[casual_games] Issues to think about in the casual game space - subsciptions and ARPU

[Brian Robbins]

> Now my nitpick:  In question 4 you define ARPU as average revenue per unit.

> Is this intentional?  I usually see ARPU defined as average revenue per

> user. Per user seems to make more sense in this context than per unit.

> Obviously changing the price of the game would change the revenue per unit,

> but I think the point is a about maximizing the average revenue user even if

> it means lowering the revenue per unit. With a lower price, each user (demo

> player) is more likely to purchase more games, or more likely to purchase

> any game at.  Thus lower revenue per unit could lead to a higher average

> revenue per user. Or maybe higher revenue per unit would lead to higher

> average revenue per user.  The point is, isn't it really just all about

> average revenue per user?


I think that depends on if you're a portal or a developer. A portal
obviously wants to increase average revenue per user as much as
possible. That's largely the point of doing bundles, package deals,
subscriptions, etc. In that respect lowering the price *might*
increase their revenue per user.

As a developer though, I think you do want to maximize revenue per
unit, because for the most part nobody releases enough games to see
the benefit of an increase in revenue per user.

It's an interesting and very tricky problem though. I'll even poke a
hole in my own assumption above that it's better for a developer to
have high revenue per unit :)

If average revenue per user increases, then there is more revenue "in
the pot" for developers. As a developer, it stands to reason that if I
have a better than average game, then I will benefit more from having
additional money "in the pot"  More money  in total means more money
for me as a developer of a great game.

The unknown of course, is where is the additional revenue coming from?
In your example you suggest lowering the price to get people to buy
more games. If that works than I as a developer have a relatively low
chance of users purchasing more than one of my games. For the absolute
market leaders, this would be disadvantageous as pretty much everyone
who would be willing to buy there game probably already is. For that
next tier though, this becomes more advantageous. You still get all
the sales that you had before, but now you pick up a few additional
sales from those people who would have only purchased one game, but
are buying yours as a second game. Hopefully the additional people
here offset what you've lost by selling the first one cheaper.


The net result from all this is that as a developer I'm *probably* in
favor of something that increases revenue per user, but I'd need to
know a lot more of the specifics before I can say for sure.

Taking this on another tangent: what if the market were based upon a
fixed price/unit to the developer? Suddenly I as a developer am 100%
behind pretty much anything that increases revenue per user. This
should result in more copies of my game getting purchased which will
definitely put more money in my pocket. Now my goals as a developer
are completely aligned with the portal/retailer, and I want to help
them maximize revenue per user.



-- 
Brian Robbins
Executive Producer and Gaming Evangelist
Fuel Industries - www.fuelgames.com