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LTV the basics.

LTV (Life time value) of a customer in mobile games is one of the most important metrics to track. The LTV is not only dependent on game to game but also in the free to play world varies from each stage the game goes through. Below is a basic understanding of this from game publishing business point of view.

While designing a F2P game or any mobile product that uses in-app commerce to monetise its users it is crticial to start thinking on the LTV in the design stages itself, it is rather difficult but doing market research, choosing a genre of the game or highlighting your competition can give hints on what a possible ARPDAU (Avg revenue per daily active user) your game can achieve that can easily be modeled to calculate LTV by multiplying the same with simple retention or no of days the user expects to stay in the game/app. This is important to evaluate during kickoff because financial viability of the product should be a checklist item before commencing.

While in soft launch the CGP (core gameplay) or core usage of the mobile product has to be tested first once that is established to build a business case the LTV calculations need to established to see if the hypothesis that you put during design stages get verified. Since the product is never complete and opitmisation of LTV is never ending, it is important that atleast some cohorts in the product satisfy the LTV>CPI equation so that you have a solid set of people that one can go after launch to scale the product. Also very important is to start testing the acquisition sources and model LTV based on these acquisition sources so that you know - which UA source requires the quantum of investment on product launch. One great resource and for me the best one on undrestanding LTV calucluations in this stage is http://mobiledevmemo.com/two-methods-modeling-ltv-spreadsheet/ an actual template speadsheet created by one of the best mobile marketers Eric Seufert. Since LTV calculations is not just a hypothsis but actual numbers and complex calculations this sheet is immensly helpful.

To undestand different kind of LTV caluclations and have an easy to use tool this is a great resource http://blog.soom.la/2016/04/6-ltv-clv-calculators-mobile-apps.html. Once the game is launched its a constant process of finding a target cohort which has positive ROI for UA and then keep on optimising the LTV in that cohort as retention and other metrics stabalise. The CPI is not just acquiring cost but can also be re-engagement cost that can have an overall impact in increasing the LTV. Hope these resources are useful for people starting out to calculate LTV and take better decisions.

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