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It is difficult to talk at any length about the subject of growing a mobile game, without touching on player LTV, or ‘lifetime value’.
The term ‘LTV’ refers to the amount of revenue a player is estimated to generate over the course of their ‘lifetime’ within a given game. The higher the LTV is for a particular player of your game, the greater the value of that player will be for you over their whole relationship with the game.
So, if you are to scale your mobile game, you will need to keep track of player LTV. But what else do you need to know as you seek to use LTV to help power your game’s growth?
It might seem obvious enough as to why you would want to aim for higher LTV for your mobile game. Making more money from each and every player – both the most committed players and those who might play much more casually – will give you greater financial resources to invest back into the further scaling of your game.
But while player LTV might be just one metric, it is a crucial one for determining the approach you take to the marketing and growth of your mobile game.
LTV can help you with:
LTV, then, can give you a wealth of information and insights into your game. That, in turn, can help give you a better idea of what you need to do in order to maximize revenue and realize your game’s full growth potential.
This is a more complicated question to answer than you might think, as there isn’t just one way to calculate player LTV.
The simplest way would be to divide your game’s total lifetime revenue by the total number of players your game has had since it was launched. That would give you an extremely approximate figure for how much each player of your game is worth, on average.
So if, for example, a user spends 10c a day on average on your game, and plays your game for 60 days, their lifetime value would be 0.10 x 60 = $6. But as we said above, there can be a lot more to calculating player LTV than that – not least because the above formula is based on the assumption of you already having a good amount of historical data on your game. Even then, it can only ever be a rough estimate.
Your business model, as well as the data you have available, might lead to you using a range of variables and formulas for calculating LTV. Metrics often taken into account when calculating monetization include the likes of average revenue per user (ARPU) and average revenue per daily active user (ARPDAU).
Knowing your game’s expected customer LTV will help you determine how much money you can afford to spend on user acquisition campaigns, while still being profitable.
In short. you don’t want the amount of money you spend on acquiring a given user to exceed the amount of money you generate from that user over their ‘lifetime’ of playing your game (their LTV).
The average amount of money that it costs you to acquire a user for your game is known as the customer acquisition cost, or CAC. When it comes to mobile gaming, this measure also refers to cost per install, or CPI. You can calculate it by dividing total ad costs by the number of new players you acquired for your game through those ads.
So, you can probably begin to see that whilst LTV is a key metric, it isn’t a metric that you should be looking at in isolation. It needs to be considered as part of a broader picture.
To give just one very simple calculation as an example, if your game’s average player LTV is 50c ($0.50), but your CPI is 70c ($0.70), this indicates you’re losing 20c ($0.20) for each user you acquire, which is of course, not the desired goal – and requires you to rethink how you’re marketing your game. Remember that we’re talking about how much it costs you to get the user to install the app, including the associated marketing, not how much it costs them to install it.
But when you achieve an average player lifetime value that is higher than the average customer acquisition cost, you will be on a path to a positive return on investment (ROI).
That, in turn, will give you more revenue that can be spent on further user acquisition efforts, thereby helping to achieve growth for your game.
We have written a complete LTV checklist that will help you discover LTV growth opportunities and go into more detail around some of the topics covered previously.
Everything previously discussed is really just the tip of the iceberg when it comes to player LTV, but we hope its importance in achieving sustained growth has been conveyed. Given the complexities of increasing LTV, it is often difficult for publishers to choose the right approach without using a large amount of internal resources, which even then, does not guarantee success.
From our experience, there are always LTV growth opportunities within the metagame, monetization and/or ad monetization. So, please do reach out to us for a 15-minute call that would enable us to explore together how we could help you achieve your LTV objectives for your mobile game.
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