1. 4 Years, 300 Games: What We’ve Learned About Free-2-Play Casual Connect Europe 2013 Emily Greer, Co-Founder & COO $$$$$$$

2. Brief History of Kongregate Launched in 2007 as developer- friendly, open platform for free web games –Only source of revenue was advertising –Almost all games single-player & Flash –Level & achievement system attracted core, male audience

3. The New New Thing We’d heard about something called “microtransactions” that were a huge source of revenue for web games in Asia Not many games had tried them in the US, but virtual worlds like Second Life, Gaia Online, Habbo & IMVU were doing well with them

4. What Were We Thinking? 1.Transactions will mostly be <$1, therefore –Payment processing costs are a big deal –Incenting larger purchases will be valuable –Stored credit cards and existing balances will be a powerful way to reduce friction 2.Players will be buying cosmetic items, gifts, power-ups & content 3.Multiplayer/social elements are crucial 4.US/English speaking much more valuable than any other market

5. Let’s build a platform! Because of the transactions costs & friction we should build a site-wide currency for our developers to use There’s no point to creating a currency if there aren’t games to use it

6. The Blind Leading the Blind Funded 6 games, focusing on synchronous multiplayer & unique gameplay Monetization elements tacked on, shied away from pay-to-win elements: –Cosmetic Items (Dinowaurs & Remnants of Skystone) –VIP subscriptions with more content (Skystone, Battalion) –Some power-ups & currency (Zening, Skystone, Battalion)

7. Launch to Failure Our currency “kreds” launched in November 2008 “Premium” games launched gradually over the next 6-9 months with decent ratings but minimal sales

8. Open Sesame 1 st MMO 1 st Asian MMO First FB Game

9. 4 Years, 300 Games

10. “ Transactions will be really small, <$1”

11. What Were We Thinking? Revisited 1.Transactions were going to be really small, <$1 mostly, therefore  LOL! –Payment processing costs will be a big deal  Only on mobile –Incenting larger purchases will be valuable  Still very true. Testing has shown that bonusing larger purchases raises revenue by 14%, increases buyers who spend $100+ by 25%

12. You Always Need More Storage Type LTV Avg Trx # of Trx % of Revenue Credit Card $ 130 $ 28 4.7 50% PayPal $ 110 $ 25 4.4 32% Mobile $ 43 $ 8 5.7 7% Prepaid Cards $ 69 $ 19 3.6 6% Offers $ 10 $ 2 4.4 5% –Stored credit cards and existing balances will be a powerful way to reduce friction  Also very true LTV on non-stored credit card buyers: $66, 3.6 trx LTV on stored credit card buyers: $195, 7.8 trx In general the higher the friction of the payment type, the lower the value of the buyer:

13. “Players will buy cosmetic items, gifts, power-ups & content” Almost all sales (95%?) are for items that affect gameplay – ~70% purchases are for permanent items and upgrades, about 30% go to consumables like energy –Cosmetic items have minimal sales, but cool-looking items sell better than more ordinary ones –Gifting behavior is quite light with our 85% male audience –Content sells somewhat in single-player games, but sells best mixed with a package that includes skill points or another power-up.

14. “Multiplayer/social elements are crucial” Yes! But it still doesn’t look like we expected it to. In the early games we funded we focused on synchronous multiplayer, both PvP and co-op PVE. That was a mistake. Type% 50 Plays% BuyersARPPU ARPU Synchronous1.4%0.54%$43$0.25 Asynchronous3.6%0.80%$88$0.66 Both2.9%1.07%$51$0.55 Single-Player0.8%0.85%$7$0.05

15. ARPU & ARPPU

16. “Multiplayer/social elements are crucial” What about PVP vs PVE? Both! Type% 50 Plays% BuyersARPPU ARPU PvP2.2%0.63%$61$0.38 PvE2.4%0.56%$24$0.14 Both2.8%0.91%$71$0.65 Single-Player0.8%0.85%$7$0.05 Guilds make everything better – all top games have them. Guild wars & guild leaderboards are very powerful.

17. Multiplayer is very important, but it’s not the most crucial element. Turns out the single most important aspect of a game is strong RPG/character progression. Type% 50 Plays% BuyersARPPU ARPU Multiplayer RPG2.6%0.75%$69$0.51 Multiplayer Non-RPG1.0%0.45%$9$0.05 Single-player RPG1.8%1.29%$12$0.10 Single-Player Non-RPG0.2%0.53%$4$0.02

18. So what genres work best? Some of the best sub-genres: % 50 Plays% BuyersARPPU ARPU Empire Builder3.9%0.87%$104$0.78 CCG2.6%1.01%$65$0.71 Lootfest3.3%0.88%$67$0.66 Some of the weakest sub-genres: % 50 Plays% BuyersARPPU ARPU Pet Battlers1.9%0.97%$19$0.18 Artillery1.3%0.61%$26$0.14 Shooters1.7%0.56%$19$0.11

19. “ US/English speaking much more valuable than any other market ” Broadly true – 65% of our revenue comes from English-speaking countries. Individual smaller markets outperform the US, however, especially Northern & Western Europe Country% Buyers ARPPU ARPU Switzerland 6.96% $ 248 $ 17.24 Kuwait 1.64% $ 499 $ 8.19 Austria 5.49% $ 143 $ 7.88 Norway 4.43% $ 143 $ 6.34 Germany 5.77% $ 100 $ 5.75 United Arab Emirates 1.07% $ 512 $ 5.46 Singapore 2.26% $ 203 $ 4.59 France 5.34% $ 85 $ 4.56 Cyprus 2.18% $ 207 $ 4.53 Netherlands 4.66% $ 96 $ 4.47 Sweden 3.95% $ 112 $ 4.44 Denmark 4.03% $ 106 $ 4.27 Belgium 4.94% $ 74 $ 3.64 Japan 2.99% $ 118 $ 3.54 United States 4.20% $ 81 $ 3.40 Australia 3.29% $ 102 $ 3.37 Finland 2.73% $ 122 $ 3.32 Canada 3.81% $ 86 $ 3.29 United Kingdom 3.54% $ 84 $ 2.97 Russian Federation 3.64% $ 78 $ 2.83

20. Keep Going, Keep Learning We struggled for nearly a year (two including development) before we saw any success. Your first game isn’t likely to do well either. Free-2- play is hard, and many important elements are counterintuitive. But once the elements come together the improvement is exponential

21. Die Ende To learn more/find links to other talks visit developers.kongregate.com Topics include: retention big spenders item pricing promotion management more For web games contact us at apps@kongregate.comapps@kongregate.com If you’re interested in mobile publishing it’s mobile@kongregate.commobile@kongregate.com Follow me on Twitter: EmilyG