Last time we discussed how a game's LTV curve not only dictates the revenue margins and also the speed in which you can scale - taking less risk by acquiring more users in a short amount of time. It is a cycle hyper growth cycle - the higher the LTV, the more users you can buy, the more you can earn, and the higher the LTV. At the end of the day, it is all depends on the LTV of the game.
Let's focus a bit on hyper casual games and discuss some strategies on how to grow the LTV. Hyper casual games are games that are usually very simple, short lived and very easy to pick up and play. Their cumulative ARPU usually equals to their LTV. The life-time is short, roughly around D30 - D60. Only 12%-13% of players will retain after 7 days. There are 3 main ways to optimize these games - boosting retention (lifetime), optimizing interstitials ads, and refining rewarded video placements.
Since hyper casual games are so short-lived, it is too risky and most of the time, not worth the effort to monetize from IAP (in-app purchase) because IAP usually needs more than 7 days to gain momentum. Therefore, hyper casual games rely mostly on ad monetization. Boosting retention will be a key way to extend the cumulative value gained from those eye-balls. Tutorial funnel analysis, game economy and content progression tuning will be some game design tactics in attempt to extend retention.
Ad monetization in hyper casual games falls into 2 main buckets - interstitials and rewarded videos.
Interstitials are unsolicited ads that pop-up usually after a user accomplished something in the game or did some action. These type of ads has a very strong negative correlation to retention. Therefore, it is very important to AB test them to find the sweet spot of gaining the most ARPU while minimizing impacts to retention. As mentioned, having them pop-up after an in-game reward is given is one good strategy since there is a "cliff-hanger" / anticipation of checking out the rewards recently obtained.
Rewarded videos on the other hand are much more forgiving. It is considered to be the secret weapons in mobile games since it is a ultra rare monetization feature that could lift both LTV and retention at the same time. Even if the placement is not fully optimized, it will not hurt your retention as long as the ad is not too long and has a proper 'x' button. If properly tuned, rewarded video can even help solve retention problem by helping players understand the game better. Because rewarded videos are user triggered, user also enjoys them more and therefore, other advertisers are paying more for them.
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