Building successful monetization and growth strategies (GDC 2019)
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Building successful monetization and growth strategies (GDC 2019)

August 11, 2019

SARAH THOMSON: Hello, everybody. Good morning. My name is Sarah, and for
the last 2 and 1/2 years I’ve been heading up the indie
community on Google Play, and it’s been an
awesome experience. I started as an indie myself
well over 10 years ago, and it’s still my
favorite group of people. I’m a little bit
biased with indies, so you’ll probably
see that come through as I talk to these
two amazing humans. And this morning we
talked a lot about– we had some great talks
run by Googlers and some of our partners who
were talking about improving game quality, and how
can you really maximize your discoverability. And we’re going to
actually kick off into a lot of different
discussions carrying on to build on top of that. So today I have Sam and Mike,
who are two indie developers and publisher, who are
really experts and have seen a lot of success around user
acquisition, which is something that I think a lot of
indies really struggle with. Put your hand up if you
struggle with user acquisition– like, where to even
start, what is it. It’s super overwhelming. And then we also have
Butterscotch Shenanigans here, which are experts around
community-building. So we’re going to talk
about those two things. It’s going to be super exciting. All right. Welcome guys. Thanks for joining us. SAM COSTER: Thanks. SARAH THOMSON: So maybe let’s
start with some introductions. Sam, maybe you can start. Talk a little bit
about yourself, your history in gaming,
about your company, so forth. SAM COSTER: Sure. Yeah. So Butterscotch Shenanigans was
founded about seven years ago by me and my two brothers. And a family-owned business,
which is always a terrible idea I’ve heard, but it’s
working out pretty good. And we’ve launched five games. We started on mobile
and we’ve recently gone more cross-platform,
so our games now reach out onto other
platforms as well, like Steam and console. And a big part of
our strategy has been answering the
question, once we somehow manage to get a
player, how can we just keep that player around? So instead of worrying
about user acquisition in terms of bringing
new people in, how do we keep people with us. And that’s sort of been
what a lot of our focus is, around community management
and that sort of thing. MIKE GORDON: Cool. I’m Mike. I’m the CEO of Iron Horse Games. There’s one person at Iron
Horse Games, and that’s me. I started the company
three years ago. Last year we did 11
million installs, with a heavy amount
of user acquisition. So I do a lot of
marketing myself, a lot of creative
testing, and mostly focus on Idle Game publishing. That’s it. SARAH THOMSON: Cool. So the first obvious question I
want to ask you is, why indie? Why did you choose to
be an indie developer? I think a lot of people
feel it’s harder than ever to be indie, especially
in mobile and increasingly on other platforms. Why did you choose this path? MIKE GORDON: Sure. I can start. It’s personal and professional. So personally, I had worked
at Kongregate previously and helped build up the
mobile publishing business. We’d worked with a lot
of really big teams, and I wanted to get more
hands-on with smaller teams and make an impact
on their games. And that’s been personally
really satisfying. Professionally, I
saw that there was a big gap in the market from
a publishing perspective. From a business
perspective, the way that publishing typically
works if you have success is you build on that success. You have a game, it generates
a lot of money, you market it, and then start hiring on a
team to help build the games bigger, which means that
subsequent games need to be bigger and bigger. And that creates
a snowball effect, and then you look
up after four years and you’re publishing
like two games a year. I never wanted to
do that, and felt that there was a huge
opportunity for one and two-person teams
to really benefit from a lot of the learnings
that the big team had from publishing. So that’s what I set out to
do, and largely what I’ve done. SARAH THOMSON: Awesome. SAM COSTER: Yeah. So on our end, one is that
we really like to make games. In the past we liked
to make them fast. That’s changed a bit. But we started out
doing game jams, and so that sort
of creative freedom you get from just iterating
over a weekend we basically extended into how we
make our games generally. So we have a really iterative
design and development cycle. And on top of that,
the sort of new thing that we do at our
studio is a lot of this really interesting
web tech and web integration with our games. So we built our own
proprietary account system called Bscotch
ID, which is now transitioned into Rumpus,
which is our “powerful back end,” as we call it. [LAUGHTER] And what that allows
us to do is get players into this email system, which
now we have half a million players who have at some
point bought one of our games who we actually have
their email address and we send them emails
basically once a month letting them know what’s
going on at the studio as well as essentially hyping
up whatever our new game is or selling merch
or whatever else. So a big part of
our learnings have come on that side of things. We really wanted to have
the time and the space to explore that
whole aspect of it and see what we could do there. SARAH THOMSON:
That’s super cool. So Mike, I’m going to move
over to you and dive into– you come from gaming. You’re not new to games. But being in this space of
really being this one-man indie sensation, what’s that been
like over the last few years? What’s the learning
curve been like? MIKE GORDON: Yeah. So it’s nice that you called me
a sensation, because it’s not– SARAH THOMSON: Yes. You are a sensation. You are sensational. MIKE GORDON: Thank you. It’s been difficult and good. I think you can
probably relate to this. If you have any
degree of success you start feeling a
little bit nervous that it’s going to go away. So that’s one
element that I deal with quite a bit,
especially when we have a successful business, is
the feeling that it’s not going to be that way forever,
so you stay really scrappy. I think the most important
learnings of the past three years have really been the need
to adapt and do it quickly. When I started Iron
Horse Games, about a year later the app store
did its redesign. If anyone here is a
mobile game developer, you’ve probably seen what
the impacts of that are. And then also there
have been a series of changes on Google Play where
a lot of organic installs that used to kind of
fall from the sky have changed how they
come into your game. They’re all still
there, you just have to figure out a
way to unlock them. For me it was leaning really
heavily into marketing and user acquisition. So when those things
happen you need to pivot, and you need to do it
incredibly quickly, because otherwise
you’re going to wake up and you’re not going
to have a business. I mean, if I didn’t make the
changes that I made to start marketing aggressively
last year– and I had done zero marketing
at Iron Horse before this– I wouldn’t be here today. Period. The business would not exist. SARAH THOMSON: Yeah. So building off of
that and in reference to what we were talking
about a little bit earlier, is that you have really taken
on head-on the concept of user acquisition. And how you started
from square one– you really didn’t
know much about it, and now you’ve acquired this
incredible wealth of knowledge in that space. So how do you do
that as an indie? Where did you even
start with that? MIKE GORDON: Yeah. So, credit to Kongregate
and my time there because– well, I wasn’t actively
doing marketing myself. I was working with
that team a lot and kind of getting an idea
of what that looked like. For the specific way that
I started doing marketing and started tackling
it, the first was algorithm change
rolled through Google Play. Some of my games lost installs
and a lot of the games kept them. So I looked at why the
games who still had installs were continuing to get them. The answer, at least
for me, was that they had a high third-party
referral rate. So I was getting
a lot of installs from outside of Google Play. I inferred that that meant
that the algorithm might be encouraging developers
to market their games, so I started marketing
really conservatively to start on live games. I’d take about 30% of
the projected net revenue for the month, I would reinvest
that into marketing and user acquisition through
sources that I was confident would have
either net neutral– so I wouldn’t lose any money on
them– or ROI positive payback. I mean, this is
not a lot of spend. We’re talking like
$1,000 a month. I monitor the results,
and then as that started gaining
success and snowballing I developed a strategy
around marketing on open beta and then marketing during
launch, which is probably the most important window
that you can market your game in on Google Play. So the first 30 days when you
release your game globally from open beta or
pre-registration, the paid to organic
ratios are insane. Like, normally on a game
that’s live maybe you buy one install on Google
Play and you get one organic. During that launch window,
you buy one install and you get four organics. So knowing how to
market your game and having some experience
marketing your game and then aggressively marketing
during that 30-day window gives you all kinds of
benefits outside of just you’re making money. You can also use
that information to pitch the folks at
Google and say, look, I’ve got a really good
game here and I think you guys should support it. SARAH THOMSON: Right. And you just scaled from there? MIKE GORDON: Yeah. That’s it. I mean, on every game we start
really small in open beta. I’m predominately
spending my budgets on Facebook, Unity, Google
Play, AdWords, Tapjoy, and Iron Source, and some ad action. Those are the big six for me. It’s a mix of display
and video ads, and then as the
game’s net revenue grows we come up with
a monthly budget, and then we spend that
every month at either net neutral or ROI positive. And my games don’t
have massive RPUs. We’re talking like $0.50
CPIs for Western users. So it can be done. I do it every day. I did it this morning. Yeah. SARAH THOMSON: And just one
last question around that. Can you tell me a
little bit about– you referenced the fact that
things change on the store. Right? MIKE GORDON: Yeah. SARAH THOMSON: The way
that games are surfaced and what’s going on behind
the curtain, so to speak, is changing. And that can be
really daunting, I think, for developers of all
sizes, but especially indies. So how has that
been to navigate? What’s sort of your
outlook on that? MIKE GORDON: My outlook
on it is that you guys have a business that you’re
optimizing and growing. So I don’t begrudge any changes
that happen on the store because it’s something that
Google’s heavily invested in, and it’s their right to do
whatever they want with it, to grow it and change
it as they see fit. The way I feel about it
is that it’s terrifying when users start disappearing. But there’s always a signal. So I have a broad data set. I’m a publisher, so I
have 15 games or more. Whenever anything changes I
dig deep to see who the winners and losers were
and try and come up with a hypothesis as to
why they won or lost. But typically
marketing has allowed me to weather most storms. I think if you have a consistent
stream of marketing, whatever is happening with organic
installs on the store, as long as it’s not affecting
that first 30-day window and it’s not punishing
us on the paid to organic ratio for live games,
you can pretty much weather it. You just gotta get
to that point where you’re reinvesting in
marketing on a monthly basis. SARAH THOMSON: And I want
to point out and give a plug for Mike’s talk tomorrow. So Mike, can you give details? If this is really
interesting to you and you want to hear more and
some really specific examples in Mike’s talk tomorrow, where
can they join you tomorrow? MIKE GORDON: That’s
a great question. [LAUGHTER] It’s tomorrow. SARAH THOMSON: Somewhere. MIKE GORDON: It’s
around 2 o’clock-ish. SARAH THOMSON: Here. MIKE GORDON: And it’s at GDC. It’s called “Scrappy Marketing.” SARAH THOMSON: OK. MIKE GORDON: That’s it. SARAH THOMSON: That’s probably
enough information for people to– MIKE GORDON: That’s the title. And it’s a really
good presentation. This sounds like I
haven’t prepared. I’ve prepared. I just don’t know the
specific [INAUDIBLE].. SARAH THOMSON: Awesome. OK. Great. MIKE GORDON: Good time. SARAH THOMSON: So let’s
jump over to Sam here. Thanks, Mike. So you guys have been around
for a number of years now, and doing a pretty good job of
weathering some crazy storms in the indie world, and
you’ve seen great success. So, what’s your secret? How have you managed to do that? SAM COSTER: So I
think it kind of goes back to what you
were talking about as far as the concept of how
do you build a business that is able to weather the various
changes that are happening literally all the time. So while Mike’s taking more
of a marketing approach, ours has been more on
the community engagement side of things. So through that
newsletter system– essentially the
first reason we built that was because we said, OK. We can’t necessarily
always guarantee that Google or Apple
or anybody else is going to give us a feature. Right? It’s never guaranteed,
and also they’ve got their own stuff going on. Maybe Super Mario Run
launches and absorbs all of the top
spots for something, or all sorts of games
come out and just start absorbing all sorts
of feature spots where usually you would
think you’d be in there. So we said, how can we
actually robustly build a future for
ourselves where we get to control at least a little
bit of that launch potential, and actually do it without
any marketing money? So we’re heavy on the tech side. We build a lot tools
for ourselves and things like that to really
optimize workflows as well as to optimize things
like these sort of marketing back channels and stuff. So for us the answer came
in the form of building this proprietary tech,
which really was originally built in PHP– like a really kind of
hideous back end system, Which is much better now,
much more stable now. But it allowed people to
just back up their data. It’s a Cloud save system. Right? And because our games
are cross-platform that meant that if someone
played it on their tablet on Android and then
hopped on their PC then they could just pick up
exactly where they came from. And we found our users
really, really liked that, and it also gave them a reason
to give us their email address. So the question
then is, what do you do once you have
that email address? For some reason
indies in particular really love Twitter,
when Twitter has, like, the lowest pick-up rate of
almost any communication channel you could ever
try to broadcast on. It’s sort of like
you’re just kind of screaming into the
void a lot, with hashtags. [LAUGHTER] And so, I mean, we’re talking
between a 15% and 40% open rate on these emails that
we’re sending to people. We’re sending them to,
like, 150,000 people. And what we found over the
years is that everywhere we’ve gone to build an
audience has always ended up getting restricted. So, for example, we first
built an audience on Facebook, and then it became
quickly clear that if we wanted to actually reach
the 20,000 people that we had driven to that page to
like us through our games, that we had to pay money now
to reach the audience that we had curated there. And on Twitter it was the same
thing, where we couldn’t quite hit our total audience pool. And so we said, OK. Email looks like a
good way to do this. And for some reason it’s
not a tool that indies use. So as far as something
that’s– it’s a really, really effective tool. And, yes, there are some
complications with something like GDPR, but it’s actually
not particularly difficult. It seems really scary. And it is really easy to
walk through once you get it. So the email newsletter system. And then on top of that,
we do a weekly podcast, which is just us– me and my two brothers– just
getting a room for an hour and basically being weirdos. We talk about the
games industry, we talk about the
game we’re working on, and then we answer
community questions. And we– depending
on the week– will have around between 1,500
and 2,500 listeners per week. And if you talk about the
power of having your fan base listen to you talk for
an hour every week– that’s something that
really can’t be matched. And cumulatively the podcast
has had over 350,000 hours of people listening. Right? And so it’s allowed us
to build a fan base, even start a little tiny
mini convention of our own in St. Lewis where we’re
based in the Midwest, that people flew from
Florida and drove from Texas to come see us. So it’s allowed us to
do a lot of these things that normally we would
feel very out of reach for, and in a lot of ways weather
all these changes long enough that we can
pivot effectively and take advantage of whatever
the new sort of shiny thing is that we’re supposed to do. SARAH THOMSON: So
was that intentional, to build your fan base
around your studio brand as opposed to– SAM COSTER: Yes. SARAH THOMSON: And then,
of course, it cascades down into the gaming brands. But was that an intentional
thing or did you just get lucky? SAM COSTER: Absolutely. Yeah. Well, do I think it’s
absolutely intentional? And definitely luck
is involved, too. So a big part of
it was recognizing that we were tired of– so basically we had
launched these four games within two years or so. And these were smaller,
strictly mobile titles. And doing the run-up every
single time to launch was always so harrowing
because you’re like, are we– we’re
talking to Google. Are we going to get
a feature in there? Like, I don’t know. Maybe. [LAUGHTER] And then we don’t have money to
spend on ads, so we’re like– MIKE GORDON: You and I
both know that’s not how that happened on Crashlands. SAM COSTER: Well,
not on Crashlands. MIKE GORDON: Am I
going to get a feature? Yes. SAM COSTER: Crashlands will. [LAUGHTER] So the previous
four, not so much. So, yeah. So a big part of that
then was just saying, how can we take a single
player coming into Crashlands or into Flop Rocket–
one of our other games– and how can we get them
excited about the breadth of all the rest of our games? So all of our
games actually take place in the same universe. They have the same art
style across all of them, no matter what the genre is. And they hop around
genres all over the place, from things that
make you want to snap your phone in half
to Crashlands, which is like a 60-hour RPG. So a big part of it was,
yeah, this really intentional, how do we get someone
to come in and then stay with us as a team as
opposed to just saying, I really like that game. I’ve no idea who made
it and I don’t care. SARAH THOMSON: Yeah. That’s awesome. So we’re almost
out of time here, and I really want to know– obviously you and your brothers
have a particular talent of that kind of
community-building effort around the podcast. And there’s charisma and
personality happening there, and not all of us are
blessed with that. SAM COSTER: Sure. SARAH THOMSON: So how
can you, as a very small, resource-limited team, build
a community in different ways? SAM COSTER: Yeah. I mean, honestly I think
the highest leverage way to do it is through
something like a newsletter. SARAH THOMSON: OK. SAM COSTER: A lot of people– especially if you’re an indie
or you just like making games, a lot of people are more
introverted by nature. And I do actually consider
myself an introvert, I’m just good at
talking when I need to. But I think everybody
usually has the ability to write pretty effectively. And you should actually
develop that skill. And that’s something that you
can do sort of on your own time without the pressure
of an instant response. And those email newsletters
are honestly so phenomenal. I know there’s a talk
about Chris Zukowski about this exact topic,
I think, tomorrow, which is all about how
to build an email list and then use it
really effectively. And it’s one of those things
that, for some reason, people ignore. Kind of like the user
acquisition side on indies. And it can help
you so much, even if it’s just like 2000 people. Or even– like, we started
ours with 13 people. So, you know, it
takes a little bit. Then you go. MIKE GORDON: Do you guys
do any incentivization in the actual games themselves? Do you, like, get
this cool thing– SAM COSTER: Yeah. That’s where, essentially,
the Cloud saving– all those additional
features come from. And we do cross-game– MIKE GORDON: All
packaged together. SAM COSTER: All
packaged together. We do cross-game
unlocks and stuff, too. So if you beat a boss
in one of our games it will unlock a quest
line in Crashlands when you’re playing, as long
as you’re on the same account. So all sorts of crazy
tech stuff like that. MIKE GORDON: That’s cool. SARAH THOMSON: That’s awesome. So we’re going to
end on that note. Thanks, guys. This is huge gems
of wisdom you’re able to share with
this audience. And thank you so much. Join Mike’s talk tomorrow. And next up we have
Serena and Moonlit who’s going to take you on
monetization adventures. Thank you. SAM COSTER: Awesome. Thank you. [APPLAUSE] SERENA SHIH: Hi everyone. My name is Serena, and I am a
Google Play [? BD ?] based out of Beijing. We do fully overseas,
so no rumors here. Today me and my
colleague Moonlit will be discussing on why
revenue diversification is a must. We’ll be going over
the following agenda, starting from why
diversification is important, followed by how Playgendary
and Kongregate were able to succeed with
diversifying their revenue. And finally, we’ll be focusing
on how Google products aim to help you successfully adopt
different business strategies. To start, why diversify? In the last few years
we’ve seen [? emergences ?] of genre-mashing titles. For example, we have DH
games as Idle Heroes, which combines the RPG gameplay
with Idle Clicker assets. And we also have
Pixelberry’s Choices, which combines the player’s
love of story books with the ability to control
the overall narrative. The genre-mashing
trend therefore opens up more way of revenue
diversification and innovation. Multiple genres allow for
additional business model combinations of IAPs,
ads, and subscriptions. In addition to
genre-mashing titles, in the real world
when we’re trying to access a very diversified
and good stock portfolio it’s important to not place
all of your eggs in one basket. And therefore this helps you
diminish your overall risk. What better way to back this up? Well, we’ve plotted all
of our top-grossing titles on the chart that you see
on your left and right. On the x-axis we can see
the percentage of revenue from the top 5% of
buyers, which means the more you’re leaning
toward your right, the more you’re
dependent on your revenue from your top HVUs. On the y-axis we see the
buyer reactivation rate, which is essentially how likely
your players will come back after they’re already turned. You can see an overall
negative correlation here, which means that the more you’re
squeezing out of your buyers, the more they are less likely
able to come back after they’ve already turned from the game. So we have a really
nice little sweet spot marked by the yellow star,
where it follows the philosophy that you would rather have
everyone spend $1 in your game than to depend on
that one person who is going to spend $100. So where can you start? We would like to
encourage you to challenge the conventional
thinking that we have. On this graph we can see
that essentially the lower the engagement, lower
skill needed from players, you’re more or less
likely going to be expecting an ads-only game. On the other side
of the spectrum, if you are expecting higher
engagement and higher skill, you’re more or less
likely expecting an IAP and subscription-based game. What is important
is to challenge this overall
conventional thinking that the genre of your
game should necessarily determine your monetization
strategy in order to evolve your game economy
with evolution of games today. So, just like the
evolving game genres, gamers today have also evolved. So we’re not talking about
the three or four years ago players who are not
really familiar with one of the strategies that
are already present. So therefore, whether you have
a casual or mid-core game, a singular or a
multi-genre title, you’re still able to
succeed with serving different monetization
strategies to this new, mature audience. So now let’s take a look
at how Playgendary does it. Headquartered in
Germany, Playgendary is a hyper-casual and
casual game developer founded in 2016,
with their heart of development in Belarus. Starting all the way from the
design stage of their game development, Playgendary has
always been very experimental with the way that they
do their in-game revenue diversification. We’re going to take a
look at the two games we have right here. We have Tank Stars, which
is a hyper-casual game, and we have Partymasters,
which is an idol clicker and story-based game. I’ll be using these
two titles as examples of how Playgendary
has challenged the traditional gaming
revenue strategy. At the designing
stage of their games all three monetizations
have already been considered at the
initial planning stage. From the start
Playgendary is keen on combining all
three methods that are possible in order to strive
for the most optimized results. Therefore, when looking
at their current titles, regardless of how the
title actually is, you’ll see different
combinations of rewarded ads, IAP, and subscriptions. How do they do this? To Playgendary, games
is an art form just like music and just like movies. Therefore, creating a
great gaming experience for your partner is their
number one priority and is, therefore, the most important. With this in mind they
put their main focus on adding a lot
of in-game assets for their players to consume. The focus of having really good
content and in-depth content, therefore, leads to a more
stable revenue stream. How is this content distributed? We’re split into two
different focuses. One, they are allowing
the game currency to be distributed and consumed
in any way the player chooses. So whether you’re a
payer or a non-payer, you’re able to
choose how you would like to experience your game. And two, gamers loyalty. We were talking about LTV with
[? Nacho, ?] and therefore the importance of keeping
your players inside your game through a lot of live-ops
opportunities and events. So honing in on game currency. In Tank Stars, which
is a hyper-casual game, you can see that all three
methods are used in this title. How they use it is, IAP– you’re able to buy
different tanks and weapons and upgrade your in-game assets. And subscriptions will do
almost exactly the same, but adding a little
more for the subscriber. In this game in
particular, actually, the subscriber revenue takes up
a 46% of the total IAP revenue. Of course, we can’t
forget rewarded ads. And rewarded ads, although
the players are not willing to contribute
monetarily directly, they’re still able to
contribute their time. So what they’ve done is to
set up a gotcha system where the player is able to
choose based on gotcha to see if they can
actually pick out and draw the tanks that are available
through IAP or subscription. So in Partymasters, which is a
story-based idol clicker game, all three monetization
models are also utilized, and each ties very closely
back to the storyline. For example, players are able to
help their in-game protagonist through watching ads for
character accessories and upgrades, or purchase
gems through IAPs to purchase similar items. Or players can get
both needed currencies through becoming their diamond
members and subscribing. By focusing on creating a good
storyline for their players, Playgendary is able to split
their in-game currencies and content among different
variations of revenue models. So in terms of
creating gamer loyalty, Playgendary stresses
the importance of having a consistent revenue
heartbeat with Live Ops Having a casual/hyper-casual game did
not rule out the importance of keeping a really good
lockup system in their game. As you can see from the graph
that they’ve shared with us, Playgendary was able to utilize
one Live Ops event to re-engage the players who had
installed their games three to four months ago previously. How they do this is
split into two types. So we have the free
holiday content events that follows
the holiday calendar, and we have the paid
new mode star available. For the non-paying buyers,
free Live Ops events are used to re-engage
the players, new or old, into letting them
know that the developer still cares about the player. So fresh new content
is being pumped into the game in general just
to create more excitement for the player. But even though this
is a free event, it doesn’t rule
out the possibility of increasing revenue
throughout this Live Ops event. We can see from
what they’ve shared with us that the blue bar
represents all the game packs that are present regularly. And the red bars are the
effects of the revenue through during this
free Live Ops event. So it’s also a good way to
be able to create new paying buyers. So, of course, paid
content therefore is the most direct
way to stimulate your overall monetization for
your players, new and old. So this is the method where
you can also create excitement, but at the same time
create more places where people are able to
engage and become a new buyer. Overall the Live Ops account for
40% of their total IAP revenue. So, as Playgendary has
shown through their games, having more content
creates more possibility of adding different
revenue streams. With the flexibility
of allowing players to choose how they can
consume in-game content, as well as creating Live
Ops events to ensure player engagement and
re-engagement, Playgendary was able to see
a healthy revenue stream regardless of the
different genres they have. Playgendary focus
on gaming experience and setting up that
in-depth content has also allowed Playgendary to use
multiple business models that are complementary but
also substitute-able for their players
to choose how they like to experience their game. And with this I would
like to introduce my colleague, Moonlit, who
will be sharing with you how a mid-core game was able to
find success with reward ads. [APPLAUSE] MOONLIT BESHIMOV:
Thank you, Serena. Hello, everyone. My name is Moonlit. I’m a business development
manager at Google Play Games based in Mountain View. Today I’ll be sharing with
you the story of Kongregate, how they’re able to
boost their revenue by leveraging ad monetization
across a portfolio. Kongregate is an indie publisher
based in San Francisco. They have a portfolio of
games of diverse genres, ranging from casual to mid-core. Diversifying their
business model is the company-wide
strategy, as they believe it’s a
great way to drive substantial incremental revenue
without much cannibalization. When we say ad
monetization we think about casual and hyper-casual. No wonder, as most of these
games on the market do rely heavily on ads for revenue. But what about deeper
mid-core games? Would ads work for
these genres as well? Kongregate decided to find out. Through experimentation
with an open mind, they found that with
the right design principles ads actually work
really well for mid-core genre as well. Of course, this does
not mean that ads is now the primary source of revenue. But, as you will see in
the next few minutes, the revenue as well
as engagement gain could be substantial. Now, before I dive into
the how, in true Google and Kongregate fashion,
let’s look at the data. Across Kongregate’s
portfolio of games they’ve seen that ads have
boosted their annual revenue by 20% to 30%. And this is without
IAP cannibalization. Moreover, depending
on the game, ads can contribute up to 10%
to 70% of total revenue. So how do they do it? Two things. First, Kongregate launched all
new games with ad integration since Q4 2016. And two, this
growth is the result of intentional ad integration
and deliberate ad management. Now, let’s double-click
on the ad revenue. They found that rewarded
ads has a large market share on mobile, which is 70%
to 80% of all ads revenue. Therefore, rewarded ads
is what we’ll focus on in the next case study. Now, regardless of genre, there
are four design principles when we implemented rewarded ads. First, for the ads to be
part of player’s habit, tie the entry points into the
core loop of the game play. Second, rewards that’s
meaningful in how players progress. Make sure the rewards also scale
as players advance in-game. For example, if you only gave
out a fixed amount of currency, and as players
level up this amount will quickly become
negligible as players level up and in-game inflation kicks in. Third, in terms of
placement the ads should be accessible
for everyone. Ideally on the main home
page, but ensure it’s not intrusive or detrimental
to the user experience. And last, make sure that the
experience itself is also fun. Inject some humor and
delight by tying it into the fiction
of the game world. The case study we’ll
look at together is from Animation Throwdown. It’s a mid-core
card-collecting battler game that Kongregate launched
in September of 2016. Together we’ll walk through
three different ad units that have been added in
the game over time, as well as their
impact in the KPIs. The first ad unit was
available at launch. It’s a standard ad
unit that provided better rewards for
all battles played while the bonus is active. Let’s tie this back
to design principles. First, the ad unit reinforces
the core game mechanic of battles. Second, the reward also scales. Because it’s applied
as a percentage, thus it remains relevant
regardless of which level the player is at. And the third,
this ad design also encourages repeated
engagement, as players can stack the bonuses by
watching multiple ads. The second ad unit was
inspired by the game Burrito Bison, which is a casual
game in Kongregate’s portfolio. Burrito Bison added an ad
unit that was very successful called the pinata. As the name implies,
you reward something by randomly drop the rewards. Now, after seeing the great
results from Burrito Bison, the Animation
Throwdown team also implemented this
in their own game by randomly dropping
locked ad crates as battle rewards, which can
be unlocked by watching an ad. Now, let’s tie this back
to design principles. First, this ad once again
reinforces the core game mechanic of battles. Second, because the
reward is randomized, it can scale depending on
what level the player is. The third ad unit was
added more recently. Now, one of the core game
mechanics in this game is allowing players
to combine two cards into a more powerful combo. But this combo has to first be
discovered through research. Knowing that players engage with
the research slots every day, the Animation Throwdown team
added a third research slot that is only
activated through ads. They also set clear expectation
that, to activate the research timer, players will
have to tap a button to start watching an ad. Now, tie this back to
the design principles. First, once again, this
reinforces the core game mechanic of tech improvement. Second, in terms of placement,
the ad research slot is prominently placed next
to the other research slots. But again, the user initiates
the ad-viewing experience. Now, let’s look at
the KPIs and impact. The two most important
metrics for rewarded ads is, first, the number of ads
viewed per player per day. As you can see on this graph
here, from the original reward bonus– which is the blue bar– to adding the second ad
crate– the green bar– they were able to increase
the number of ads viewed per player per day to
the target of seven and remain stable since. But you might be
wondering, why didn’t it grow more with a third ad unit
added, which is the research [? slot in ?] the yellow bars. Kongregate told me that
it’s actually very important to keep this metric
steady and balanced, as to not overwhelm the players. Therefore, they designed
the ad experience such that the reward and
benefits is optimized when players watch between
six and eight ads per day. The second important
metric is ad engagement. Well, how many players watched
ads as a percentage of DAU? This is the metric to
maximize within each game. Strong engagement counts on
diversifying the ad units, thus to increase the percentage
of players engaging. And this is why Kongregate
designed three ad units that were just covered earlier. Looking at this graph you
see that adding two more ad units increased the
ad engagement number to 60%, which is their target. Even though Animation
Throwdown is a mid-core game, this number is actually on
par with other casual games. Now, if you’re thinking about
diversifying your business model with rewarded ads
or in-game subscriptions, I have some exciting updates to
share with you from our product team. I’ll share new features
in two categories, three will help you find
new buyers, and three more to help you retain them. Now, some of these
features are only available through close beta
right now, so feel free to take a picture of the
slides when there are links to the early access
into forums available, or you can stay in touch by
following the Google Play newsletter. First, a feature that’ll
help you find new buyers. Google Play has
partnered with AdMob to make it even easier
for game developers like you to integrate
rewarded ads in your games. Introducing the
rewarded product, which is Google Play’s
offering of rewarded ads. You can try it in your games
without any additional SDK integration. You can find it on your
Play console today. It is not available. It is open beta. Now, for those of you who
are already using AdMob, this remains to be the most
fully-featured way offered by Google to integrate
rewarded ads in your game. More on this after this session. The second new feature
around new buyer acquisition is about subscriptions. This feature is available
in closed beta right now, and that’s the link. Subscribe, then install. It’s a new feature we’re testing
that will allow your players to subscribe directly in
your Play Store listing page while the game
gets auto-installed in the background. The third and the latest and
greatest of new subscription feature is allowing
your future buyer to start their subscription
by directly redeeming a gift card or a promo code. This feature is also
available through closed beta. Now, onto new features that
will help you retain buyers by reducing voluntary
cancellation. First, in the cancellation flow,
we now allow players to pause is an alternative to canceling. As you can see here that
players have the option to pause for one,
two, or three months. Pause will be publicly
available in a few months. Now, if they still
decide to cancel, this might be a good time to
create a win-back offer that will let your players
continue their subscription at a discount. This feature is
available in closed beta. Last, if they still
decide to cancel, understanding why it’s a
good win-back strategy. Last year we launched
a cancellation survey to provide you with
the insights of why your subscribers are leaving. We found that 74% of users chose
to respond, with 10% of them actually give a
free formed answer. The survey results are
available through API query now, and these insights will be added
to your Play Consoles soon. Now, I should think about the
takeaways for this session. I have three wishes for you. First, I hope you
found the inspiration to reinvent your
monetization strategy. Second, I hope you believe
now that your past doesn’t necessarily dictate your future. And last, I hope you will
all go back to your teams and ask, how can
we diversify more? I am excited to see
how you will innovate and defy conventional thinking. Would it be through business
model diversification, regardless of genre,
or maybe more? Thank you, everyone. Next I’d like to introduce
Duke, director of product from AdMob to go deeper on that. [APPLAUSE] DUKE DUKELLIS: It’s amazing
to see the science and the art going into rewarded ads, and
I think about the journey that we’ve been through. So I need to do a
statistical question. How many of you are fans– like, raging fans– of ads? I’m seeing 80%, 90%. I’m seeing 110%. OK. It’s amazing. Remarkable. So I am Duke. I lead mobile app
monetization for the ads. It’s been quite an
amazing period of time. So for those of you who
didn’t put your hands up, we’re going to talk through
a couple pro tips here. I’m going to see how
many hearts and minds I can shift to embracing it. And the truth is, when
done right it can actually improve some experiences,
which is something that we’re pretty
amazed to find that. You saw some of those
experiences come before, and really it’s
around psychology. Today I’m going to
talk about three tips that are very focused on this
evolution of the industry and what we’re seeing out there. And at the end we’re
going to check back. We’ll do another
statistical sample here and see if we
shifted that from 80% to the rest of the 100% of you. All right. So first tip is about building
this into game design. You saw some of that in
the sessions we just had. And if you do this right you can
actually make users feel good. They’re getting something. They’re earning something
extra that they otherwise felt like they could
not have gotten. And that’s terrific. But you could also
build revenue streams. Now, we saw all this happening. It’s been going. You saw the experiences. So we put our heads
together and we really thought about how can we
make this easier for you. And right now we have a huge
base on AdMob and Ad Manager, and we said, well, for
those of you not on there, what can we do to get this into
your hands as fast as possible? And we’re just watching
this chart grow and we said, who else can we reach out to? And there’s a whole
segment of developers who really have been IAP focused. And I think back
two years ago where a lot of those discussions were
really, don’t touch the app. IAP is everything. And I’m going to talk a
little bit more about this. This has shifted remarkably
in the last two years. I mean, this has been
really remarkable. So the first step we’ve
taken– and you just heard this before– was
getting rewarded ads in play. So this means if
you’re already offering IAP you can do it very quickly. So I’m going to show you– here’s a screenshot
of the Play console. And you’ll notice the
tab over on the right. So there are these
rewarded products. And one of those rewarded
products is rewarded ads. So this is as simple as,
instead of choosing an IAP price you choose an ad. An ad is the cost. That’s the cost that
the user is paying here. And it’s that simple. So that’s awfully darn easy. We’re really excited to
see how this is going. We’ve been running it
through some beta programs and now we’re announcing
the open beta right now. OK. Let’s move on. Number two. So, supplementing
IAP revenue with ads. So what we’re seeing
is, developers who use this combination–
yes, the numbers are all going in the right direction. You add ads– and
again, this is a shift of thinking from just IAP or
just ads to go, how can we put these two things together? And rewarded ads, again, is one
of these areas where it just changes the mold. And if you think
about– initially it was about banners or
native, find the space, and interstitials. You put them between, and
rewarded has really just been something different
because it’s that opt-in. It’s that I choose
to do something. I choose to do this. So here’s Cookie Jam. It’s just a really
terrific developer. And they’ve really put
these two things together. They put these boosters in. And over the over long-term–
so here’s the remarkable part. They’re using the free
rewarded experience to drive an experience
that then people say, I like that experience
so much I’m actually willing to pay for it. OK? So they’re seeing an uplift
in IAP with rewarded ads being the trial way in. And they’re also seeing
the users who never would have made any money for them. Which, by the way, in
most of these games tends to be an awful
lot of those users. They’re watching
rewarded ads which means they’re generating
advertising revenue. So this is where– this breaks the mold. Like, this is not a
pure, oh, show ads, user experience declines. That’s not necessarily
what’s happening here. In fact, we’re seeing a drive
towards better monetization. And that’s just really
terrific to see. OK. So let’s move on to
tip number three. So non-spending players. So this has been the
really interesting piece. And I’ll go back– two years ago I was talking to a
number of different publishers, developers around, hey, we know
you make a lot of money on IAP, but really how much? And we heard things
from 1%, 3%, 5%, 10%. That’s the number
of users in my base, or the percentage
where I’m making money. It turns out the rest– so sometimes that’s
80%, 90%, more– are not making money. That’s a net cost for your
app, for your service, if you’re on a server. They’re sort of costing money. In some places that makes sense
because of networks and such. But in many cases they’re
sitting there going, I really want to
monetize that group, but I want to take no chances
on this other group of users who are paying me money. I just can’t afford to
take the risk there. So again, we went to
work here and we thought, how can we do this? So what if there was a
way to segment out smartly the users who are going to
spend and don’t show them this ads experience from the
users who are almost certainly not going to purchase? And those users we want to go
ahead and put the personalized ad profile, and that’s how
we’ll make money off of them. And it’s that simple. So here’s an example. You’ve got the game on the
left in mission overview. And we segment this, we look. We use our machine
learning to figure out what’s going on here. Who’s the spender? OK. They follow the
path up at the top. Who’s not the spender? Unlikely to make a
purchase, very unlikely to make a purchase. We send them through, we
give them ad experience. so we’ve tailored this to
the profile of the consumer and how they prefer to
help pay for the app. So this is pretty big
news because now we’re taking a risk-free approach
to generate more revenue here. So, it’s a first step. It’s really easy to do this. When you go create an
interstitial ad unit right now– this is what we’ve
announced we’re launching– there’s a box that says,
smart segmentation. It’s that simple. And then what we do is
we go ahead and look. We use our machines
to go figure out who are the spenders, the
likely spenders, who are the unlikely
spenders, and then we just start doing this
for you automatically. It’s as simple as a checkbox. OK? And we’ve seen– yeah. Here’s an example. We’ve seen 30% increase
on ads revenue site because they’ve been introducing
ad units that they before were afraid to introduce because
it might have impacts on IAP. So that’s what I’ve got. They’re pretty
quick and tactical, but can make a huge difference. And I actually find these
things just so revolutionary to where we were one
year, two years ago. So, number one was,
really think about how this rewarded fits into the
game and the psychology. You heard that through
the sessions before. You can go to the
rewarded play option and you can get that design
and placement up, like, immediately. You can test out
what things work, what things don’t work
without a lot of integration. Number two, you can
supplement that IAP revenue with the rewarded and
probably grow your IAP if you do this right. And then number three,
our smart segmentation offering– now it’s a checkbox. It’s that simple. Don’t put any of
your IAP at risk. And you have a
chance to monetize 90% plus of your users
who aren’t spending. So it’s a real win. So, that said, I need to do
another statistical sample here. Show of hands, who now
is a raging fan of ads? OK. Yes? This is overwhelming. I feel the love. This is great. [INAUDIBLE] I think
it just comes in to really talk about how
successful this whole area has been. And the more we can put these
tools and these products in your hands to make
money, just the happier it really makes the team here. So thank you all for that.

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