engagement – Alley Mobile

THE RISE OF THE SUBSCRIPTION MODEL IN THE APP ECONOMY

By Stefano Melucci | October 25, 2017 | Comments 0 Comment

If you have looked at the Top Grossing charts on the App Store (though that’s harder to do in iOS 11 than it used to be), you might have noticed an important change taking shape in the last few months. On October 1st, for the first time, the Top 5 grossing on the US App Store didn’t include any of the usual free-to-play games that have dominated for so long: Clash of Clans, Clash Royale, Candy Crush, Mobile Strike, Game of War or Pokemon Go.

Credit: Prioridata

The big winners in the free-to-play game market do not need to panic: they are still doing well (with 5 of them remaining in the top 10 on that date), but we can detect some interesting market trends from this new chart.

The first is that mobile consumer spend is diversifying from games into other popular content categories like dating, music streaming, and mobile video. Mobile video, in particular, is very hot, with a multi-billion dollar battle to turn the smartphone into a television as well as skyrocketing trends in mobile data traffic driven by video.

The other common denominator among the Top 5 grossing apps from the chart above is that they monetize their content with a subscription business model. It comes as no surprise that the subscription model can be very profitable for content providers and very convenient for regular consumers of a particular content portfolio. What is relatively new is the expansion of this business model inside the app stores, and consequently, the growth of its importance in the app ecosystem.

In fact, in June 2016, the App Store changed some of the rules around the subscription model for apps, mainly extending it to all categories of apps and reducing the fee from 30% to 15% for subscribers using the services for more than 12 months. Just last week Google announced it will follow the same rule for subscriptions on Google Play store starting from January 2018. This certainly can contribute to the growth occurring on both stores: Apple announced that 2016’s app subscription billings were up 74% year-over-year to $2.7 billion. Google announced that over the past three years, subscription spend has grown over 10 times on Google Play, while subscribers doubled in the last year.

So, if it makes sense for your app, you should definitely look into implementing a subscription model and taking advantage of the recent changes in the app stores. Although the fees are still higher than alternative web payment methods, the low friction in the purchase flow shows conversion rates that are 100%-400% better than usual account and credit card flows.

However, not all apps work well with this business model: you need a great product with a clear value proposition that continues over time. Examples are:

– Premium features (e.g., “Likes you” in Tinder Gold)

– Great and updated content (e.g., HBO NOW)

– Exclusive and personalized service (e.g., health and fitness apps like Runtastic)

– Utility apps (e.g., Dropbox etc.)

Recent research by Google Play outlines the details of what users are willing to pay for, how much they are willing to pay (by category of content), as well as useful insights on how to price your product and keep your users engaged. The Google Play dashboard has also recently added some useful reports to keep track of retention and churn for subscription services.

What about mobile games? Can games benefit from this rise in subscription business model in the app ecosystem? While subscription is definitely not a new model in the PC game space with many MMO (Massively Multiplayer Online) games like World of Warcraft, Elder Scrolls Online, etc., traditionally offering premium subscribers “unlimited access”. This model definitely presents challenges on mobile, with the predominance of casual gaming and its free-to-play model.

The coveted “Netflix for Games” approach that is pursued on the console market by Xbox Game Pass and Playstation Pass requires the bundling of a large number of popular premium games into a catalog. During the subscription, the catalog can be accessed (without limits) with ongoing additions and updates to the content. This is pretty hard to achieve in the mobile free-to-play space, although there has been some success in emerging markets with initiatives like Bemobi (now part of Opera) which bundles a number of premium titles along with full access to free-to-play games using a subscription model.

Another interesting approach exists for free-to-play games with very long player lifetimes and high user spending: offering subscription services either for exclusive features, an advantage in the game, or simply a discount on repeated purchases.

A great example of this is Supercell’s Boom Beach that recently started offering two different subscriptions: “Endless Reserves” which removes the time constraints related to training troops for $9.99/mo and “Extra Builder” which allows a player to build two buildings at the same time for $2.99/mo.

This model has yet to be replicated on Supercell’s most popular and lucrative titles (Clash of Clan and Clash Royale), so we can assume that they are currently testing the appeal of this model in the free-to-play realm to see its effect on the game economy. So far, judging from t he community’s reaction, it seems to resonate well with heavy users of the game. This approach could also be applied to their other titles: wouldn’t you consider paying a monthly subscription for the ability to open Chests instantly on Clash Royale?

Another successful example in the gaming space is Song Pop 2 by Fresh Planet, that offers a “VIP subscription” giving access to a bundle of features and eliminating ads from the game for $4.99/month.

It is too early to know if the subscription model will make headway in the free-to-play mobile games market, but it is certain that potential candidates need to meet the same criteria we listed above for other types of apps: high engagement and clear continued value proposition that can be proven to their users with a free trial period.

If your title satisfies the above characteristics it would definitely be worth exploring the possibility of venturing into a subscription business model, that notably offers developers a more reliable stream of revenues than IAPs and consequently simplifies your User Acquisition efforts.

As usual, do not hesitate to comment or contact us!

ENGAGE YOUR USERS WITH PUSH NOTIFICATIONS

By Stefano Melucci | October 12, 2017 | Comments 0 Comment

Push notifications are a very powerful tool because they allow communication with your app’s users when they are not actively engaging with your app or game. However, they have to be executed carefully! Otherwise, there is a risk that they will be ineffective, or even hurt your game’s retention and increase churn. Indeed, their perceived overuse has sparked extreme reactions – as the recent Wired article “Turn off your push notifications. All of them” illustrates. Although the author’s frustration is understandable, it is also undeniable that push notifications, when used wisely, can be very useful to users as well as being an effective channel to keep them engaged in your game.

Indeed, here at Thumbspire, we typically experience an increase of game launches around 12-15% on our weekly push campaigns days. The graph below illustrates Day 7 retention for one of our games where the weekly re-engagement push campaigns effect is very evident.

So, how do you effectively configure push notifications in your game?

First of all, it is important to understand the rules for opt-in on both Android and iOS. In iOS, the game needs to get permission from the user by displaying a system pop-up where the user can either grant or deny it, and… it can only be asked one time! For this reason, we recommend to explaining the benefits of the notifications for your game, and gauge the user’s intention before triggering the pop up with a flow similar to this:

Source: Localytics

On Android, permission is granted at install, so historically there has been a higher percentage of opt-in than on iOS (60% vs. 40%). It is important to notice some recent (and upcoming) changes on Android: Android N introduced a 2-click flow to disable notifications for an app, which makes it even more critical only to send timely and relevant information to users, so as to avoid your channel from being “shut down” by them. The upcoming Android O introduces the interesting concept of Push Notification channels, where notifications can be bundled by type, thus allowing better control from the perspective of the user and the publisher. For example, engagement, marketing promotion, and transactional notifications could be separated into different channels, thus offering the user more granularity in controlling what to opt-out from if desired.

Depending on your game you might want to set up transactional notifications for meaningful events, for example when a waiting time is over, when energy refills, or when a user action is required in a turn-based game. While these notifications are typically very useful to bring users back to the game, they need to be designed carefully so that they do not overwhelm the user, increasing the risk of being ignored or pushing the user to opt-out altogether. Keep your notifications “fresh” by mixing in new copy (including emojis), so the messages look more appealing and catch the user’s attention.

Another type of push notifications are the engagement notifications that are typically triggered from your marketing automation or analytics platform (e.g. Appboy, DeltaDNA, Swrve, etc.). You can define cohorts of users based on their characteristics (progress in the game, frequency of playing, time from last session, etc.) and target them with engagement campaigns to bring them back to the game. You should define a broad weekly re-engagement campaign with new copy every week and then smaller campaigns for specific cohorts of users (inactive players, players stuck on a level, etc.). Most tools also allow you to also cap policies to make sure users who fall in many different cohorts don’t get hit by too many messages.

To set your expectations, the typical open rate for push notification campaigns range between 2% and 3% with Android having a slightly higher open rate than iOS.

Here are some tips that you should keep in mind in order to maximize the effectiveness of your campaigns:

Work on the copy of your message so that it is both compelling and intriguing: curiosity can inspire users to open the notification to find out more.
Personalize the message as much as possible. Use specific characteristic of the cohorts you are addressing to connect with the users on a very specific need or situation (e.g. Stuck on a level? Low on cash? Etc.).
Nail the timing: you should always set the campaigns to be delivered in the user’s timezone at the times when most users engage with your app. A 2016 Tapjoy study(based on 4.4 million push notifications) found that open rates are highest on Mondays and right after lunch.
Make the message actionable: prompt the user to take an action, (with clear results) and, if possible, offer a reward for that action! We guide our developers to integrate mechanisms in the games so that a push notification can trigger a reward: a virtual currency gift, a free power-up, or a special sale promotion. These kind of targeted campaigns with clear rewards have shown much higher open rates and can be very effective to re-engage your users.

In summary, push notifications are a very important part of your game’s live operations (‘live ops’) after commercial launch. Do not hesitate to comment or get in touch if you need any guidance!