Lifetime Player Value (LTV)
Strategies For Mobile Games

When mobile gaming’s in a boom phase, investing in the right marketing and monetization strategies for your game is vital. When times are tougher, strategies tailored specifically to your game and its audience become even more critical.

User acquisition continues to lie at the very heart of making a mobile game a success or failure. And one of the main indicators of the quality of users you acquire and how they’re engaging with your game is lifetime value (LTV).

Player LTV in mobile gaming

A proper discussion of growing mobile games is impossible without talking about player lifetime value. 

The term ‘LTV’ refers to the amount of revenue a player generates or is projected to generate over the course of their ‘lifetime’ within a game. The higher the LTV is for a particular player, the more profitable they will be for your game. It should go without saying that you want more high LTV users. 

Not too long ago, mobile game developers and publishers put a heavy focus on UA, but they didn’t care (as much) about who they acquired as new players. This was especially true for hyper-casual game makers, and rightly so, considering they were making expendable games with short shelf lives. But mobile game monetization is an ever-changing game, and following the changes in digital privacy for mobile advertisers, lifetime value became an even more important metric to focus on.

The last decade has seen both of the main marketplace holders, Apple and Google, make considerable voluntary and involuntary changes to user privacy in their ecosystems, greatly affecting the mobile game industry. In order to talk about LTV, we first need to understand how privacy changes have affected the measurement of it.

Here’s a potted history of the changes that took place between 2012 and 2022 alone and how they affected the mobile game marketing and advertising world:

We can now of course add Google’s Consent Management Platform and gradual deprecation of cookies, the EU’s Digital Markets Act (DMA) and doubtless many more in the near future. 

Now, it’s time to get back to the mobile gaming industry and the importance of lifetime value. Simply put, if you are to scale your mobile game, you’ll need to keep track of player LTV because LTV is the KPI that can help you estimate how profitable your game will be over its course.

But what else do you need to know as you seek to use LTV to help power your game’s growth?

How is lifetime value calculated?

This is a more complicated question, as there isn’t just one way to calculate player LTV.

The simplest way is to divide your game’s 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 is worth.

For example, if 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 that you already have 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).

Why is player LTV important for mobile games?

It might seem obvious 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’s a crucial one for determining the approach you take to the marketing and growth of your mobile game.

LTV can help you with:

• Estimating how profitable your game will be.
• Evaluating the potential of your game while it is still in the beta stage.
• Optimizing revenue streams – such as in-app purchases or subscriptions – to help achieve greater profit.
• Figuring out your budget for user acquisition campaigns.
• Observing how your game’s most loyal players behave.
• Determining the likelihood of specific players churning or spending.
• Testing the impact of updates to the game.

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.

Today, mobile game-makers care much, much more about lifetime value. It has gone from a nice-to-have to a make-or-break. You used to be able to launch a game based on CPI alone, but now even a game that has an IPM of 40-50 may not be a financial success, simply because the quality of the player is not good enough for proper monetization. 

With many of even the most casual games shifting toward hybrid monetization models and more engaging core game loops, acquiring quality players with long play times and willingness to spend in-game is becoming even more important. This means LTV is becoming the golden KPI to focus on to predict financial success for mobile games.

In fact, the days of acquiring users as cheaply as possible are pretty much gone, and we’re seeing a shift toward acquiring high-value players to maximize the revenue of a mobile game.

Why LTV is important for user acquisition campaigns

Knowing your game’s expected user 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 the cost per install (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 while 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. Especially considering how CPI and other install cost metrics are losing their power and the lifetime value of a player is becoming more and more important.

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 or more ambitious LiveOps, 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 about some of the topics covered previously.

Note: If you’re running the finances of your mobile games company, do keep in mind that you need to consider all the other operational costs as well. This article only focuses on mobile game marketing and advertising matters; LTV alone won’t paint the full picture. No single metric can.

How to improve LTV for mobile games

The first thing you need to do is approach each mobile game differently. In the end, no product, not even a cloned game, can succeed in the market if it follows the same path as another. 

Some mobile games can increase LTV and become profitable by just adding content on top of content. For instance, you’ll see this often in King’s Candy Crush series. The mobile gaming giant will drop new levels en masse and put a heavy focus on retargeting existing players. Meanwhile, your game is highly unlikely to have a similar pull level, nor would you have the budget to create new levels for your games at King’s pace.

We strive for high-quality players because they improve our games’ LTV, and the higher the LTV, the better. Because it simply means you’ll have more resources to further invest in your mobile game and scale it to new levels.

We strongly suggest taking a few steps back first and then understanding the current trends and climate for your game’s genre. Following that, you can start analyzing your target audience, how you can optimize your mobile game marketing efforts to acquire high-quality users, and how you can optimize and shape your strategy for maximum performance.

Some LTV growth opportunities lie in the following:

• • Game progression: How long does the average user play your mobile game, and what happens when they completely finish the content that’s available in your game? How is the player experience, the game flow, and what milestones do you offer? More importantly, how can you maximize the game progression to maximize revenue per player?
    Simply pushing out new levels and content used to work when the competition wasn’t as fierce and when there weren’t so many alternatives available to players. Now, it’s a different story. Which brings us to meta layers.
  • Meta layers: Mobile games are growing and evolving, and players demand more than super simple gaming experiences with this growth. Meta layers allow you to address the player demand and allow you to grow your game, and help attract new player bases.
    Adding a new meta layer that’s suitable to your mobile game will increase engagement KPIs drastically. You should watch your players closely to understand their behavior, gather player experience data, and use these insights to optimize the flow of your game to improve LTV.
  • Game economy: Playing with a mobile game’s economy is extremely tricky. One seemingly minor change to how you can earn a soft currency can lead to amazing results in the short run. However, short-term results often hide the upcoming massive LTV issues.
    When making changes to your game’s economy, try to be a few steps ahead, do a lot of testing, and focus on the long run as well. For instance, many puzzle games find long-term success in adding new soft currencies to their game, but they combine economic changes with new events or maps/regions/areas. This allows control of the game economy and player spending and increases engagement and player dedication, hence improving LTV.
    For instance, Scapes games (Gardenscapes, Homescapes, etc.) have added several new soft currencies over the course of the years and saw increased LTV through gameplay and economic changes.
    
  • Monetization: How you monetize your game can increase your LTV or drive even some of the most dedicated players away. Showing ads at the wrong time and place or too frequently can harm your LTV. Showing ads way too frequently can be a sign of a “once successful, now dying” game. Luckily, if you have a game that seems to have its best days in the rearview mirror, we can help you turn things around.
    Another example is Supercell removing loot boxes from Brawl Stars. The company planned the change in monetization thoroughly yet experienced some considerable hiccups along the way.
    Meanwhile, adopting new monetization strategies can greatly improve your LTV. It’s all about understanding your players’ likes and dislikes and how you can use their behavioral data to increase your game’s LTV. 

How SuperScale can help improve the LTV of your mobile game

Everything previously discussed is just the tip of the iceberg when it comes to player LTV, but we hope we’ve provided a few pointers as to its importance. 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. 

If you want to modernize your approach and scale your mobile game, reach out to us for a 15-minute call so we can explore how to help you achieve your LTV objectives for your mobile game.