency or P$). P$ can be purchased with real money (dollars, etc.) using the app-store interface all F2P apps use. I try not to use real money directly for IAP or DLC as it can lead to confusion when you adjust prices or have promotional sales. It is also motivational for players to earn a bit of P$ for achievements and to denote progress – “earn 10 gold for leveling up”. Giving them a real $1.50 probably isn’t legal. Grinding for in-game money is a big part of many games, I typically say that the amount earned from grinding is roughly equivalent to 1/10 the amount earned from using IAP or DLC – this gives real value to spending P$.

These same buddies who ask me about F2P also wonder if isn’t “evil” or dishonest. Like any power, F2P can be used for less than honest reasons. There are some companies that learned the F2P formula and then tried making games that would prey on the psychological addiction to games and racked up large profits only to find that players get tired of being mistreated. Players are becoming much more sophisticated and recognize being scammed into paying for energy or undoing time locks without actual value.

One agrument against F2P is that that “core gamers” prefer paying for the game up front and then just enjoy the 10 to 30 hours of gameplay they paid for. There is a terrific game industry blog that posted “Why Core Gamers Hate Social Games: Because Their Selfish Exploitation Of Casual Gamers Is Coming To An End” – basically it suggests that casual gamers have been buying, but not finishing games for decades… and those casual gamers have been subsidizing the core gamers buy purchasing games they don’t actually finish or gain the real value for, but the new F2P games allow the casual gamers to enjoy the game as they like while the core gamers actually spend the money needed to finance the game. The result is that core gamers gain a large pool of players to engage with (see above about “whales” coming to the party) and the casual players become engaged enough that eventually they become paying players themselves.

This is an interesting redefinition of what “core” and “casual” actually means – and may for the first time reconcile what is really going on. The “core” players are the ones who pay for the game and “casual” players are the ones who provide the party or social atmosphere. I was always reluctant to believe the old definition by time played (core plays more than casual)  – my wife, who enjoys puzzles and card games, will play those for dozens of hours each week, but she would not consider herself a “gamer”, and as busy as I am, I generally only get limited time to play as many games as I like… and the ones I do get to play tend to be for 5 or 10 minutes at a time, but I definately define my lifestyle as “gamer” by choice. So I like the idea of “core” or “casual” describing a game player’s spending behavior, not the kinds of games they play.

When a game has real value – truly entertains the players, provides a means of social interaction with their friends, and provides a genuine community for player’s to engage in – then players are happy to pay for the IAP and DLC. Many of the games I’ve worked on have had incredible conversion rates, large viral growth, and enjoyed significant financial success. This wasn’t by abusing players, but by giving them what they want – real value to have some fun.

When choosing what metrics you are going to track and how to analyze the data remember that there is already a vast amount of work out there already. You don’t need to reinvent the wheel, especially if you can partner with one of the tracking services that helps game companies instrument their games and have wonderful web dashboards to investigate those large data sets. Let them provide that service, while your team works on the game.

Hopefully this is useful to many of you, and if it generates more questions than it answers I am happy to answer them in the comments.

 

 

Rogues in the House

Another year speaking at DunDraCon – this time about “Rogues in the House” – the unoffiical sequel to “Gypsys, Tramps & Thieves”. My co-speaker this year is Bruce Harlick.

This time the topics goes into depth about steps and twists associated with heists and cons – in the fashion of TV shows like White Collar and Leverage.

As always you may download the slides too: RoguesInTheHouse.zip (171 KB) or RoguesInTheHouse.pdf (226 KB).

Phantasies & Imagineering