Mobile Gaming Ahabs Beware: Why Hunting Whales is a Bad Idea

Steve Anderson : End Game
Steve Anderson
The Video Store Guy
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Mobile Gaming Ahabs Beware: Why Hunting Whales is a Bad Idea

It wasn't so long ago when it was revealed that the gamers getting in on Game of War spent an absolutely staggering amount of cash on their game of choice, spending about $549.69 per user per year. So it's clear that there are some real whales out there willing to drop piles of loot on their favorite game, and pursuing these whales might be the perfect business plan. Some dispute this battle plan as being less than ideal, and one source of dispute may surprise you: Electronic Arts.

The notion of EA—voted two years running the worst company in America via The Consumerist—passing up a source of revenue sounds about as counter-intuitive as mice passing up bread covered in peanut butter. Yet that's what EA's Director of Global Mobile Engagement and Acquisition Erica May suggested is the case, as May suggested game designers instead focus on player experience. May noted that developers often think about things like cohorts and revenue, but “...really at the other end there is a player, and it's really important to understand their experience.”

Of course, EA hasn't gone completely Ebenezer Scrooge after the ghosts on us; the measure of return on advertising spending (ROAS) is still a “very important” number to EA, and of course, it's important to any business to be profitable at the end of the day. EA, however, seems to be coming around to the notion that it's about return business rather than one big shock, and that's not really out of line. May drives this point home by noting “So each of these users is on a different point in their journey, and they’re all important to us. It’s not a question of attracting more high-paying players, but taking those other segments and seeing how you can message them and work with them to increase their attention and monetization there as well.”

It's a good point to keep in mind. After all—according to a report from Slice Intelligence—the average mobile game player in the United States spent $87 on free-to-play in-app purchases, and that's not exactly whale territory. However, it's worth noting that whales are out there, as 10 percent of users account for 90 percent of revenue when it comes to in-app purchases. Indeed, the top one percent of gamers actually account for 58 percent of  free-to-play revenue, and that might make it sound like going after whales is a smart idea. Look at the back side of the numbers, though, and a new strategy emerges. If one percent of gamers are producing 58 percent of income, and 10 percent are producing 90 percent, that means 10 percent of the entire gaming market's revenue is spread out over 90 percent of the gaming public. It may seem counterproductive to pursue such a huge market with so comparatively little revenue to it, but it's important to remember that there won't be so many companies going after that market. In the end, it's possible to get more pie by going after a big piece of a little pie rather than a sliver of a huge pie, and in many cases it's desirable.

There are even some unexpected overlaps; a report from 2015 suggests that kids under the age of 18 represent 7.8 percent of all mobile gaming spending worldwide, so instead of hunting whales, why not go after the kids' market instead? Granted, it takes a completely different kind of product to draw in the under-18 market, but considering how much of the global spend they're responsible for, trying to be the next Game of War may not be the best idea.

Better yet, a game developer would do well to pursue the gaming market that isn't part of the mobile field yet. There's a lot of opportunity to be had there, and the only way to get those gamers is to focus on the overall experience. It's the same no matter what industry one's in; whether it's retail, service, or mobile gaming, satisfied customers tend to come back, and it doesn't really matter how much they're spending as long as there's enough of them to make it worthwhile.

The temptation is there to go after the whales, and with good reason. It's hard to justify going after the 90 percent of the market that only makes up 10 percent of the spending. What developers like EA are noting, however, is an old principle writ large, the “1,000 True Fans” rule. While some dispute the effect of 1,000 True Fans, the concept makes sense: as presented in The Technium as far back as 2008, the rule posits that, should an artist of any sort—writer, sculptor, comic creator, game designer—land 1,000 True Fans, fans that will go anywhere and buy anything, then that artist can comfortably make a living on the strength of that fan base.

Thus, instead of pursuing the whales, a developer should instead look to making the best possible customer experience and building True Fans. It's a philosophy that more than a few have made a living on, and one that even EA can get behind. It's not about the numbers, it's about the impact, and there's a big market out there waiting to be your next True Fan.

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