Premium on Mobile Today

Premium is making a comeback! Or at least some people hope so..

There are a few companies with an interest in keeping premium alive. That might be good for indie developers.

As everyone knows, the mobile market shifted to free-to-play (F2P) games a few years ago. Back in the Angry Birds era, people seemed happy to pay $0.99 for hours upon hours of entertainment in their phone. Then, a few years later, everyone collectively realised that paying such princely sums for mere entertainment is clearly unreasonable – at least before they thoroughly get to test play the game before being asked to pay. During 2011-2013, the market shifted so quickly that by the end of 2013 between 90% (iOS) and 98% (Google Play) of the revenue was from F2P games.

Since then, there have at times been talk about the comeback of premium. Unfortunately, the data does not support that claim. When looking at the top charts, things have moved even more clearly in the direction of F2P dominance. The current top-100 grossing chart on iOS is 99 F2P games, and Minecraft. It has been pretty consistently like that for the past 2 years. Some hit games that have an existing brand outside of mobile (Console titles, Steam titles, etc.) can briefly make it to the top-100 list – think 5 Nights at Freddy’s or Grand Theft Auto. But the only one that has stayed there is Minecraft.

On Google Play, it’s even more clear. The top grossing game without IAPs today is This War of Mine at position 269. The next is GTA San Andreas at position 363, Geometry Dash at 416 and Star Wars: KOTOR at 431. Of these 4 that are in the top-500, only Geometry Dash was a mobile-first game. That is, one single pure premium mobile first game in the entire top-500 grossing list. the others who got there without using IAPs all had brands from outside mobile.

The best premium games today can make revenue of some millions of dollars. This is for games that get selected by Apple as Game of the Year, such as Monument Valley and Badland. While that is by no means bad, these games also required a lot of talented people to develop. For instance, Monument Valley cost $1.4 million to develop, and generated $5.9 million.

That’s a bit more than 4X return on investment. And that’s the best that you can hope for with this model. In practise, it means that every 4th game that you make needs to be Apple’s Game of the Year.

No investor who can count is going to put their money on such a business. Which means that if your company has VC money, you make F2P games. No discussion! Which in turn might open up some opportunity for indie companies.

You see, there are some companies who would still like to see premium succeed. Apple for one. They are a very premium company and the pay-once-up-front model appeals to them. Premium apps also have the upside that they increase the cost of switching between iOS and Android phones. Your F2P game can be downloaded for free on the other platform, and often you can just keep on playing as if nothing happened. With a premium game, you have to pay again – thus raising the barrier to switching.

Closely allied with Apple in the quest to rescue premium on mobile is the games media. The people who write for games media are often hard core gamers themselves (otherwise, how would they have ended up in that job?). And hard core gamers usually don’t have warm and fuzzy feelings about F2P monetization. In addition, it’s just in their self interest to promote premium games. After all, if I’m required to pay up-front with real money for a game, I want to at least read a review before paying. Which gives games media an audience and a revenue stream. If, on the other hand, I am curious about a F2P game, I will just try out the game instead of reading a review. Goes a long way towards explaining why lots of the top grossing F2P games are completely ignored by the likes of And also why TouchArcade is in financial difficulties as a result of the rise of F2P:

For a large game company, the strategy is clear: develop only F2P games. For a small indie, there might still be a niche for premium. You know you won’t be competing with the big budget companies, and you also know that you have a few good allies if you do premium. A tradeoff of a way smaller best case revenue (by a factor of almost a thousand) versus much less competition could still make it worthwhile. Just remember to keep your budget reasonable. And you might still end up like Zombie Match Defence, if you don’t get a good featuring by Apple.

Or, you might have tremendous success, like the guys who did The Room. They’re another game of the year, though.


Even more reading about the topic:

I’m on CNBC!

CNBC make a short article about the Finnish tech industry – games in particular – and interviewed me for it as well. Over here:

And, I’m pretty sure Tero is ironic in his commentary:

Going Global

Apparently, this blog is attracting quite a global audience. It’s getting read by a few hundred game developers every week quite consistently so far. And have a look at the map – you come here from just about everywhere in the world. Readers in over 40 countries so far!

Thanks and enjoy!




The Top-100 SDKs you should Integrate into your game

This is about tools and 3rd parties.

There’s a lot of tools, third parties and support companies you need to worry about when building your game. Here’s a brief explanation of who they are and what they do. Unfortunately, a lot of them come with their own SDKs (Software Development Kits) that you need to put into your game.

Let’s start with the platform SDKs. iOS, Android, Windows, Steam and the others will, of course, have their own ways to do lots of things. There are Game Centers of various sorts for social features, billing systems for In App Purchases, and ways to access their unique hardware features such as Apple’s 3D touch on iPhone. A lot of these things are mandatory, and some are just good ideas if you want to be friends with the platform owner – which you likely do.

Next up are Ad Networks. There’s quite a number of these, and they can be used both for advertising your game, as well as advertising other things in your game. That is, you need to integrate the Ad Networks both when you want to spend money on ads and when you want to make money on ads. In both cases, you will want to have several competing Ad Networks integrated.sdk

The problem of multiple Ad Networks has led to two more SDKs that you need. When you are spending money on ads, you want to be able to track how much traffic you are getting through which Ad Network, and how those customers behave once they start playing. For this you need tracking SDKs such as Fiksu, AppsFlyer or Adjust.

If, on the other hand, you want to make money from ads, you have a related problem. Which Ad Network will pay you the most – and be able to fill all ad requests your game can make. For this, you should have a so called “waterfall” through a mediator. You first ask the highest bidder for an ad. If they do not have one, you ask the second highest bidder, then the third, etc. down the line. Who is the highest bidder will vary constantly and depending on what country the player is in. It will really pay off to have someone optimize this for you. Some of the Ad Networks, such as Heyzap and Google, will offer this mediation service in addition to their ads.

Next up, you want to know how your players behave in the game. For this, there are a number of analytics solutions such as Game Analytics, Omniata and DeltaDNA. You can find an overview of them here:

Some testing tools, such as the fabulous PlayTestCloud, also have their own SDKs.

Then you will need to integrate towards social networks to get players to invite their friends and thus help make your game more viral. Facebook, Twitter, Instagram and others are in this category. Some also allow your players to record in-game video and post that for others to see. Unity Ads is one of these services. And last, if you find that there are too many social networks to integrate, you might use GetSocial to integrate them all in one bundle.

Some recent addition to the SDK world are the various innovative ways to earn money other than straight IAPs or ads. There are SDKs to let kids ask their parents (or grandparents) for gifts of in-game money. And there are SDKs that let players earn real-world prizes for in-game achievements. There is Creel that links you in-game money to real-world loyalty points (airlines, etc). And there are SDKs that let people bet real money on who is better at mobile games (Gumbler, Skillz, CashPlay, etc.)

Last, you might want to use a publisher to market your game. They also often come with their own SDKs. They might use them for cross promoting between games in their portfolio or for some multiplayer features.

I’m sure I’ve forgotten about some really crucial SDKs here. And rest assured that there are a number of startups inventing new ones as you read this. Just try to think through which ones are really necessary for you, and which you can safely leave out. If you integrate all of them, your game is bloated by all these 3rd party SDKs. You need to constantly upgrade the game just because of changes to SDKs, and your package size might go over the limit of what the App Store allows without demanding a WiFi connection. And if you leave out too many, you might be missing the crucial features that can make your game successful and profitable.

How to increase your ROI by 100,000 X in 5 easy steps

Ad -> AppStore -> Tutorial -> Retention -> Monetization

This post will be about the whole journey of the player, from hearing about your game for the first time, until they are a happily paying customer. There are a hundred nice ways to lose them along the way. The good news is that you can see where they got lost, if you just remember to keep an eye on your players. There’s a funnel from and ad, to the App Store, through the tutorial to retaining the player for a longer time and eventually converting them to a paying customer.

When you are testing out your game, likely in some cheap and cheerful place far away from home (to make sure you’re not measuring your friends), an ad is the first thing the new players are going to see. Advertising is already a science in itself, and you will likely see more than 10x differences between your good ads and your bad ads. I suggest you try out a few different formats on e.g. Facebook and Unity Ads to see what you can get.

At the soft launch stage, when you are only spending a few thousand dollars, you do not need to optimize every last percent out of your ad efficiency, but it is nice if you can spend 1 500 dollars instead of 15 000 to get your first measurable users. On one of our games, we had to pay over 5 dollar per install with one ad, but got under 50 cents with a few tweaks that only took us hours. For one game, Facebook was clearly cheaper, while another got cheaper traffic from Unity Ads. The difference was from 6 dollars, down to 40 cents.

Once you have the ads up, players will be landing on your App Store or Google Play page. I suggest using Google Play during the soft launch phase simply because it’s faster to get new versions of your game published when there is no review process. At this stage, your gameplay video, game description, icon and screenshots will determine whether people who view you Google Play page actually download the game. Happily, Google Play is also trackable nowadays. One early test we did there only got 2% of players who landed on the page to download the game. Another got up to 40%. Again, the difference between a good and a bad version is huge. 20X for us.

Once the players have downloaded the game, they are, of course, greeted by your tutorial and first game session. This too is the subject of it’s own article. Suffice to say, that there is again a more than 10X difference between an OK tutorial and a good one. On our Benji Bananas game, we measured a 40X improvement for the early game retention during the soft launch phase.funnel

When people have cleared the tutorial, we get to the longer term retention. As I explained in an earlier post, this is the most important number that you should track. A bad game has just about 0% 28-day retention. An OK game will likely have a 28-day retention of only a few percent. A really fantastic one can even get above 20%. The difference here is at least 10X, but probably more.

Last, you want to get your players to pay you. That happens only at the very end of this funnel, and with your most ardent fans. Again, you will see a large variation between good and bad games. A badly monetising game will have an Average Revenue Per Daily Active User (ARPDAU) of less than a cent (yes, we’ve been there), while a good one can get above 10 cents. Once more, the difference is more than 10X.

In summary, this allows you to see very clearly why there is a huge difference between the games that make money and the ones that do not. To calculate the return on investment from ad spend to revenue, you need to factor in all parts of the funnel above. If we have five stages, where each can easily vary by 10X-50X, we get a variation of between a hundred thousand and half a billion. Goes a long way to explaining the difference between the top grossing revenues, and the poor indie games that make hardly any revenue. Some indie releases get only a few dollars in revenue over their lifetime, while the top grossing games have generated up to a billion per year for several years.

Go have a look at your funnel, and figure out exactly where you could do better to know what you should improve.

The $100,000 you need to prove that your game works


LifeTime Value is larger than Cost Per Install. That’s the golden formula for making money. When you have that, you can spend $3 on advertising to get an install, then wait for the player to spend $4, pocket $1, and spend the remaining $3 to buy another customer. In short, you have a loop that prints money. To prove that you do have that, you will need a minimum of $100,000. Here’s why:

Let’s start with the LTV part. Measuring your life time value is a not trivial. Here’s a short overview of how you can do it:

The challenge for an indie developer is that you need a significant amount of traffic to be able to measure that number reliably. Say you want a 1 000 paying players to have a good sample. Say you have 3% paying customers among your players (which should be considered quite good). To get a sample of 1 000 payers, you will need 33 thousand downloads for your app (1 000 / 0.03).

The other part of the equation is the cost per install, CPI. This varies according to type of game, and which country you are advertising in. To get good paying customers, you will need to choose a developed country to run your test in. Western Europe, Canada, or Australia might be good candidates, and those countries are expensive. A typical CPI at this point might be $3.


Now we are ready to sum up: 33 thousand downloads at $3 per download will cost you $100,000. And that’s for a single measurement of LTV with a decent accuracy. Unless you are a F2P monetisation divinity (or very lucky), you will need to do this a few times to get everything optimised.

This is where an indie developer needs a good publisher or a VC investment.