Tuesday, September 23, 2014

Customer Acquisition versus Retention in MMOs

Repeat business.
That's the real secret sauce for any great company.

This blog post isn't about the merits of new customer acquisition versus customer retention.  Fostering customer loyalty is cheaper and more easily done than acquiring new customers.  It's more profitable for businesses and a more rewarding experience for customers.  Done right, it's one of those rare win-win situations.

And yet...

Google this topic and you'll find plenty of citations and examples of companies who prioritize acquisition over strengthening relationships with the most valuable and loyal customers.

Free the Peons!
TAGN recently posted a video from Extra Credits about why F2P is currently broken.  They don't specifically talk about MMOs, but they do speak to the model overall and what they believe is the fundamental problem.

Which, to paraphrase, is that retention is largely focused on the "whales" willing to spend big bucks rather than the peons (er.. people) whom those whales need to compete against.  As they accurately point out, without the peons (er.. people) also playing, the "whales" get lonely, no longer feel special, and leave to play other games.

And so... these F2P devs end up with massive new customer acquisition costs to replace peons (er.. people), so that the "whales" continue to have someone to play against/with.  Peons, who in turn, leave shortly thereafter because the game isn't that fun unless you happen to be a "whale".

Extra Credits even goes so far as to say that the solution to this problem is to focus on the peons (er.. people) who spend far less than the whales by providing them a more rewarding experience.

Developing for the guy who doesn't play your game...
Perhaps the thing I hate most in a developer is when they make major concessions in their game design to placate people who don't play the game.

Now don't mistake that for thinking that I don't believe games can or should evolve.  But they should evolve because of the developer's vision and not because some guy who never played your game or quit it long ago says it sucks.

When you cave to that guy, you tell all your existing customers that they don't matter as much as the guy who left.  Don't make the mistake of placing customer acquisition over customer loyalty.

You can't grow while your bleeding to death.
The typical MMO peaks near launch and then starts a steady decline.  I couldn't prove this in a court of law, but it always seem to me that the first thing the dev tries to do is address the issues the players leaving the game are citing.

I can see addressing those concerns shortly after launch but at some point, sooner rather than later, you need to shift your focus and understand why people are staying and then do more of that.

Now if the things people who stayed are complaining about are the same things the people who left complained about -- then it's pretty obvious what needs to be fixed.  But if the two things are not the same, and they often aren't, then as the proverb advises: you need to hold on to the bird in your hand and not the bird that's in the bush.

Because before you are going to see growth again, you need to retain the people who are still paying customers.   You simply can't grow if you are still hemorrhaging players.

This is what I believe is the true secret to EvE's growth over the years.  They have a fostered a very loyal community and while retention among new players is similar to the industry norm, the retention of the long-term players continues to be very high.

Friday, September 12, 2014

Quick Hit: Subscription model vs Cash Shop

Proponents of cash shops,  F2P, P2W, and microtransactions often cite the idea that they like these models because they value real money over time invested in the game.

The rationale is that real money and time are both currencies.  When we are younger, we have time but no money.  As we get older, we have money but no time.

So for those with money and no time, spending money through cash shops is seen as a very viable and practical way to gain a level footing with those who are spending time.

But here's the rub and why this rationale is wrong.

In the scenario of a subscription model where we spend "time" to gain our in-game advantages, the incentive for the dev is to keep you playing and resubbed.  While this has it's obvious flaws, the dev also has an incentive to make any grind as fun and interesting as possible.

Whereas, in the second scenario where he wants you to spend money to gain an advantage, he wants it to be as painful as possible without causing you to quit.  Games are carefully designed to "hook you" and then make you frustrated enough to want to spend money to AVOID whatever blocker they have placed in your path.

So what kind of exploitation do you prefer?  The kind where the dev bribes you with Pavlovian treats to keep you subbed or the kind where they withhold the treats unless you pay $5 to get your fix?

I'll take the bribe.