Free to Play Games

Free to Play Games
VI R TUA L EC ONOMI ES
BY TEUT WEIDEMANN
CONSULTANT ONLINE ENTERTAINMENT
Please do not put online for download without my permission. If you
use parts of this presentation please quote me as the source
[email protected]
Who is Teut Weidemann
 Working on Games since 1981
 Professional since 1987
 Over 70 titles on C64, Amiga, Atari ST, PC, Consoles, Online …
 Specialised since 1996 on online games
 Jobs: Graphic Artist, Programmer, Designer, Development
Director, CEO, CTO
 Now consultant for Online Formats
 Also teacher at Film Academy Ludwigsburg
 Companies: Rainbow Arts, Softgold, Lucasfilm Games,
Microsoft, Wings Simulations, Jowood, CDV, UBISoft
SLIDE 2 - 26
Teut‘s Oldies … 1987-1990
Katakis, Denaris, Turrican, Spherical, X-Out, MUDS, R-Type, Rock‟n Roll, 60 more
SLIDE 3 - 26
My „Serious Games“ …
And some more …
SLIDE 4 - 26
Teut‘s Classics … 1997-2009
And 20+ more
SLIDE 5 - 26
Teut‘s New … 2010 - ????
www.diesiedleronline.de
www.nadirim.com
 The Settlers Online for UBISoft/Bluebyte
 Nadirim for Digital Reality/Docler in Hungary
 Both free to play
 Both browser based, Flash/Flex „client‟
SLIDE 6 - 26
The Settlers Online
Monetization Strategies
MAKING MONEY WITH A FREE GAME
“F2P NEVER WORKS IN EUROPE”
UNNAMED CEO OF <PUT NAME HERE>
PUBLISHER
2005
Definition: Classic Business
Retail Sale
Buy before you play
Reviews, Demos as guidelines
Risk of returns
Very indirect customer
feedback
System Specs sensitive
SLIDE 10 - 26
Classic Market
SLIDE 11 - 26
Free to Play (=f2p)
No costs involved
free game download
or free access via browser
try before you commit: no costs involved
Low entry barrier
Usually low system specs
Majority are online games (MMO)
SLIDE 12 - 26
F2p Business Overview
13
SOME FOUNDATIONS
Business model
 Unlimited free play
 Dual currency system:


“Coins” are earned by game mechanics
“Gems” are bought for real money
 Coins are used for trade and production
 Gems can be spend in the item shop
 „Achievements“ earn gems too (fair play)
SLIDE 14 - 26
Soft Currency
 Part of your virtual economy
 Earned by game mechanics



Quests
Achievements
Monster kills
 Spend on game mechanics



Repairs
Trade
NPC sales
 Will be affected by inflation on elder servers
 Is not convertable into hard currency
SLIDE 15 - 26
Hard Currency
 Bought with real money
 Earned in very small quantities



Quests
Achievements
Monster kills
 Spend on virtual items



Itemshop
In Game Monetizers
Services & Comfort
 Only „drops“ influences economics
 Is sometimes convertable into soft currency
SLIDE 16 - 26
Why 2 Currencies
 Business depends on hard currency
 Should not be prone to inflation

Userbase is chaotic system, don„t depend your business on it
 Drop Rates & Sales are 100% controlled by you
 Metrics key to success: hard currency has to be
tracked 100% and id„ed accordingly
 Note: global currency for all games = bad idea


Thats why Facebook Credits might hurt the business
It happened in the past (Compuserve vs. Genie vs. AOL)
SLIDE 17 - 26
Hard Currency Sales
18
ITS NOT AS EASY AS IT SOUNDS
BUT ITS ALL OUT THERE
GOOGLE IS KING
This is how its done*:
19
Image from www.grepolis.com
SLIDE 19 - 26
20
$ Packages
 This fits even 800x600!
•2,5,10,20,50,99€ packages
•Scaled hard currency
amount
•List advantages of larger
packages
•Show older expensive
prices
•Do not page/scroll
•3 click buying process
Image from www.grepolis.com
21
Payment Options
 The more the merrier!
•Depending on choice they
witch
•Depending on country
they change
•Not all options are
available:
•
•
1.99€ is SMS only
4.99€ can be T-Pay only
•Reason: Costs of payment
system influence your
packet sizes
•Adding payment systems
doesn‟t cannibalize others!
Image from www.grepolis.com
22
Other stuff
 The small stuff
•Country selection
•
•
People do travel!
Note the https symbol
•Progress indicator
•Other options
•
•
•
•
Friend invites
Link to Payshop
Explanations
Other services
•Service & Faq
•Users have to TRUST your
shop & service to pay!
Image from www.grepolis.com
1.
2.
3.
4.
5.
6.
7.
8.
9.
Integrate into webpage!
No pop up!
Not inside flash!
https!
This is a service page!
No advertising!
Less clicks=win
3 clicks maximum
Each additional click
costs you 30% users!
10. Metrics!
11. Metrics!
12. A/B Tests
Image from
www.ikariam.com
23
Payment Systems
 Each country has favourite ones
 Each country has specific ones
 Adding payment systems do not cannibalize others
 Support is key to success
 Thats why:
 Your provider has to be in the same timezone
 Has to be flexible with the UI (no ready made box)
 Has to be international (Europe, Eastern Europe)
 (in other words don„t use US only providers)
SLIDE 24 - 26
FREE Advice!!!!
 Use Global Collect for most payment options
 Use MoPay for SMS payments
 Use InFin for Landline Payments
 Thats it!
 Covers 95% market and are proven experts
 Europe, Russian Territories, Arabian Countries, Turkey, etc.
 They aren„t the cheapest, but thats not important!
 Service is!
SLIDE 25 - 26
Definitions
26
o
Churn Rate: how many leave per month
o
Reg to Active: How many play* after registering
o
*Active User Definition: returning after first day and first login, definition varies
o
Active to Pay: How many actives pay = Conversion Rate
o
ARPU: Average Revenue per User (total revenue/active users)
o
ARPPU: Average Revenue per Paying User (total revenue/paying users)
o
CPA/CPL: Cost per Acquisition/Lead (of user)
o
LTV: Lifetime value (total revenue per paying user over his lifetime)
o
PCCU: Peak Concurrent Users
o
MAU/WAU/DAU: Monthly/Weekly/Daily active users
SLIDE 26 - 26
User Flow
Visitors
Churn Rate
Registered
Active
Pay Users
Conversion Rate
Revenue Distribution
50% of your revenue
comes from „high
rollers“ or „wales“
These Users need
special attention
„VIP“ flag needed
through all services
Total Revenue
90% of
Pay Users
10% of
Pay Users
Number of users is key to success
o Revenue = Active Users*Conversion Rate*ARPPU
Target
Responsibility
Turn Around
Active Users
E- Marketing
24 hours
ARPPU
Pay Item Design
1 Week
Conversion Rate
Game Design
1 Month
Retention
Game Design
1 Month+
o Printing Money?
o If ARPPU or LTV > CPA of paying users
SLIDE 29 - 26
Market Size & Forecast ARPU(!)
Source: IDATE Sept. 2008
SLIDE 30 - 26
Sample Business Case
1 Million registered users
Reg to Active: Churn rate varies (we assume 60%)
400.000 Users left
Rule of Thumb: 5%-15% Users pay
5%: 20.000 paying users
15%: 60.000 paying users
ARPPU 15€: 300-900 thousand/month (ARPU: 0.75-1.5€)
ARPPU 30€: 600-1.8Mil per month (ARPU: 2.25-4.50€)
SLIDE 31 - 26
User Attributes
o Anonymous
o Can leave anytime (low stickyness)
o Usually brings 0.5-2 friends with him (6-8 on Facebook)
o Once he pays, he pays even more (package selection)
o Paying users spend hard currency within days
o Most users come from countries we are not used to make
business in:
o
o
o
o
o
Low average income
Low or evolving internet infrastructure
Low system specs
Can‟t afford PC or consoles
Usually play in internet cafes
SLIDE 32 - 26
Browser Game Countries
o
o
o
o
o
o
o
o
o
Turkey
UAE countries
GUS states
India
Brasil
China
Poland
Phillipines
Malaysia
SLIDE 33 - 26
Consequences
 Low System Specs & Software requirements
 Localization (or better Culturization) important


Successful f2p games localize into 25+ languages
Thats where US companies FAIL
 Game Content compatible with alien cultures (Muslim,
Asian)

No pigs, cows, alcohol, owls, events on Christian holydays etc.
 Free to play with item sale model (not fremium)
 Special payment systems

Specifics of Turkey (ePin), Russia (no CC, no accounts)
SLIDE 34 - 26
Monetization Strategies
35
BASICS
EXAMPLES
ODDITIES
HTTP://WWW.GAMASUTRA.COM/VIEW/FEATURE/6218/
PLAYING_WITH_FIRE_ETHICS_AND_GAME_.PHP
Item Sales: Overview
 In game economy required
 Monetization by player motivation:
 Players Game Progress
 7 „Sins‟
 Online Role Behaviour
 Item Types
 Retention Strategy (pursue the player to come back)
 Examples
SLIDE 36 - 26
Monetize the player by progression: Acts
Act2: Mid Game
 Comforts
Act1: Early Game
 Specialization
 Time Accelerators
 Leveling
 Startup helps
 Socialization
 Power buffs
Act3: End Game
 Elite Items
 Super Powers
 Rare Items
Monitoring the player: Best buy offer for his current needs
SLIDE 37 - 26
Monetize the player by the 7 sins
 Vanity: Showing off socially/posing
 Envy: Desire for friends Possession
 Gluttony: Consume more
 Lust: Instant gratifications
 Anger: Wrath on enemies
 Greed: Virtual Wealth
 Sloth: Avoidance of work
SLIDE 38 - 26
Monetize the player by playing style
 Challenger: Fast Leveling, Achievements, “Raids”
 Trader: Master Trader, Auction House, Resources
 Explorer: Maps, Exclusive Access, Easter Eggs
 Slayer: Better units, faster reactions, comfort battle UI
 Socializer: Gifting, Decorations, Customizations
 Note: Players switch roles all the time!
 Note 2: If your game doesn„t support all roles you suffer revenue
Source: MMO Archetypes by Richard Bartle
SLIDE 39 - 26
Item Sale Types
 Permanents:
 last forever
 May have cool downs
 expensive
 Consumables:
 vanish after use
 one time buff or help
 Cheap
 Immediate Monetization Actions
 Game has direct access to monetization actions right at the moment when needed
 Comfort: monthly premium services ok, but limits ARPU
 Rent: pay per use/day: not a good idea (time pressure on user), only
works for long term rents
SLIDE 40 - 26
Process of Design Items
 Every game mechanic should be thought about to monetize
 Make list of planned items and actions (! Note the difference!)
 Attach attributes for all 3 pillars to each item or action
 Fill in new items to less occupied columns for the 3 pillars
 Make experiments for light, medium and heavy spenders
 Adjust prices and total gems spend
 Compare hard currency spends with your currency prices
 Adjust – Test - Readjust
Source: MMO Archetypes by Richard Bartle, note that players change those roles all the time!
SLIDE 41 - 26
Process of Researching Items
 Play hugely successful f2p games, i.e. Metin 2, Dark Orbit, Grepolis
 Make excel list of all their items in shop and sort them to 3 pillars
 Make list of all payed actions and put them there too
 Don„t forget their pricing
 Repeat for Runes of Magic, Seafight, Farmerama etc.
 Compare
 Ask yourself WHY each item works
 Watch item shops for new items and seasonal/event items
SLIDE 42 - 26
Player Retention Strategy
Hourly Retentions Daily Retentions
 Building
construction
 Gifts & Friends
 Chat &
Communication




Build queue
Daily Offers & Bonus
Production limits
Specialists usage
Weekly Retentions
 Rare & Event zones
 Building upgrades
 Combat
Monthly Retentions
 Wild Zones
 Alliances & Guild Wars
 Expansions
SLIDE 43 - 26
Requirements
 Pricing Strategy: double your initial thoughts
 Lowering prices is easy (and actually is a good marketing tool)
 Raising prices is hard
 Think about item power when pricing them:
 how much does it give?
 Save time?
 Increase luxury?
 Value that to the hard currency earnings per hour
 Accelerated costs in game vs. deaccelerated costs when buying
 Mask real price by odd exchange rates
 Make sure left overs are there when user spends all his money
 Make sure your monetization strategy allows high spending
SLIDE 44 - 26
Odd Examples
45
ODDITIES IN MONETIZATION
OR WHY IST THE WILD WEST OUT THERE
(WORDING BY DAVE PERRY)
THE FOLLOWING ITEMS
ARE
ALL
BEST SELLERS!
Wedding Ring
46
Item Attributes
 Allows closer
socialization with one
player
 Offers advantages like
more XP, teleportation to
partner etc.
 Divorce costs ten times
as much
Metin 2 Wedding Ring
Shit
47
Item Attributes
 Allows to throw it on
other players
 Everyone sees you dirty
 Cleaning takes a days
or …
 … a pay item ;)
Shit
No picture
given ;)
Mute
48
Item Attributes
 Allows to mute a player
from chat for 24h
 Everyone sees YOU did
it
 Saves moderators
 And the users even pay
for it!
Mute button
Out of Client Modules
49
OOC
HERE IS WHERE MOST DEVELOPERS FAIL
BY
UNDERESTIMATION
Landing Pages
50
 Various LP‟s for various




countries, Biz Dev
partners or markeitng
events
Ultra fast Loading speed
Advertises what your game
is all about
In VERY short steps
Task: Lead user to register
SLIDE 50 - 26
Community Pages
 Localized CP‟s



51
Requires CMS (!!)
Imagine posting to 25 languages
At the same time
 Service Portal!
 Here you communicate to active




users
No Flash! (loading times)
No sound! (office browsers)
No Advertising! (but your own)
Task: engage the users within
your community
SLIDE 51 - 26
Forum
52
 Use industry standards

i.e. vBulletin, nothing else
 Forum Web Server and DB
Server on their own
machines
 Establish a common login
for game & forum
 Forum CM is not as easy as
it sounds!
SLIDE 52 - 26
Community Management
 Is NOT support!
53
 Lead CM must sit in your




offices
Honest, direct, immediate
communication to your users
is KEY
Even if its bad news
Train your CM
he is worth thousands of
marketing dollars!
SLIDE 53 - 26
Payment Systems
 Support as many as possible
54
 Research what big (European)






companies support
Do not underestimate this point
Secure transfers
Rollbacks
Accounting
Fraud
P.s.: Bigpoint has 160+
payment systems online
SLIDE 54 - 26
Support




Ticket System
Rights system
Intl. support
Support actions





55
Reimburse items
Check player game status
Check player payment status
Check player support history
Includes bans, mutes, etc.
 Support actions needs to logged
 Knowledge base key
 Other problems needs to be
escalated
SLIDE 55 - 26
VIP Support
 Ticket System auto




56
priorizes VIP‟s
Turn around time less
than 12 hours
VIP‟s receive special
treatment
See Pokersites, they do
this since years
Btw, Wales, ask Zynga …
SLIDE 56 - 26
Maintenance & Monitoring
 Prevent downtime
 Every hour DT costs €
 Altert system to your IT staff
57
24/7 (pager, sms etc.)
 Do not think your provider
can do this
 Most problems are software
based
 Most problems occur when
you‟re out of office
(Murphies law)
SLIDE 57 - 26
Maintenance & Update Deployment
58
 Fixed Maintenance day
 Wednesdays (or Thursdays)
 Mo-Tue is a bad idea, Fr is
even worse
 Do not underestimate time
needed for deployment
 Deployment strategy is KEY
for stable versions
 Without Perforce you WONT
be able to do this
SLIDE 58 - 26
Life Team – Dev Team
 Life operations draws time
 You won‟t have time for other





59
stuff
i.e. further development
So you need 2 teams
Shared resources are ok
Sizes vary over time as game
matures
Do not underestimate
requirements & demands from

Marketing, BizDev, Support,
Community Management,
Users, IT
SLIDE 59 - 26
Business Development (BizDev)
60
Sells your game to media
But you operate it
On your servers
White labeling needed
BizDev can generate millions
of users
 Deals vary from CPA/CPL to
lifetime share
 BizDev partners do not cost
money initially!
 They are only payed on
success





SLIDE 60 - 26
E-Marketing
61
 Your key to acquire users
 Traditional marketing




won‟t work
Banners are out
Forget magazines
You can acquire users
without leaving your
offices – world wide
SEM, SEO is key
SLIDE 61 - 26
Player retention strategy: Updates & Expansions
 Plan for bi-weekly updates
 Major expansions every 1-2 months
 using sliced economics*
 High update frequency means
 2 Teams: Life & expansion team needed
 High Performance Version Control (Perforce)
 Users need to see the „service“
 Mini Expansions weekly (items, events)
 Ever expanding game means users will stay
 Be careful however with major gameplay changes
 As users always will complain
SLIDE 62 - 26
Hacks & Exploitation
Players will find potential exploits,
all the time
They exploit as its „just“ a game
Guaranteed - at 70k active users
It will harm your business
So you need to protect yourself
Process needed
Alert System needed
SLIDE 63 - 26
Q&A
Contact me:
on Facebook
or Twitter (Teut)
or LinkedIn
or Xing
or ... simply [email protected]
SLIDE 64 - 26