The most important task right after launching a mobile game is user acquisition. All these brick-and-mortar and advanced acquisition strategies require a certain budget in one or another way. If not them, you can opt for those organic ways of user acquisition such as ASO, which are time-taking and also require expertise in doing them.
The Mobile Game publishers planning to monetize their games go out for a hybrid acquisition model, which is the amalgamation of both the paid and organic ways of growing mobile users. The paid one being real quick might claim overnight success for your game, but there’s much more you need to understand before jumping in.
The term LTV (Lifetime Value) is closely associated with User Acquisition, and that happens for a reason. Both User Acquisition and LTV are crucial when it comes to determining the faith of the game. The surprising part is user acquisition is an easy-to-comprehend concept, whereas LTV is complicated.
But, what makes LTV earn that tag or maybe it’s because of mere confusion. Let’s begin from start:
What is LTV (Lifetime Value)?
Lifetime value is the mobile game publishers’ estimation of the profit margin they are going to make from an average user throughout their time of stay/play.
In other words, it’s the difference between the Cost to Acquire a Customer (CAC) and the Total Revenue developers generate from that particularly acquired user.
Let’s make it easier to understand:
LTV (Profit) = Revenue – Cost to Acquire Customer (Expenses)
Key Players of Lifetime Value (LTV)
Various factors impact customer/user lifetime value. Though the endpoint may remain the very same throughout still the key players or variables keep changing.
Below are the 3 factors of LTV:
Monetization – From monetization strategy to revenue, everything belongs to this point. No matter if the revenue is generated via Subscriptions, Ad Impressions or the Premium Model.
Retention – The retention focuses on the lifespan of the user right from the date of install. Moreover, it also covers the quality and quantity of user engagement as a whole.
Virality – That’s hard to track, but it’s still an unmissable factor. Virality refers to the users’ referred, recommended or influenced users joining the game.
How to Calculate LTV of Mobile Game?
The ultimate aim is to know the profit mobile game publishers gain out of the acquired users – as this is what LTV means. There are multiple ways to calculate LTV, below are a few of them:
LTV = f (Monetization, Retention, Virality)
LTV = (ARPDAU) Average Revenue per Daily Active User x User’s Lifetime Usage
In some cases, where users are subscribers, the ARPDAU is limited to Average Revenue Per User (ARPU).
Tips & Tricks to Increase Lifetime Value
Set Optimum Game Difficulty Level: Developers need to find that ‘sweet spot’ for the user based on different game difficulties. The real struggle in doing so is understanding user behavior, else the churn rate will increase just after several engagements.
Keep Measuring Game Retention: The cohort analysis while keeping D1, D7, D15, and D30 retention rate in accordance help in tracking the game retention throughout. Not only this, but it also gives substantial actionable insights to improve LTV.
Organize In-App Events: Keep the hype alive for the users, and in order to do so, setup in-App events with a catchy name and exciting features to retain users and engage them in the longer-run.
Show Rewarded Ads: The Ads can be boring for the users, but that’s not true about the rewarded Ads which not only help publishers with revenue but also let gamers earn benefits to be capitalized within the game.