Economics of Living Outside the Box

The Economics of Living Outside the BoxJoost van Dreunen

Prepared for Casual Connect, HamburgFebruary 8, 2012

1Casual Connect, Hamburg, February 2012 | Copyright © 2012 SuperData. All rights reserved. | www.superdataresearch.com

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Intro

Joost

Casual Connect, Hamburg, February 2012 | Copyright © 2012 SuperData. All rights reserved. | www.superdataresearch.com

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SuperDataMarket intelligence on paying online gamers


‣ 200+ titles‣ Social, MMO‣ Brazil, Canada, Colombia, Chile, France,

Germany, Italy, Mexico, Poland, Portugal, Russia, Spain, UK, USA

‣ Benchmarking: key performance indicators‣ Market analysis, forecasts, revenue estimates

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Future of the games industryDouble rainbow all the way


“Companies that continue to rely on the old model as the model changes before our eyes, unless they change their ways and invest in the future those companies eventually will die off. No two ways about it.”

-- EA COO, Peter Moore

“the global market for virtual goods would exceed $100 billion by the end of this decade.”

-- Digital Chocolate CEO, Trip Hawkins

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Free-to-PlayResonates with new generation of gamers and changing preferences


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BoxedUnboxed

Shown: Boxed sales (retail and arcade revenues) versus unboxed sales (digital downloads, subscription, and virtual good sales) for the U.S. market. Numbers shown are estimates for 2012 in billions of dollars.

$15.9$7.1

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Free-to-PlayMarket characteristics

+ Accessible market+ Room for growth+ Future not (yet) set in stone

- Crowded- Consolidation- Lack of market transparency


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F2P is obvious but not easyWhat works for DLC doesn’t necessarily work for F2P

$9.2MM + 2.5MM = 0


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So,tell me

What are the economics of living

outside the box?


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Careful management of available wealth

and resources


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All relationships in life are transactionalNo, really.

‣ Investors‣ Traditional Publishers‣Advertisers‣Partners


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Conversion rates show steady declineOverall percentage of paying gamers drops from 5.5% to 0.5%

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Title A


Monthly conversion rate for City Building social game in Germany

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Top spending audience double ARPPUAggregate trend belies 73% growth in key segment

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Monthly ARPPU for City Building social game in Germany (title A)

Top 10% Spenders

Middle 40%Bottom 50%

Total

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Title’s ARPPU outperforms market Throughout 2011 ARPPU consistently €1 above market average

ARPPU

Industry AverageTitle B

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One-on-one comparison of a single title (City Building) with its industry benchmark

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On track to meet industry engagementGap in number of average purchases slowly closing

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Industry Average

Title B

Average Number of Purchases per User



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Transaction value drops 53% since JulyOverall market increases from €0.88 to €1.59 in same period

Average Basket Size, €

Industry Average

Title B

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German ARPPU increases €10 in 2011Both City and S+C genres show healthy growth in average spending

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Strategy + Combat


Monthly ARPPU by Social Game Genre in Germany

City Building

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City building genre doubles purchase sizeS+C games show U-shape trend for average basket size

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City BuildingStrategy + Combat


Average Basket Size per Purchase (€) by Social Game Genre in Germany

low: €6.47

high: €13.50

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Engagement with S+C jumps mid-yearAvg. purchases for city building games decline from 3 to 2 in 2011

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Strategy + Combat


Average Number of Monthly Purchases by Social Game Genre in Germany

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Brazilian engagement grows 179 percentGermany shows waning appetite for city building games, losing 57%

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Germany


Average Number of Monthly Purchases for City Building Games

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Brazilian spending halves in 2011German spending jump mid-year by 153% and stabilizes

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Germany

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Average Basket Size per Purchase for City Building Social Games (€)

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Indirect payments average €3.35Partnering with one offer provider or another can mean a big difference

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Industry Average

Deal United

SponsorPay


Average Basket Size for Social Games facilitated by Offer Providers (Germany, €)

€0 €2 €4 €6 €8

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Mobile payments average €6.83Service providers show €1.87 difference for same type of transactions

Industry Average

Boku

MoPay


Average Basket Size for Social Games facilitated by Mobile Payment Companies (Germany, €)

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Case StudyWhat are your strengths and weaknesses?

Metric CurrentCategory

BenchmarkConversion 1.0% 1.33%ARPDAU $0.01 $0.046ARPPU $1.48 $3.72Session Length 15 minutes 12 minutesSessions Per Player 1.5 2Retention

1-Day 21% 30%7-Day 6% 30%

Example Scenario


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Case StudyWhat are your strengths and weaknesses?

Metric

18 to 24 Male + Female

25 to 34Female

35 to 44Female

ARPPU $2.62 $4.93 $4.90

% of Users Spending over $25 in 1 month 1.0% 2.4% 5.2%

% of Users Making multiple purchases in 6 months 54.6% 55.3% 43.6%

% of Users Making multiple purchases in 1 month 5.8% 12.0% 5.2%

Earnings metrics for strongest audience segments

Industry benchmarks are adjusted for game genre and geography. Industry benchmarks based on sample of 772,958 transactions.


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ConclusionLiving outside the box means


‣Living in an accessible market‣New set of demands‣A constant evaluation of your and everyone else’s performance

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Thanks!Contact info


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Economics of Living Outside the Box

Business

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