So Facebook released its 3rd Quarter Earnings Report this week and despite “WhatsUp” performance, the result was pretty impressive. My interest in this blog is not to give detailed analysis of the performance, rather it’s to decipher through the numbers and pointing few things that are important to game developers. User Growth Compared to previous earning reports, user growth in this quarter has slowed; with major gains in LATAM and Africa. I would imagine, this will be the trend moving forward.
User growth in the US or Western Europe has stagnated for quite a while and remains at <….> % of the general population. Not clearly reported but equally important is the decline in teen engagement. So what does it mean for game developers?
- User acquisition cost will continue to increase in first tier markets (US and Europe). This trend has a tendency to favor deep pocketed game developers that are willing to dump money on user acquisition.
- Declining teen engagement also means less in app purchase since a high proportion of in-app purchases are made by teens & young adults.
- Game developers will see more users from third tier markets (LATAM and Africa)
Monetization Facebook is doing a remarkable job monetizing users. Average revenue per user stands at $2.41; which by any standard is pretty impressive.
Assuming a Facebook style monetization holds true for a game that has 1 million actively monthly users, the game would have to make $1.45 per user. The reality for a typical game on FB however, is ~ $ 0.30. So what can one learn from Facebook monetization approach?
- Game developers need to think of ways of monetizing regions outside US and West Europe, especially Asia and LATAM countries.
- Add video advertisement to your mix of monetization tools. By Inserting video ads between game sessions or level-ups, you can effectively double your ARPU to ~$ 0.75.
AppLixir is a video ad platform serving Facebook apps with a great monetization opportunity. With a 70% video ad fill rate at ~$3 and more, Applixir provides the best monetization tool for games. – www.applixir.com