6. Why Business Modeling Your F2P Mobile Game is Important?
Discussion about Business Modeling's importance for F2P Mobile Games
Business modeling is key nowadays, when the mobile games funnel is operated from top of the funnel approach, in building and Live Operating your mobile game(s) successfully.
This article discusses, in short, about key points and principles of business modeling — and why it’s needed for successful new game development and Live Ops in mobile games business.
Why Business Modeling?
The answer lies within two basic principles:
1. Healthiness of your product in terms of LTV > CPI:
Having your e.g., ROAS profiled properly against your UA efforts.
One step down more from ROAS?
Overall with that you can look into your retention metrics, retention curve, monetization KPIs as well as UA metrics, cohorts, and so on.
Helps you to realize if you have business case, or not — navigation / exploration tool during iterative development; find more about iterative development and method here (https://gamesalchemy.substack.com/p/2-get-iterative-game-development):
2. Prioritization for your roadmap, to improve your business case:
By knowing your numbers from top of the funnel approach down, e.g., from Dx ROAS % to retention, monetization, and UA metrics, you can prioritize what's important to move a needle according to your next goals and current product stage.
For example, if your goal is to increase ROAS, you can find from business modeling means to achieve it through improving engagement metrics, monetization metrics, UA metrics (e.g., getting lower CPI) or through tie-ins of all of these; which can look easily like a basic excel exercise to some level, but going beyond that to product level you'll be able to choose your must win battles better, especially when you know what is achievable on e.g., product, game design and UA side as well as what you have as strategy and product vision for your product in terms of taking it further in its product life-cycle.
Scenarios for UA with different volume and CPI profiles can be reviewed against your ROAS profile's changes on product, to see how things affect and where the tie-ins lie.
Basically helps you to walk in right direction with right mindset and priorities, when you understand business, product management and distribution all together, including their tie-ins.
Benchmarking Will Enhance Business Modeling
Business modeling can come alone, but at many times, on top of it, benchmarking is a way to advance it further (it also helps with early stages).
By combining business modeling with benchmarking, you can go deeper in your healthiness check and roadmap prioritization; where you can compare, adjusted to your product stage, are you e.g., on track properly to different benchmark targets like top 10 percentile, top 25 percentile, etc. in a category (based on constructed targets and goals for your product).
I’ve posted about early stage mobile games benchmarking after writing this article, which can act as a starting point for benchmarking — and taking it further from that, by e.g., building, as mentioned above, target profiles for your product based on different targets on e.g., getting your game to top 10 percentile, you can advance business modeling with benchmarking to more mature product stage, and further.
You can find more about Benchmarking here (https://gamesalchemy.substack.com/p/7-early-stage-benchmarking):
Business Modeling combined with Benchmarking can also be used for competitive intelligence, e.g., breaking down competitor games and seeing how they engage, monetize and scale / maintain their operations. Modeling and Benchmarking can be also used for modeling category percentiles, as the case applies, for seeing what is really required to get there from UA KPIs onward up to engagement and monetization KPIs.
Business Modeling at Early Stages
In terms of early stage adaptation of business modeling, it might not be needed in all cases, where benchmarking (adjusted to your early development stage and its goals) comes first in stepping order — but it can come handy if you are operating under the current commercial sentiment (find more about what I’ve written about it here / below: https://gamesalchemy.substack.com/p/16-mobile-gaming-cycles-commercialization) for mobile games development.
What does this mean? In short, given how e.g., user acquisition runs through top of the funnel approach and modeling e.g., ROAS, the general advise would be looking to add monetization features into your product as early as possible.
I believe strongly that in many types of F2P mobile games, monetization and engagement are two sides of the same coin. A well-designed strategy ties the two together, ensuring that players feel rewarded and motivated, rather than pushed away. So, it’s kind of part of the experience — from gaming to entertainment. Thus, some parts of monetization should be looked to be tackled as early as possible, in connection with the realities related to the top of the funnel approach.
Final Thoughts and Direction
Business modeling is a good tool that helps you to navigate inside the current environment of mobile game development, publishing and live ops.
It’s something that can be used from early stages, on top of other tools (e.g., benchmarking), to later stages, when you have right mindset and lenses on for how you should approach games commercially.
It helps overall to realize your healthiness of a game as well as finding how far you can go with scaling your monetization and UA — with constant monitoring also over engagement (I think as a tool it’s good as it’s not forgetting engagement at all, as engagement is big part of how you attract and retain users in your game) as well as marketability.
Start building your business models now, if you haven't already! For building them, in the first steps it’s important to get your basics down — from UA metrics to cohorted retention profiling to cohorted ROAS / LTV profiling; which means you need to know and model at least your CPI / eCPI, volume of acquired users per each day, UA spend per each day, organic traffic per each day, cohorted and forecasted retention profiles / curves, Ads/DAU, eCPMs, IAP conversion %, ARPDAU, ARPU, ROAS / LTV cohorts, incl. predicted ROAS and LTV, and such. For basic forecasted models trendline, logarithmic means or smoothened curves can do their work, but over time it would be important to model curves based on actual historic data, which would be then used for forecasting how curves and cohorts evolve over time. Obviously, the longer the forecast goes, the more of detailed act this becomes statistically and evolving with your methods — like some games’ paybacks can be anything from 6 months to 1 or 2 years, or so; where some fingers might need to be crossed in terms of models having statistical +/- variation to actual results — where obviously a solid game and, furthermore, solid Live Ops needs to be executed and being able to be kept up along with the model's forecast's required level.
These models evolve over time and throughout their evolution they can be moved to analytics, which would have historic / actuals data and forecasted days ahead on same cohorts, where same type of principles mentioned above are used. Ideally, on top of that layer, it would be actually nice if more tooling tie-ins with analytics would be done where also Business Modeling / prediction dashboards would be done for UA and game teams, vs. they would work with each on separate models.
Extra Read
Curious about whst's behinf KPIs / metrics overall? This article about physiology and psychology, and how those affect to KPIs / metrics, would be very interesting for you to read (https://gamesalchemy.substack.com/p/8-physiology-and-psychology-how-they):
Want to make your execs and stakeholders happy with the magic of Business Modeling? Read more about expectations management of this layer here (https://gamesalchemy.substack.com/p/3-stakeholder-and-executive-expectations):
Happy building and Business Modeling!