THE SWRVE

MONETIZATION
REPORT
January 2014

The Swrve Monetization Report - January 2014

INTRODUCTION
The mobile games industry has undergone a revolution in the past few
years.
From a situation that many on the outside looking in would view as normal - namely consumers
paying for a game up front - we have migrated to the freemium model in which developers
effectively give the product away and then rely on in-game purchases.

That model has been a success, but theres

still surprisingly little data relating to exactly
how consumers interact with the freemium
model. This report intends to change all that.
Swrve is the worlds leading marketing engine
for freemium games. With access of tens of
millions of players, we have aggregated data
from across our system to finally lift the lid
on what goes on after install - and where the
money is made.
Enjoy!

Brief Notes on Our

Methodology
The report is restricted to
freemium games and examines
only revenue delivered via inapp purchases
Using Swrves Fraud Filter
technology, only genuine
revenue events are reported
The report is restricted to a
single month of data - providing
a snapshot of how mobile
gamers monetize; it is not
intended to show lifetime values
In total 10s of millions of
users, and their associated
monetization events, have been
analyzed and aggregated to
produce this data

The Swrve Monetization Report - January 2014

HOW MANY PAY, AND HOW MUCH?

Its a given that the vast majority of freemium games players dont
actually spend money at all. In fact, in January 2014 only 1.5 % of active
players surveyed made an in-app purchase at all.

That means that excluding any revenue

from advertising (which does not fall under
the remit of this report), the vast majority of
players in any given month deliver no revenue,
and confirms again that great care should be
taken when acquiring users to ensure they
are, as much as possible, in the subset of
spenders.
If we look at how MUCH is spent per month
(and from now on all averages and percentiles
relate solely to paying players, unless stated
otherwise), we see a monthly mean average
total spend of $15.27. This is in effect a typical
(or target) MRPPU - monthly revenue per
paying user.
That total comprises of an average number
of purchases per month of 2.57, of an average
value of $5.94. The rest of this report will take
the form of a detailed breakdown of these
numbers.

Average monthly
spend is $15.27

1.5% of players
purchased
in January 2014

The Swrve Monetization Report - January 2014

NUMBER OF PURCHASES
The illustration below indicates the percentage of payers making the
absolute number of purchases - from 1 to 5 or more.

A full 49% of payers only make a single

purchase, although note that this relates to
the month of January, rather than a lifetime
figure.
At the other extreme, 13% of paying players
make 5 or more purchases. A repeated
theme is the dependence of the freemium
games model on a small percentage of paying
players (who are, if we recall, themselves only
1.5% of the total player base).

49% of all payers

make only a single
purchase per calendar
month

The Swrve Monetization Report - January 2014

VALUE OF PURCHASES
We saw above that the average value of an in-app purchase is $5.01.
How that figure breaks down sheds interesting light on the relative
contributions of different purchase types, or value levels, to the bottom
line of a freemium game business.

This illustration shows in-app purchases in value buckets (as individual purchases) and, plots
both the % of purchases that fall into that bucket, and the total % of revenue accrued from that
bucket.

66.8%

27.4%

27.0%
22.4%

22.4%

14.0%
9.1%

8.2%
1.9%
$ 1-5

$ 6-10

Purchases by SKU Value

$ 11-20$

0.7%
21-50$

Revenue by SKU Value

51+

The Swrve Monetization Report - January 2014

Most notably, we see that while purchases

between $1 and $5 represent a majority (67%)
of all purchases, they contribute only 27% of
total revenues.
Similarly, high value purchases (those over
$50) unsurprisingly account for a mere 0.7%
of the total number, but a still significant a
sizable 9% of total revenue. It is worth noting
that very few SKUs in fact fall into this range.
Those titles that currently do not offer SKUs
at prices greater than $50 should probably
consider introducing them.

In-App purchases of
over $50 contribute
9% of all revenues

The Swrve Monetization Report - January 2014

HOW PLAYERS BREAK DOWN

Many industries are characterized by a small number of customers
delivering a significant percentage of total revenues. How true is this of
the freemium games market?

Below we chart every paying player in the

month in deciles by total spend. In plain
English, that means we show the bottom 10%
- ie the 10% of users who spent the least in
total - on the left, and move in 10% steps to
the top 10% on the right.

We show for each of those deciles the % of

revenue derived from that group, the average
number of purchases each member of the
group made, and the average purchase price
they made them at.

Percentage of Total Revenue by Player Spend Category

(#7.0, $11.10)

50.8%

(#4.0, $6.20)

16.3%
(#3.2, $4.90)
(#2.6, $4.10)
(#1.8, $3.30)
(#1.6, $2.60)

(#1.2, $1.70)

(#1.2, $2.80)

0.7%

1.4%

2.2%

2.8%

0-10%1

0-20%

20-30%

30-40%

(#1.2, $0.90)

4.0%
40-50%

(#1.8, $4.00)

10.2%

6.9%

4.8%
50-60%

60-70%

70-80%

80-90%

90-100%

The Swrve Monetization Report - January 2014

A couple of key data points immediately

stand out. A full 50% of revenue derives from
the top 10% of payers. To add further context,
if we express that group as a % of total players
they represent a mere 0.15% of that group.
That number bears repeating: 0.15% of all
monthly players contribute 50% of total
revenue.

The top 10% of

payers (by revenue)
contribute 50% of
total revenues in the
month
Taking an even more granular approach, 13%
of revenue comes solely from the top 1% of
payers (not graphed).
The implications of those numbers bear
extended consideration, most of which we
dont have space to cover.

However at the very least they suggest any

freemium business should ask themselves
the following three questions:
Have we identified these customers
within our own business?
Are we investing appropriate time and
resources on retaining this specific
group of players?
Do we understand where they come
from, and have we amended our
acquisition strategy accordingly?
Note in addition, from the same graph, that
conversely a full 50% of all paying players
contribute little over 11% of all revenues.
It is clear from the data that it is both the
greater value of individual purchases AND the
greater frequency of purchases that is the
driver behind the large value derived from the
top 10%.
This group has an average number of
purchases of 7, only around 700% greater
than the bottom 10%( average purchases 1.2),
but and the average value of those purchases
is $11.1 - an 681% uplift.

The Swrve Monetization Report - January 2014

NEW PLAYER SPENDING PATTERNS

Approximately 53% of our player base were new in the month - ie
playing the game for the first time in the calendar month of January.
As we wished to give these payers sufficient time to develop a spend
profile, they are taken from the first 17 days of the month only, allowing
us to compare the first 14 days activity for all.

Shown on the following page is time to first

purchase, shown in buckets of 24 hours from
first session start.
From this chart it is clear that a significant
amount of spend activity takes place relatively
soon after the game is first played. That is
born out by the fact that the average time to
first purchase is a mere 23.97 hours.

Average time to first

purchase is 23.97
hours

30000

Min [ hrs: 0]

20000

25th Percentile [hrs: 1.17 ]

Median [ hrs: 23.97 ]
75th Percentile [hrs: 92.54 ]
Max [ hrs: 335.98 ]

10000

01

00

200

Hours

300

The Swrve Monetization Report - January 2014

10

Note this analysis is (deliberately) limited to

the first 14 days of life. However, it is fair to say
that the shape of the long tail is apparent even
at this point in a payers lifecycle.

As can be seen below, 53% of payers go on to

make a repeat purchase, whilst 47% do not,
and 13.7% of new players accrue more than 4
purchases in their first 14 days.

Next we looked at how many new payers went

on to make a second purchase within the 14
day period, and how long the typical delay
between the 1st and 2nd purchase was.

They are probably on their way to

membership of our top 10%.

46.9%
MAKE ONE PURCHASE

21.8%
MAKE TWO PURCHASES

11.2%

MAKE THREE PURCHASES

6.4%

MAKE FOUR PURCHASES

13.7%

MAKE FIVE+ PURCHASES

The Swrve Monetization Report - January 2014

11

Interestingly, the typical time lapse between

the first and second purchase is only 1 Hour
40 Mins. The chart below shows typical time
lapse to second purchase amongst those
new players who made at least 2 purchases in
the month.

As the previous chart related to average time

to first purchase, this chart shows 14 days
binned into 24 hour periods. Whilst second
purchases can occur after a significant
amount of time has passed, they tend to
follow hard on initial buy-ins.

30000

Min [ hrs: 0]

20000

25th Percentile [hrs: 0.05 ]

Median [ hrs: 1.47 ]
75th Percentile [hrs: 28.44 ]
Max [ hrs: 335.96 ]

10000

1002

00

Hours

300

The Swrve Monetization Report - January 2014

12

Further detail of the revenue spread for new

users can be seen below, in which we chart
the total revenue (for the first 14 days of
life) that accrues on day one, day two and
so on - to a final bucket of beyond day 5.
That information reveals that fully 72% of all
revenue is accrued by the third (change as
applicable) day of life, with only 15% coming
after day 5.
Whilst there is almost certainly a long tail in
terms of revenue beyond the first 14 days
(again, not shown here, and not reported)
the consistency in the pattern in terms of
revenue share suggests long term value can
be predicted with some accuracy after as
little as 3 days.

60.8%
ACCRUED ON DAY 1

10.9%
ACCRUED ON DAY 2

6.0%
ACCRUED ON DAY 3

The typical time lapse

between the first and
second purchase is
only 1 Hour 40 Mins

4.1%

ACCRUED ON DAY 4

3.2%
ACCRUED ON DAY 5

15.0%
ACCRUED ON DAYS 6-14