The Moneymakers For Social Games Aren't The Big Spenders

I believe that one of the industry areas hugely affected by the spread of mobile devices and social network is gaming. Prior to the spread of smartphones, gaming was basically confined to two traditional platforms: consoles and PC. Nowadays you can find people playing all kinds of games on their mobile devices (speed and graphics have been resolved by the advances in display and computing power, but the restriction of display size and gaming input has yet to be resolved: I'll post more on this later on).

Now, you receive invites to all sorts of games from your Facebook friends, and these games show how you rank compared to other people in your network. The competition aspect of social gaming is one of the core drivers that increase engagement and play time, but there are questions as to whether such engagements can be interpreted directly as customer value.

I've found an article dealing with the nature of social gaming and some important aspect of the definition of high-valued customers. Bottom line is, although individual customers spending large amount of money playing your game may seem to be ideal consumers, people who interact with more players through your platform are the ones who create new leads and generate higher lifetime value.

Attached below is the full article.
(Source: http://www.forbes.com/sites/alexknapp/2014/10/03/the-moneymakers-for-social-games-arent-the-big-spenders/ )

If you pay attention to online gaming, especially in the “free to play” space, where a game download is free, but extras of all sorts cost money, you’ll see stories about people spending ridiculous amounts of money in a game – far more than a typical $60 disc. For example, there’s a report today about a Belgian teenager who spent nearly $50,000 in a single game.

If you’re a creator of a free to play game, stories like that might warm your heart. You probably don’t want players this extreme – it’s kinda bad publicity – but you want to find the kind of players who are willing to spend far more than the price of a typical video game, right?

Wrong.

As it turns out, when you analyze the data for social gaming, the biggest sources of revenue aren’t the biggest spenders, but rather the most social players – even players who don’t themselves spend any money at all. That’s been one of the key findings of Ninja Metrics, an analytics firm that explores the data about how players interact with each other in the social gaming space. That interaction, it turns out, is key to predicting how a game will do and what players companies should focus on.

“Some influencers spend no money but generate hundreds of thousands of dollars,” Ninja Metrics CEO Dmitri Williams told me. “That also applies to game time, as well.”

The more a game incentivizes players to play together, the stronger this effect is, he continued. For example, the company has used its analytics engine to observe interaction in the game Imperia Online. For that game, the company determined that about 75% of play time is driven by social interaction. That is,Imperia players want to play with their friends far more than they want to play alone.

Using this data, the company can help game developers focus on those social players, rather than the “whales,” in order to gain new users and retain those influencers.

“We can now find out where the influencers came from to find the game and so acquire more users,” Williams told me. “This helps a game retain the right people – and gets them to spend more money when it has them.”

This data can also be used to predict churn – the likelihood that a player will grow tired of the game and stop playing. So, for example, if there’s a player who brings in a lot of revenue through his friends coming in to play the game, you can target that person for different kinds of promotions and see what keeps her playing. But more importantly, a company can test to see what kind of promotion keeps both her and her friends playing the game.

“Businesses want to think ‘I have a relationship with my customer,’” said Williams. “But they often forget about the relationships their customers have with each other. But until now, it’s been hard to see those relationships. That means that promotions and marketing can be less about squeezing particular targets and more about what ensures people have a fun time playing.”

Williams noted to me that this type of analytics can also make for a more fun gaming experience.

“You can see which parts of the game create more social value than others, which is great for the product team because now they have better data about what works and what doesn’t,” said Williams. “So if the social values of level 1-9 are crummy, but the social value spikes in level 10, maybe there’s something you can take from level 10 to make the earlier levels more fun for people to play with their friends. You can’t manage the game experience if you can’t measure it.”

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Below is a quick infographic showing some of Ninja Metrics analytics applied to Imperia Online:

(Credit: Ninja Metrics)