ABOUT
Mi ke H i n e s
AmazonAppstore@MikeFHines
Founder@2FinancialServicesStartupsFounder@2SoftwareStartups
QAEngineer@NowSoftwareQAManager,ProductManager@[email protected]
Mentor@GameFounders,DevBootcamp
GamesJudge@CasualConnectIndiePrize,WhiteNights,andPocketGamerVeryBigIndiePitch
Speaker@GDC,GDCE,CasualConnect,PocketGamerConnects,AnDevCon,WhiteNights,CES,PAXDev
iPHONEiPAD GOOGLE PLAYAMAZON
47.7%57.1% 36.5%64.2%
66.0%
26.3%
7.7%
SHAREOFMOBILEGAMESPENDERSPERAPPSTOREUS,UK,GER,FR2014
LEVELOFSPENDINGAMONGSTALLMOBILEGAMESPENDERSPERAPPSTOREUS,UK,GER,FR2014
56.3%
34.9%
8.7%
64.9%
28.2%
7.0%
58.1%
33.1%
8.1% %MinorSpenders
%AverageSpenders
%BigSpenders
©2014Newzoo |Source:Newzoo DataExplorer
Source:Newzoo TrendReportSpottingTheMobileSpenders
AMA ZON R EACH E S ( B I G ) S P END ER S B E S T
POWER-USERS ARENOT NEW
Well-Known across Industries
Mobile Apps isn't the first industry to recognize the importance of highly engaged customers.
THEY SPEND ON THE THINGS THEY LOVE
Substantial Spenders
When it comes to their passion (whatever it may be), power-users spend more money than the average fan.
KNOWN EARLIER AS THE 80-20 RULE
The Pareto Principle
In 1941, Joseph M. Juran generalized the concept of the "vital few," which he named after Vilfredo Pareto.
CASINOS DEFINED COMMON TERMS
Whales, Dolphins, Minnows
Monetization strategy is segmented, based on different customer experiences at different price points.
Freemium:• Minnows = 90-98% of users• Dolphins = 50% of revenue• Whales = 3-4% of paying users (<0.1% total)
Source: GGV Capital, Feb. 2013 — http://bit.ly/1Ldu5Fu
THE NUMBERS VARY, BUT…We All See Similar Segmentation
• Newzoo: 3.5% of U.S. mobile gaming customers generate 33% of sales
• Google: 1% of U.S. customers generate 14% of monthly sales
• Kongregate: 0.1% of U.S. customers generated 53% of all time sales
Top 1% of customers who spend on mobileSources: Google, Casual Connect July 2014; Kongregate, GDC March 2015
EVERY CUSTOMER HAS VALUE
The Vital Few and Useful Many
Juran originally defined the Pareto Principle as "the vital few and trivial many," but later realized that even non-spenders are important.
They can be:• Potential power-users• Influencers and advocates• Eyeballs for advertising
POWER-USER VS. WHALE"Whale" Has a Negative Connotation of Exploitation
Nicholas Lovell, author of The Curve, differentiates:
• Ethical: Customer spends because they love what you do• Unethical: Customer spends because of who they are
We prefer the term "power-user" to describe the avid hobbyist who loves your work.
WHAT DO THEY LOOK LIKE TO US?
Amazon Appstore Power-Users
• Spend $50/month or more• On average, spend >$200/month• Are concentrated in US, Japan, UK, and
Germany
POWER-USERS ARE LOYAL TO A FEW APPS
Focused Passion
80% of customers who spent $1000 in January, 2015 spent 75% (or more) of that on just two titles.
POWER-USERS LOVE ALL KINDS OF APPS
Candy Crush Saga
MMOs are traditionally associated with power-users, but King has expanded our view of what is possible.
POWER-USERS LOVE ALL KINDS OF GAMES
Game of War: Fire Age
Similarly, Machine Zone has had success in a completely different genre.
NOT ALL IMPORTANT METRICS ARE COMPLETE
ARPU & ARPPU
Averages are most useful when data has a normal distribution (Bell curve).
For example:• Human life-span or blood pressure• Number of petals on a daisy• Cloudy days in Seattle
APP REVENUE HAS HIGH VARIANCEData Points Can Be Very Far Apart and Spread Out
Best-describedbyapowerlaw,inwhichonevalue(suchasrevenue)variesasapowerofanother(suchasrank).Re
venu
e
UserRank
RevenuebyUser
REVENUE DISTRIBUTION INFLUENCES ANALYSIS
Impact on Other Metrics
Optimize the funnel, but look for emergent behavior among power-users and tune those pathways.
• Prioritize features according to monetization segment
• Design separate A|B tests• Identify highest-impact flows
WHAT YOU BUY SAYS SOMETHING ABOUT YOU
Personal Expression
The media you consume expresses who you are, and your emotional connection inspires the willingness to pay.
CONNECT WITH WHO OR WHAT YOU ADMIRE
Stand Out, or Fit In?
Go big: Identify with someone, a broader community, or something that inspires you.
Go small: Establish yourself as part of an elite tribe.
TELL THE WORLD WHY YOU'RE GREAT
Status Update
Highlight your accomplishments or social status. Purchases act as a badge of achievement, or a uniform commanding respect.
UNDERSTAND THE CONNECTION
Emotion & Spending
Knowing why they buy is critical to making your app attractive to power-users—and more importantly, worthy of them.
DESIGN FOR YOUR POWER-USERS
Before
• Foster early engagement• Message at the right time• Keep them in the app• Keep them coming back• Use server-side accounts
LET YOUR CATALOG SUPPORT THEIR DESIRES
During
• Self-expression / aesthetics• Ability• Status / collection• Money for time• Price distribution
Source: Amazon Appstore, March 2014
31%29%
7%
12% 11%
5%3%
1%
14%11%
6%3%
16% 16%
11%9%
0%
5%
10%
15%
20%
25%
30%
35%
$0.99 $1.99 $2.99 $4.99 $9.99 $19.99 $49.99 $99.99
% of Assortment % of Sales
ASSORTMENT BY PRICE POINTTotal Marketplace
28%
15%
10%13%
11%9% 9%
5%
32%
19%
7%4%
10%12%
5% 4%
0%
5%
10%
15%
20%
25%
30%
35%
$0.99 $1.99 $2.99 $4.99 $9.99 $19.99 $49.99 $99.99
% of Assortment % of Sales
Source: Amazon Appstore, March 2014
ASSORTMENT BY PRICE POINTTop 50 Only
GROW WITH THE CUSTOMER
After
• Understand price sensitivity• Expand your catalog (keep it fresh)• Limit price points to clarify value• Treat all customers well!
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
1 4 7 10 13 16 19 22 25 28
Source: Amazon Appstore, July 2013
Days Owned
+60%
averageselling price
REGULAR CUSTOMERS SPEND MOREPrice Sensitivity Declines over Time
GROW WITH THE CUSTOMER
After
• Understand price sensitivity• Expand your catalog (keep it fresh)• Limit price points to clarify value• Treat all customers well!
69%
100%
145%
0%
20%
40%
60%
80%
100%
120%
140%
160%
1-5 Items 6-10 Items 11-15 Items
Source: Amazon Appstore, March 2014
# of In-App Items for Sale
ARPPUINDEX: Average = 100%
SELECTION DRIVES REPEAT ORDERSMore Is Better
GROW WITH THE CUSTOMER
After
• Understand price sensitivity• Expand your catalog (keep it fresh)• Limit price points to clarify value• Treat all customers well!
Conversion Rate
INDEX: Average = 100%
DON’T CONFUSE YOUR CUSTOMEROFFER VARIETY, BUT NOT TOO MUCH
Source: Amazon Appstore, March 2014
147%
101%
52%
0%
50%
100%
150%
200%
1-5 Price Points
6-10 Price Points
11-15 Price Points
GROW WITH THE CUSTOMER
After
• Understand price sensitivity• Expand your catalog (keep it fresh)• Limit price points to clarify value• Treat all customers well!
iPHONEiPAD GOOGLE PLAYAMAZON
47.7%57.1% 36.5%64.2%
66.0%
26.3%
7.7%
SHAREOFMOBILEGAMESPENDERSPERAPPSTOREUS,UK,GER,FR2014
LEVELOFSPENDINGAMONGSTALLMOBILEGAMESPENDERSPERAPPSTOREUS,UK,GER,FR2014
56.3%
34.9%
8.7%
64.9%
28.2%
7.0%
58.1%
33.1%
8.1% %MinorSpenders
%AverageSpenders
%BigSpenders
©2014Newzoo |Source:Newzoo DataExplorer
Source:Newzoo TrendReportSpottingTheMobileSpenders
AMA ZON R EACH E S ( B I G ) S P END ER S B E S T
MORE WAYS TO MONE T I Z E
PREMIUM ADS SELL T-SHIRTSGET PAID FOR EVERY MINUTE OF APP USEIN APP PURCHASE
POWER-USERSThe Upshot
• Power-Users drive revenue
• Any user may become a power-user
• They spend on what they love
POWER-USERSThe Upshot
• Plan for themEngage early; don't distract; keep them coming back
• Support their (emotional) choicesSelf-expression; collecting; status; advancement; optimization
• Grow with themKeep catalog fresh; clarify value; offer several price points
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