Pixonic Seminars: about choosing a concept

Inside Pixonic, we organize training seminars where we tell our co-workers about what principles we adhere to in game development and why. Following the meetings, I send everyone a squeeze of key ideas with examples. Shorthand data is stored in a Google document, where employees of the company can get acquainted with them. Although this material was compiled for internal use and is part of the context, I decided that it might be of interest to a wider range of readers.

Workshop 1

Part [1/3] – DefinitionsThere is no single rule for defining and measuring metrics, therefore, different names of the same metric are possible, or vice versa – metrics that differ in the method of measurement are called the same word.

The following indicators are used for the same thing: they are designed to report how much the project receives from one user, installation, download. With the difference that:

• LTV (Life Time Value) – they look at cohorts more often (for example, we look at income for 180 days of life);
• ARPI/ARPD (Average Revenue Per Install/Download) is simply the amount of earnings divided by the number of installations/downloads (for all time);
• ARPU (Average Revenue Per User) – in some cases, it can mean income from an active user for a day or for a month (i.e. for a certain period, and not for a lifetime). In this case, the income from an active user per day is better called ARPDAU (Average Revenue Per Daily Active User), it is considered as income per day divided by the number of unique users for the same day.
• CPI – Cost Per Install. Denotes the cost of one installation, it can also denote the method of buying advertising (in which they pay for the fact of installation, and not for the number of banner impressions, for example). It can be considered as all the money spent on attracting divided by all attracted users (including or not including organic).
• ARPPU – Average Revenue Per Payng User. The average income per PAYING user, the same as the size of the average check. It can be counted both for a lifetime and for a certain period (day, month, week, etc.).
• Retention X – user’s return on X day after installation. Example of calculation: 1000 installations arrived on December 31, 350 OF THEM went on January 1 (Retention-1 = 35%), January 7 – 150 (Retention-7 = 15%), etc. 

Part [2/3] – ProfitabilityAs for us, an important condition of work is remuneration, and for the company, an important condition of the project is its profitability.

Imagine that you were offered to participate in the development of the game full-time for free, would you agree? After all, only in this case could we make games purely to satisfy ambitions, to learn, as an experiment and to test our most unusual ideas. As long as we are not ready to give up a well-deserved salary, then we should think first of all about how exactly the project will bring money, because this is how you will ensure your salary.

To create profitable games, it is important to understand at least in general terms how the game earns.

1. Profitable = LTV > CPI I draw your attention to an important thing: profitability in the global sense depends on two metrics.

This means that it is possible (and necessary) to work in two directions: 

1) Lowering the installation price (CPI) – depends on the originality of the project idea, setting, its niche, demand, etc.; 

2) Increase in revenue from one installation (LTV, aka ARPU/ARPI/ARPD) – depends on the mechanics (genre), in-game balance, target audience, etc.

Accordingly, when you choose a project concept, you should proceed from what values of indicators can be expected.

On the topic of choosing a niche project, from an interview with Philip: 

“At the dawn of the emergence of social and mobile games, it was considered right to make as much as possible a mass, casual product that would be aimed at “everyone” at once. Now, with a large abundance of similar games, we think it’s right to make a niche product for a fairly specific audience. Therefore, after two and a half years of working on casual games, we focused our efforts on quite hardcore projects, such as Walking War Robots.”

2. About why it is difficult to achieve profitability. I recommend reading an article by Oleg Yakubenkov, a fellow analyst from ZeptoLab, which quite exhaustively describes the difficulty of creating a profitable project.

How to make money on the mobile app market?

Option 1: The application earns at least $3 from downloadingOption 2: Strong brand

An early mobile brand;

• Console or PC game port;
• Loyal user base on the web;
• Release of the application for the movie.

Option 3: Product viralityWhat exactly won’t work:

• We will put our application in the top, and organic traffic will go;
• We will be fobbed off by Apple;
• Bloggers and journalists will write about us;
• Virality.

Part [3/3] – RisksI would like to draw attention to the fact that when forming a concept (and choosing a setting / mechanics), two often opposite conditions must be taken into account: 

1. You need to get into a niche where there is money, but so far the competition is low (low CPI); 
2. To be able to make a product that both us and the players would understand (familiar).

I will try to visualize the choice in the form of a scale:

The left part is pure clones. 

In general, cloning is quite a successful model, but for this you need:

• Have time to become the 2nd, not the 102nd;
• To be able to repeat not only the idea, but also the quality, which is also very difficult;
• Ideally, you should still find an unoccupied niche (a clone of hits from FB – for OK, a hit from the AppStore – for GooglePlay).

A little to the right – there are ideas like shifting the game to a more original setting, a slight change in mechanics, adding some additional features. There are risks:

• The changes may be useless or even harmful;
• It is still required to repeat the quality of the product, because players will somehow choose between similar products.

On the other side, on the right side, there is an absolute “unknown”, such a game can be anything, it may not even be a game. “Independent” developers are swarming in this unknown. A striking example is Flappy Bird and 999,998 other games that no one has ever heard of. The risks in this case are so high that it is easier to play in a casino (in addition, many well-known indie games have much less well-known reasons for their popularity, which often have nothing to do with gameplay).

And finally, somewhere in the middle is the compilation area – this is a combination of well-known and proven mechanics, gameplay, setting, UI (user interface), etc., but in an unusual way. Such an example is Clash of Clans, the game combined:

• a popular strategy genre,
• she gave him the usual farm-style management,
• and flavored all this with no less popular and no less familiar Tower Defense mechanics

Here, for example, we should consider the second game of the company – Hay Day. There was no compilation here, they just made a high-quality farm, adding innovative management and several mechanics (a boat, fishing).

So that:

• First of all, you need to adhere to time-tested solutions, innovations can only occur when implementing USP*;
• USPS are introduced only in order to get into an unoccupied niche (lower CPI) and/or increase LTV from users;
• The more experience you have, the more USP (and features) you will be able to implement, without having to reinvent the wheel. And describe: “it will be a game like WoT, only for mobile phones. And the battles will be on robots that you design, like in MechWarrior, only more casual.”
• In 99% of cases, you have to choose from several already existing options and decide which one is best suited for your game;

In other words, it is not necessary to increase the risks of the project by creating original billing in the bank (for example, leaving only $0.99 and $99), or some unusual interface solution.

*USP (Unique Selling Proposition) – A Unique Trade Offer, i.e. a competitive advantage of the product.