Eric Johnson

Recent Posts by Eric Johnson

In Free-to-Play Games, Having Fewer Players Doesn’t Always Mean Less Money

Daffy_Duck_Money_eyesIn the world of free-to-play videogames, developers try to pull players through three distinct phases: Acquisition, retention and monetization. Each phase, the conventional wisdom goes, feeds into the next; you need to get people in the door before you can convince them to stay, and the store needs to be both crowded and pleasant before they’re willing to buy anything.

But at GDC Next yesterday in Los Angeles, games data researcher Joost Van Dreunen added a wrinkle to that equation. The audience for free-to-play online shooter games dropped 16 percent between September 2012 and September 2013, but the average revenue per user in that time increased 14 percent, a change he attributes to the dedication of the games’ core players.

“The people who really like what they’re playing, they’ll keep spending on it,” said Van Dreunen, the founder and CEO of research firm SuperData.

This is true across multiple free-to-play segments, not just shooters, he added in an email after the conference session. The relevant graph from his GDC presentation, embedded below, also forecasts an even bigger spike for the end of the year, up 40 percent from September 2012 despite a nearly 25 percent drop in audience size.

SuperData freetoplay shooters market trend

Van Dreunen speculated that in-game campaigns starting in late summer, combined with decreased audience pressure as less-invested players split off for titles like Grand Theft Auto V, laid the groundwork for a revenue spike on top of a typical holiday boost. The key to reaching that point, though, is keeping the games running and fun for the paying players who remain.

To some industries, this may sound stupidly simple, and it is, up to a point: Companies make good products, and then improve those products to keep customers happy. But it’s a data-backed validation of a favorite new industry buzzphrase, “games as a service.”

Only a few developers use the acronym GaaS, much to my immature disappointment. But the new normal is that games are no longer “done” when they ship. Even with a diminished audience, these games still command resources and attention until the players stop paying and everyone leaves.

A few other pullouts from Van Dreunen’s talk:

  • SuperData estimates the total market for digital downloads of games and virtual goods to be about $22.1 billion for the first three quarters of 2013.
  • $972 million of that total came from the U.S. in September alone, with $266 million spent on iOS and Android games (up 14 percent month over month) and $249 million spent on free-to-play online games (up 1 percent month over month).
  • Between September 2011 and 2013, mobile has doubled its share of the digital games market.
  • The audience winced when Van Dreunen showed one graph forecasting that user acquisition costs for digital games would more than double between October and December of this year — a seasonal spike that he suggested might lead some resource-strapped developers to sit out the holidays and focus instead on user acquisition in January and February.

Latest Video

View all videos »

Search »

When AllThingsD began, we told readers we were aiming to present a fusion of new-media timeliness and energy with old-media standards for quality and ethics. And we hope you agree that we’ve done that.

— Kara Swisher and Walt Mossberg, in their farewell D post