Free Player Retention Guide Get Now
Most mobile games are free to play and rely on a mixture of ad revenue and in-game purchases to make money. Because these revenue generation strategies depend on accumulating numerous small transactions over a long period, game companies must find ways to maximize game lifetime value to ensure their games are profitable.
Key Takeaways:
Lifetime value measures an individual player’s value from the time they onboard to the time they churn. The higher the average LTV of your players is, the higher your game’s total value is.
There is no one set formula for calculating lifetime value. Game companies choose their formula based on factors such as genre, audience type, data availability, and competitor benchmarks. LTV is generally easier to calculate for companies for which the main revenue source is in-app purchases rather than ads.
A simple formula is LTV = ARPDAU x User lifetime
This straightforward example multiplies the average revenue generated by daily active users by the average user lifetime to estimate LTV. You can make your LTV formula as simple or complex as you want, but once you pick one, stick with it so that you can compare how it changes over time.
Four main factors influence LTV.
Because players usually don’t pay an upfront fee to play free-to-play (F2P) games, most F2P game revenue comes from microtransactions and ad revenue. To earn a substantial profit from these revenue streams, you need players to play for as long as possible. Retention measures the percentage of players that continue to play your game over a specific period.
Monetization measures how much money players spend on your game from the point they onboard to the point they churn. Your player’s spending habits and the effectiveness of your monetization strategy influence this factor.
Engagement measures how much time players spend in your game. The better engaged your players are, the more money they are likely to spend.
Virality, also called the K-Factor, measures how many additional users each player brings to your game. The more users your existing players recruit, the lower your cost of acquisition is, which increases your profit margins and lifetime value.
There are several steps you can take to maximize your game’s LTV.
While even non-paying players can generate ad revenue, for most games the biggest spenders generate the majority of a game’s revenue. This makes it important to target your user acquisition campaigns to players you project will spend the most money on your game.
You can improve your player acquisition efforts through targeted advertising and influencer partnerships. Convert high-quality users into paying customers by optimizing your onboarding process to ensure it is simple and quick, and involves as few steps as possible.
Encourage your best customers to recruit their friends, family, and social media contacts by integrating social sharing options and rewarding players for referrals. Deploy your game across as many popular platforms as possible to increase your potential user base.
There are almost 9 million smartphone apps worldwide, and average users have 40 apps installed on their mobile devices. However, smartphone users spend 88% of their time on just five of those apps. Increasing engagement boosts your game app lifetime value by ensuring that your game becomes one of that coveted top five.
Optimize your game and your user acquisition strategy to encourage long-term engagement. Keep adding new content for high-level users so they don’t run out of things to do and quit. Offer loyalty programs to re-engage lapsed users and encourage long-term players to stick around.
Make your game as addictive as possible and keep adding new features and other content to prevent boredom. Consider adding meta layers to add variety to your game, attract a broader audience, and introduce monetization opportunities.
Find pain points that may lead to player churn, such as challenges that are too easy or too hard. Identify struggling players and offer them help through hints, tips, and power-ups. Smooth out the difficulty curve if you notice a lot of players are quitting at certain places in your game.
Experiment with different types of monetization, such as in-app purchases, advertisements, and subscriptions to improve your game lifetime value. Offer discounts to encourage first-time purchases and re-engage inactive users. Price your offers correctly and provide real value to users.
Consider adding rewarded video ads. Rewarded ads boost engagement, ARPDAU, and retention rates and cost less money than interstitial ads.
Players are constantly generating useful data. Take advantage of it to identify which users have the greatest LTV and where and how you found those users so you can target your acquisition efforts toward finding more of them.
Compare your LTV to your customer acquisition cost to ensure you aren’t over- or underspending. Your average LTV should exceed your average CAC to produce a positive return on investment.
Use the insights you gain from your analysis to target special offers to different player segments. For example, you can create offers specifically designed to encourage players to make their first purchase.
Sonamine offers engagement, monetization, and retention services to achieve your game lifetime value goals. We can help you with live events and engagement campaigns to ensure players always have fresh content, convert non-paying players into paying players, encourage repeat purchases, prevent churn, and more. Contact us today to get started.
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For a limited time until December 2024, Sonamine is offering a 60 day money back guarantee to OneSignal customers. Come experience the ease and simplicity of the First Time Spender Nudge package and watch your conversions soar.
