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When to Sunset and When to Stay With Social Games on Facebook
August 8th, 2011

When to Hang On

A game might have a LTV < CPI situation on its hands when retention drops below 10% and average revenue per daily active user is already low (say, less than 1 cent). That doesn’t always result in sunsetting, however, as we’ve seen developers turn a game around by simply changing the gameplay or adding new content. When a game introduces a new expansion, two things happen: MAU and DAU spike as new users come into the game, and retention (DAU as a percentage of MAU) falls. This creates a second curve in the game’s overall life cycle similar to its first three months on the market. Like those first six months, the non-paying users will drop out and the dedicated paying users will stay — and hopefully there will be more of those dedicated users than prior to the expansion. What Developers Can Do: Keep it Awesome, Reduce CPI

Social games on Facebook are only just now finding ways to prolong the gameplay experience through expansions and sequels. Early examples of sequels like Playdom’s Mobsters 2 didn’t perform very well, as users seemed reluctant to migrate from an old app to a new one. As RockYou’s Zoo World 2 proves week after week in our rankings, however, developers can get around this complication by running the sequel in the same app ID as the original. Other games, like 6 Waves Lolapps’ Ravenwood Fair, are hoping to find success through franchise extension in new games rather than with direct sequels. Zynga, meanwhile, continues to explore expansions like the upcoming Pioneer Trail add-on for the 14-month-old FrontierVille. Aside from introducing new content, developers can also change the evaluation equation by reducing overall CPI. This comes from targeting user acquisition toward only the users they want to have in their game. It may seem like an obvious conclusion that you should only spend money on the users most likely to spend money on you; but we still see some games going after a large, general audiences in their first two months on the market. While this “race to critical mass” approach seems to be working for some games like Disney Playdom’s Gardens of Time, most mid-market and small developers struggle to reach this point unless they go through a publisher with a preexisting critical mass. What Facebook Can Do: Make it Easier to Acquire Users

Facebook scaled back viral channels available to social games last year in an attempt to clamp down on a spam problem. Some of this virality is beginning to return on the platform, now that Facebook feels it has spam under control. Beyond that, though, the platform is working to improve social discovery for games and introduce a better new-user experience. All of this will help developers connect with the kind of users that can support high LTV. “We focus on greater ability to find the right types of users for a lower cost for your game,” Ryan says. “It’s not just a sunsetting issue — sunsetting in creative fields is life. You move on. [Facebook] focuses on better ways for you to expand, for you to go viral, for you to acquire customers. That should help, whether it’s sunsetting or expansion.”