Metrics for a Brave New Whirled

Daniel James | CEO | Three Rings

www.threerings.net

daniel@threerings.net

What is Whirled?

Player-created Flash virtual world

Rooms, avatars, toys, games, music, etc.

Social network ‘geography’ (home rooms == profiles, etc.)

Flash single and multi-player games to accrue ‘Coins’ (‘play money’)

Shop for player creations, comments, ratings, etc.

‘Bars’, hard currency bought for $$$

Third ‘cash-out’ currency ‘Bling’ earned by creators on Bar sales

Small, engaged beta community ~20,000 weekly registered active

Whirled Simultaneous Players

Hourly Simultaneous Players

What is Puzzle Pirates?Casual MMO

Broad demographics: Ages 7-70, ‘Double Bump’, 50/50 Male/Female

Signed Java Applet, ~60mb, installs from web

Subscriptions since launch Oct 2003

Virtual currency business model since Feb 2005

2007 Revenues $4M, ~$3M virtual currency ‘Doubloons’

Puzzle Pirates MetricsConversion (from landing to registration): ~5%

Retention (returning after one month): ~35%,~25% into month 2

Paid Customer Conversion (registration to revenue): ~3.5%

Average Customer Lifetime Value : ~$120

Average Registrant ‘Value’: $4.20

Registered Players since 2004: 4,200,312

Customers since 2004: 90,197 ‘Doubloons’, 68,807 Subscription

Current active players: ~110,000

Active paying players: ~30,000

Average Hours played per player per month: 21

Moar Reading

• Andrew Chen

www.andrewchenblog.com • Eric Ries

startuplessonslearned.blogspot.com • Slides for this Talk and moar links

thefloggingwillcontinue.com

(mo)AARRR!

• Dave McClure’s awesomeness:http://500hats.typepad.com/500blogs/2007/09/startup-metrics.html

• Updated:http://500hats.typepad.com/500blogs/2008/07/oct-2nd-starton.html

The Funnel that goes AARRR

• Acquisition

• Activation

• Retention

• Referral

• Revenue

Acquisition Paths

• Ads (Networks, Google SEM)• Search (SEO) - a problem for rich apps• Referral Emails (‘Virality’)• Facebook, Myspace etc. Notifications• Affiliate Links and Revshare Deals• Game ‘Sponsorship’ Clicks• Organic ‘Shows up’ Traffic

Cost of Acquisition Dashboard

• Not all these numbers are real, but they are representative

• CPM/CPC/CPA washes out to a CPA• Whilst optimising and changing flow, CPC or

CPM may make sense. • Once optimised, CPA is lower risk for buyer!

Source CPM CPC CPA Ad imps CTR Clicks Signup % Users Cost CPA

Ad Network 1 $0.50 ? ? 700,000 5% 35,000 $17,500 $0.50

Ad Network 2 $0.30 20,000,000 0.10% 20,000 20% 4,000 $6,000 $1.50

Adsense $0.08 50,205,778 0.33% 163,871 6.8% 11,126 $1,265 $1.14

Viral Coefficient• For every new player acquired, how many new

players arrive via Referral channels• If > 1 then exponential growth. Ye win!• Many ‘viral’ mechanics are ‘crafty’ e.g. email scrapers

in registration process, FB games with invite incentives

• Facebook still highly viral, but most apps supplement viral channels with paid ads

• Myspace reportedly relies more on paid acquisition• FB invites work well for ‘frivolous’ Apps, but is there a

conflict with ‘alternate persona’ games with depth? Do ‘fantasy’ players want to invite their real friends?

Activation Metrics

• Site Visitors -> Playing Experience (~25%)– Different Landing Pages, Straight into Game etc.– Forced Registration is efficient– But, Retention works out similar to ‘play first’

• Registration Conversion (~6% of visitors)• Active Players - logged in during the period• Simultaneous Players• Session Time (~20 minutes PP / Whirled)

The Whirled Funnel

Puzzle Pirates Registrations

(Different colours are different sources)

Retention MetricsRetention - % of new visitors who return to the site within some period

Churn - % of total players who leave (usually monthly)

Whirled:

~2% Retention, 1st Visit -> Return after one Week

~23% of Registered Players return after one week

Retention CohortsCohort 12/21/08 12/28/08 1/4/09 1/11/09 1/18/09 1/25/09 2/1/09 2/8/09 2/15/09

12/21/08 29% 16% 14% 14% 12% 10% 9% 9% 9%12/28/08 25% 15% 13% 12% 10% 9% 9% 9%

1/4/09 27% 18% 14% 12% 12% 11% 10%1/11/09 31% 18% 13% 12% 11% 10%1/18/09 29% 16% 12% 11% 10%1/25/09 28% 17% 13% 12%

2/1/09 29% 18% 15%2/8/09 35% 21%

2/15/09 33%

• A new Cohort shows up each week

• Table shows % retained week-after-week

• These numbers are not ideal!

Improving Retention

• Sticky Fun!

• Daily Return incentives (gift box)

• Email: Notifications, Feeds, Newsletters– Validate your emails, check your spam

Referral Channels

• Word of Mouth: Organic ‘Shows Up’• Registration ‘Find Friends’ Email• Game Invites: Email, FB Connect, IM• URL cut n paste• Trophy Notifications via FB• Share Games via URLs, FB, Myspace etc. • Share and Embed Rooms

Revenue Metrics• Conversion to Pay - usually % of registered players who pay

• Average Revenue per Active Player (ARPU) - total revenue / active players, monthly

• Paying Players / Customers - those who Purchase in that month, OR Active Users that have ever Purchased? Currency purchases are often bursty. Let’s call Paying Players those who bought in the month, and Ever Paid Players those who have ever paid

• Percentage of Paying Players - Paying Players / Active Players

• Percentage of Ever Paid Players - Paid Players / Active Players

• Average Revenue per Paying Player per Month (ARPPU) - purchase amount for those who bought in the month. This is around $50 for many microtransaction games, inc. Puzzle Pirates

• Average Revenue per Ever Paid Player per Month (AREPPU) - this is usually less, around $10 for Puzzle Pirates, as many active paid players do not necessarily purchase in that month

Mo’ Revenue Metrics: Lifetime Value

• Customer Lifetime - average life of a paying customer in months. For PP ~14 months

• Average Paying Player Lifetime Value (often called LTV) - total earned from a customer over lifetime

= AREPPU x Lifetime (for PP this is ~$125)

• Average Registrant Value - this is the critical value to compare to your CPA

= AREPPU x Lifetime x Conversion to Pay

For PP = $125 x 3.5% = 4.37%

Whirled Economy OverviewCurrency and value:

Free / Time Currency, rewards for gameplay (Coins)

Hard / Cash Currency, $$$ (Bars, Doubloons)

Creator earn-out Currency for Whirled (Bling)

Pricing

Player-controlled with some guidelines based on creator rating

Modest listing fees in Coins

Price in Coins to earn Coins, or Bars to earn Bling

Listed Items to Date

21,000 Avatars, 31,000 Furniture items, 20,000 Backdrops, 700 Toys, 3,600 Pets, 270 Games, 25,000 Tunes, 28,000 Images

Good Economic Management

• Balance your soft currency faucets / drains• Optimize Pricing• Refresh and Merchandise Items• Limited Edition and Rare Goods• Consumable Items / Mini-Subscriptions

Economy: Soft Currency

Economy: Hard Currency

Economy: What Sells (Coins)?

Exchange of Coins and Bars

Players / Purchasers by AgeWhirled Players + Buyers - Feb 2009

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

90s 80s 70s 60s older none

decade born

players

0

100

200

300

400

500

600

700

buyers

players

buyers

Spending per Purchaser

Spending by AgePuzzle Pirates + Whirled - Spending Distribution By Age

$-

$10

$20

$30

$40

$50

$60

90s 80s 70s 60s older

decade born

spending/customer

PP avg $Whirled avg $

Item Sales Distribution (PP)

QuickTime™ and a decompressor

are needed to see this picture.

Productsmix of Vanity (clothes, furniture)

and Utility (ships, swords)

Coin shop,Mostly personal utility,

some gifting, all recurring (mini-subscriptions) Portraits, vanity,

often groupsRooms / Houses, sometimes group

Customer Development

• Develop Customers whilst developing Product• Ship early, track player behavior• Iterate against player behavior and rapidly

revise product to meet customer expectations• Be prepared to completely re-tool product if

customers don’t want it!• IMVU is the case study• Reading: ‘Four Steps to the Epiphany’ by Steve

Blank http://www.steveblank.com/

Billing Bits

• Payment Breakdown:Credit card (70%, ~2% costs)

Paypal (15%, ~2% costs)

SMS (~5%, mobillcash, ~10% cost, ~50% carrier markups)

Pre-paid Card (~5%, Target via GMG, >20% costs)

Others via PaybyCash etc. (~5%, costs vary)

New: Offers via Peanutlabs (too early to say)

• Fraud, Spending Limits• Don’t build, but use a provider

Twofish, Gambit, Fatfoogoo, Social Gold, Peanutlabs, Offerpal, Super Rewards, Zong, Vindicia, Aria, etc.

That’s all Folks!

Slides going up on the blog later today:

http://www.theflogginwillcontinue.com/

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daniel@threerings.net