Converting to an in-app purchases led revenue model
Discover the 3-step strategy BitMango used to diversify its revenue streams
BitMango creates and publishes puzzle games for a global audience. They’ve released more than 50 games, including Word Cookies!®, Block! Hexa Puzzle™, and Roll the Ball®, among others.
Recently, BitMango has successfully transformed its revenue model from one relying predominantly on in-app advertising (IAA) to a hybrid model using IAA and in-app purchases (IAP).
In this article, I talk to Yoonseo Lee, business development team manager at BitMango, about their core strategies for enhancing IAP performance in new and existing titles.
Hongkeun: What was the driver for deciding to focus more on an IAP revenue model, and how did you apply that to your games?
Yoonseo: At BitMango, we’ve been pondering how to keep pace with the changes in the ad-monetization environment and drive sustainable growth. As one of the measures, we wanted to restructure our portfolio to include several leading game titles focused on in-app revenue. For this, we adopted a strategy in which we reconfigured existing titles to increase the share of IAPs, and developed new titles with in-app monetization in mind. We implemented IAPs into existing titles first to accumulate data. Then we use that data to create guidelines for IAP UX, merchandising, LiveOps, and other aspects of the IAP implementation. Since then, we’ve applied these guidelines gradually to existing and new titles to increase our overall in-app revenue.
BubblePopOrigin was developed as an IAP game, while Lollipop was modified to make more use of IAPs.
Hongkeun: What was the outcome of expanding your revenue stream to an IAP business model and investing in IAP-based games?
Yoonseo: We converted major IAA games, such as Lollipop, to use a hybrid revenue model, and successfully launched new IAP-based games in genres such as bubble shooter and brick. IAP revenue grew by 4.4 times year-on-year, while its share in total revenue rose from 13% (19Q4) to 32% (20Q3). Also, IAP revenue growth in existing titles led to an enhanced IAA CPM, which saw ARPDAU for IAA plus IAP to grow by more than 4 times during the same period. The growth in IAA revenue is driven mainly by increased CPM, as the IAP revenue growth generates demand from advertisers targeting an audience with greater purchase intent.
Hongkeun: What was your strategy for developing IAP-based games and improving IAP performance in existing ones?
Yoonseo: The strategy involved optimizing game level balance, optimizing game economy balance, and personalized merchandising.
Optimizing game level balance was about ensuring that all game levels were configured to an appropriate level of difficulty so that users are intrigued while playing. We think this intrigue is an important factor in encouraging people to purchase in-app products and consume goods. Therefore, while emphasizing fun — which, after all, is what games should be about — we reviewed and redesigned levels and found the right difficulty curve for each genre based on the data. We also added new features suitable to each level and adjusted areas that were too difficult or too simple to play or simply monotonous.
Next, the most important thing for in-app monetization was optimizing game economy balance to complement game level balancing. To balance the game economy, we tracked all the assets provided to and consumed by players, analyzed the in-game economy by converting the value of the assets into hard currency, and then balanced the inflow and outflow of assets.
For existing titles, we found several cases where the in-game value of assets wasn’t consistent with the in-app product’s price. So we recalibrated the composition, price, and value of products to make them more consistent. In some cases, we had to change the value of in-game goods. As players could see such changes as disadvantageous, we took various measures — such as making updates gradually and providing compensation for updates — to minimize any negative impact.
Finally, with sophisticated level design and economic balance, personalized merchandising was considered the most important factor in increasing the paying user rate (PUR), a key indicator of IAP performance. Through collaboration with Google Play and continuous A/B testing, we offered differentiated products to players, which led to significant improvement in PUR within a short time.
Specifically, we encouraged new players to make a first-time purchase by offering a limited-time product, a starter pack, with a high value for its price. Then, when a player failed to complete a level, items that would help them continue playing were exposed to motivate players into making a purchase. Also, we employ user segmentation to suggest customized offers based on the user’s purchase history, user level, and in-progress contents. For example, offering an unlimited booster and action package to the top-ranked players in competition events.
Hongkeun: Are there any differences between operating new IAP-based games compared to existing IAA games modified to use a hybrid revenue model?
Yoonseo: In terms of operation, IAP- and IAA-based games are not significantly different. However, IAP-based games require more data than IAA. For example, to create the best portfolio of in-app purchase items, we need to understand what items players use and how they use them in the game. You simply don’t need this kind of data in an IAA-based game. Data-driven game design and LiveOps practices are our greatest strengths when it comes to building a solid IAP revenue model.
When it comes to data, we also find the Google Play Console’s comparative benchmarks very helpful. For example, we use them to help set targets for IAP monetization metrics such as ARPDAU, buyer percentage, average transaction value, and alike. If we don’t achieve these targets, we know that other peer games can, so it’s worth considering how to optimize the game to achieve better results.
Following their success in creating IAP games in the bubble shooter and brick genres, BitMango plans to release IAP-based games in other puzzle genres. At the same time, they will also continue to optimize existing games. With these efforts, BitMango aims to increase the share of revenue from IAP to between 50 and 60% this year.
Dive deeper into this topic, check out the Game Business Fundamentals for Mobile Game Developers course at Google Play Academy, a free online education platform.