Many overlook mobile games because, well, they are games. But successful mobile game developers shouldn’t be overlooked because they have succeeded in taming the difficult mobile app medium and converting it into revenue. The free mobile games that rely on in-app purchases of virtual goods for revenue are the most interesting examples of the skills that result in app development success. Last year, in-app mobile game purchases of virtual goods produced $13 billion in worldwide revenues, compared to $6 billion in mobile advertising revenues.
The unmistakable point is that game developers at this time are more productive in deriving revenue from mobile users than the combined online advertising brain trust of Google, Apple, Facebook, etc.
In setting the goals for app development, much can be learned from the mobile game developer paradigm.
The process of creating and bringing mobile games to market is much different than that of console games. Console games are big productions, with a long waterfall development process that culminates in a release, purchase and an update cycle that relies only on sequels to generate new purchases or upgrades. The lifecycle is similar to releases of new versions of Microsoft Office.
Free mobile games are developed with a much faster and more spontaneous agile development process because the goal is not immediate revenues upon a highly promoted and anticipated first release, but the beginning of an intimate data-driven relationship with a test community of game players that will provide feedback to improve and grow the game.
Mobile games are instrumented with tools, such as Flurry App Analytics, that report the use of game features and progress during gameplay, giving the game designers and developers the insights to understand user engagement. The analysis of this data serves as a baseline for experimentation, rapid iteration and continuous improvement of the game. The goal is to lengthen the game player’s engagement and reduce his or her resistance to in-app purchases of virtual goods. Free games not only lead with revenue but also in the proportion of total time users dedicate to their mobile devices.
Only a small percentage of free mobile game players actually purchase virtual goods. Most games don’t require virtual goods purchases to continue to advance and play a free game. It’s the game content and the player’s desire to achieve in competition with himself or others that leads to the purchase of virtual goods. The value of iterative data-driven mobile design and development is proven by increases in year-over-year Average Revenue Per Daily Active User (ARPDAU), as the percentage of users willing to spend more than $0.75 per day has increased from 3% to 15% between 2011 and 2012.
As the designers and developers run iterative experiments with the game features to optimize player engagement, marketers run iterative experiments to optimize the acquisition cost of users. Free mobile game marketers can contract with firms such as Tapjoy, Fiksu, or Flurry to acquire users at a cost-per-user download, or pursue downloads with their own marketing and PR.
The free mobile game business is worth the attention of everyone building mobile apps. Mobile game companies excel at developing compelling UIs and in-game experiences that keep users engaged and get them to return. The game developers have had to master multiplatform development a long time ago to build games for disparate platforms like Playstation, Nintendo and Xbox. So building native apps for Android, iOS and other mobile platforms shouldn’t be much of an obstacle.
Like all businesses, mobile game companies are focused on ROI, but in the mobile app development sector, the mobile game companies are the best at managing the process of ideation through development, marketing and realizing revenues. And game companies like Gameloft, Popcap, and Rovio have demonstrated the ability to repeat their successes with new game introductions to such an extent that they are referred to as “studios” in the same context as Hollywood movie studios.
Whether the app developer’s goal is to build an app to enhance a corporate brand or the next Twitter app, they would be well served in striving to achieve the mobile game companies’ development skills, and ability to create a community of satisfied and returning users that achieves their corporate ROI.