Retention Rates And Profitability

Discussion in 'Game Marketing' started by Matt Sverige, Dec 22, 2019.

  1. Matt Sverige

    Matt Sverige Boxer

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    Hi guys,
    I have just joined the forum and would like to ask something. I have been developing games since the past year and I always read benchmark reports from companies like Gameanalytics, App Annie, etc. I wonder if these reports are accurate. I try to do the math but I am probably missing something and I really hope someone can shed light into this.

    Based on these game reports, a Word game with day 1 retention of 40%, day 7 of 20% and day 30 of 10% should be highly successful. (In another thread, these numbers were much higher for Voodoo) My retention rates are somewhat close to "this" goos game retention rates but I am spending more money on advertisement than generating income. My CPI rates are also pretty low when I compare to benchmarks.

    I don't have the fixed costs like rent, developers or anything else. I am a single man with ad costs but these companies have huge expenses + ad costs.
    I really wonder how they make a profit out of this. I mean even the best games lose almost 50%-60% of a new user on day 1. And on day 30 almost 90% of the users are gone if these reports are accurate. The reports also indicate that in Word games in-app purchase rates are as low as %1. So how do they really do it ? I mean generating revenue from ads are not that great when you have to pay for CPI since impressions decline obviously with retention.

    Can someone explain the math behind all this ? Do these companies generate significant revenues in the first 30 days ? Or do they only start to profit after 30 day period with %1-2 left over user base ?
     
  2. Jaro

    Jaro Avid Boxer

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    This 1-2% of users who remain for large producers can mean 1-2 million users. And when they have, for example, 150 games, then these numbers get large.
     
  3. Matt Sverige

    Matt Sverige Boxer

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    Hi Jaro,
    I am not talking about publishers like Voodoo. I am talking about small gaming companies who have about 1-5 million downloads. Is profitability only bound to 1% to 2% in all cases ?
     
  4. Jaro

    Jaro Avid Boxer

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    The average profitability on the gaming market is about 10%. Average. If you incur high costs, then of course it decreases. That is why it is very important for small producers. If you have a high number of active users and the game is able to maintain it for a long time, profit can be generated not only for the first 30 days but even for years. There are games that after publishing do not do well but come out after some time.
     
  5. Matt Sverige

    Matt Sverige Boxer

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    So you agree with these retention rates from GA and etc ? I wish they could put something like long term retention.
     
  6. Jaro

    Jaro Avid Boxer

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    Yes of course. Everyone uses it so it must be reliable. Certainly there is some error indicator but it is rather similar. For free games with attached ads, long-term planning is more advisable. This is generally a complicated topic. Any slightest mistake can discourage the user.
     

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