Breaking Even in the Gaming Industry
In the first part of this Blog # 9 - Customer Life Value , we looked at what Customer Lifetime Value (CLV) is. Customer Lifetime Value is typically calculated as:
CLV = Average Sales Per Customer Per Session (ASPCPS) * Average
Sessions Per Week (ASPW) * Average Customer Lifespan (ACL)
Step 1 : Average Sales per Customer Per Session
How much are your players spending on in app purchases per session?
Step 2: Average Sessions per Week
On an average, how many sessions per week are your users playing?
Step 3: Average Customer Lifespan
This is how long a customer plays a game until they leave.
But what about your Customer Acquisition Cost (CAC)? Any modern day Gaming company is going to put a significant amount of marketing efforts and dollars into launching campaigns. In the large, competitive and constantly evolving Gaming Industry these efforts are necessary in order to acquire new players and improve retention of current players.
If a Gaming company launches a campaign to gain new players the cost of the new campaign, CAC, must be less than the CLV in order for there to be a profit. Breaking Even is not an option. Accurate gaming analytics and calcuations are neccessary for a company to make effective business intelligence decisions.
With a Total Revenue of 46.5 Billion in 2014 – (http://www.statista.com/statistics/237187/global-video-games-revenue/)
to a record breaking revenue of $61 Billion in 2015 -(http://www.cnbc.com/2016/01/26/digital-gaming-sales-hit-record-61-billion-in-2015-report.html) The global video gaming industry is increasing rapidly. Investing in effective Marketing Strategies and understanding a company’s data analytics are necessary to drive the business forward. To determine CLV there are more complex formulas that account for other metrics like retention rates and subscriptions types.
In order to increase a company’s revenue one has uncover the first potential of Gaming Analytics. It is essential to work with a service integration company that can collect, process and accurately analyze real time data from multiple sources as well as create customized visualization tools and dashboards. Having an effective data analytics program in place is an essential step in making informed business intelligence decisions.
Pacific ERP has a history of successfully helping companies by providing specialized data service integration and data analytics customized to business's individual needs.