Transcript
Hello, everyone. I’m David Vogelpohl, and welcome to FS Learns, a premium webinar series by FastSpring. In this video, we’re gonna be talking about in-game versus web store pricing and packaging. Oh, what a puzzle.
And joining us for this conversation is someone who knows quite a bit about this. Former Scopely and SciPlay, currently head of gaming at Fastspring. I’d like to welcome to FS Learn’s Chip Thurston. Chip, welcome.
Thanks, DV. I’ve been really looking forward to this conversation. In my time at SciPlay and Scopely, wore a number of hats across UA, community, live ops, and, of course, D2C and monetization. And so I think tying into that and tapping into some of that experience, hopefully I can bring some valuable lessons today.
Excellent. Well, I’m looking forward to learning a little bit about your views here. And I know this is an important puzzle that publishers need to figure out. So I’m gonna kind of walk through a series of questions here and get your insights into pricing and packaging strategy. So let’s start by zooming out for a minute and just thinking about pricing and packaging in general for a mobile game. What is your overall high level advice or point of view on what makes a good pricing and packaging strategy for your games?
Yeah. At the highest level, I immediately go to economy management. I think one can’t talk about pricing and packaging without talking about how one manages the economy. And by that, I mean, you have, as a game, you have your sources and your sinks. This is a very common way to think about managing an economy in a game, But your source is anything you’re giving to the player. Anything the player can source from the game. So say you play a new event or a feature and you get some rewards for that, that’s a source for you as the economy manager.
Whereas the sync is what the player has to invest their resources into. Right? So say they have to pay some currency or they have to redeem maybe maybe it’s an especially hard level and they have to use some consumable item to beat that level. That’s sinking into that that feature.
And so as an economy manager, you’re constantly balancing between sourcing and syncing. And I mention this because I think that’s where I start packaging. When it comes to pricing, you’re thinking about what you’re giving to the player, what you’re sourcing for them, and how you can price that appropriately. How interested are they in it?
How much demand is there for that? Because, of course, demand dictates pricing. And it’s the same for packaging. You’re really placing it around these features and saying, hey.
Do you wanna beat this level? Well, if you do, you should go buy this item for this price. And so it all ties back to managing that economy and making sure that you’re generating the interest in the appropriate places so that your players are willing to invest for the that you’re setting.
So it’s a bit of like thinking about it through the lens of supply and demand where you’re managing that supply and demand across your game as you identify what products to sell, how to price them at, and then gauging that against your players’ willingness to pay?
Yeah. Exactly. And and the real nuance is that it’s different for every game. So supply and demand, of course, is a universal rule.
But when you look at any specific game, where they’re getting supplies and where you’re creating that demand will be different. It could be very narrowly focused. It could be very broad in all the features and different ways that it operates. And so that’s where the real fun of managing that economy comes in.
Are you also taking into account, like, willingness and ability to pay? And does that play a different role as you think about pricing and packaging on a global scale?
Yeah. That’s a great point. Only a very small percentage of players in a game generally convert. We’re talking maybe two percent to three percent of players that play a game will ever be a spender in that game or a customer of that game. And so you absolutely think about that. You do anything you can to try to get that first purchase. That’s why you see starter packs or first time purchase bundles or any of these things to try to overcome that initial hurdle because every game I’ve worked on, we’ve seen that once you get that first purchase, those future purchases are much, much, much more likely as opposed to a player who has never made a purchase before.
Yeah. That makes a lot of sense. It’s always cheaper to acquire more business from an existing customer than to acquire the first time business from that customer. So it sounds like you’re taking into account their geography, price points to get them especially in that initial purchase.
And then also their journey in the game, it sounded like, as you thought generally about pricing and packaging strategies. So let’s shift gears a little bit now that we have a better view of how you see the world in terms of overall pricing and packaging strategies. Let’s go one click deeper. How do you think of pricing and packaging strategies as it relates to direct to consumer? How is it different than how you might think about it overall for your games?
Yeah. I think it’s different because at least up until this point, you’re driving your players off platform and purchasing in platform has a lot of value to the player. It’s convenient. It’s extremely trustworthy.
It has just the the most frictionless experience possible to purchase inside the app. And for the publisher, however, you’re paying thirty percent of that revenue to these major platforms, and so there’s a heavy cost to that convenience. So as a publisher, you do wanna drive those purchases off platform, but now for the player, you’re pushing them outside of that comfort zone a little bit. Right?
Maybe they’re not as familiar with the website that they’re going to. They have to input payment information again. It’s a little bit more of a longer journey than it was as opposed to just purchasing inside the app.
And so because you’re driving them outside to another platform to make this purchase, when it comes to pricing and packaging, you generally need to be more generous with them. You need to give a little bit more to the player in order to incentivize them to take that journey with you. Most commonly, this means giving more per dollar for something purchased off platform than something purchased inside the mobile game. For example, if you say for ten dollars you get one hundred gems inside the mobile game, Maybe for ten dollars, you get one hundred and ten gems or one hundred and twenty gems when you’re outside of the mobile game and on that web store. And just by virtue of giving them more money, you’re incentivizing them enough to go drive those purchases off platform, but then you as a publisher are reaping more profit and getting more firsthand data as a result.
So and I know that this depends a little bit on how people are finding your store. Is it independently on their own through influencers or are they kind of being steered to the store, if you will? And I know that that’s only allowed in certain regions. And I know that, obviously, you can support Apple and Google Pay on web stores, which is a pretty fluid experience. But even in that scenario, you’re kind of pointing out that even then, there’s still friction there for the player. And so while it may be better for you and your game and your team to have higher profitability on your players and their transactions, there’s a little more friction there for the player. And so the idea, as you think about the difference between in app versus web store, is really around providing some kind of incentive to, convince the player that it’s worth that extra little bit of friction there.
Yeah, exactly. And I think you did touch on something that’s really interesting there we’ve seen emerge, which is the notion of direct checkout instead of web store. So that nuance is let’s think of the traditional web store journey. So a player let’s say they’re steered from the mobile game.
So a player opens the mobile game, sees a button to go to the web store. They tap that button, go to a web page that is the store, and that store has a list of different products or different items they can purchase. They add them to their cart, then they go to the checkout page. And then at the checkout page, they make that purchase and go back into the game.
It’s a very traditional web store flow. Well, with direct checkout, you’re removing some steps from that journey to take them directly into the checkout page, meaning you, as a player, open the game, see the item you want to purchase, and when you tap to check out directly from that item, it takes you to a web page, but that web page is specifically a checkout page for that item you want to purchase. And then you make that purchase and go right back into the game. At FastBring, this is our steer safe approach, and it’s the most frictionless path possible for direct to consumer.
Now the caveat with this is that regulations might dictate the future of this strategy. Right now, we’re seeing it be successful, especially in the United States, but this is subject to change and something we’re seeing evolve very quickly. So I would say it’s very important to keep up to date with the latest regulations to know where you can introduce features like that to try to minimize friction.
Yeah, and it sounds like in general, it’s around reducing friction, providing that incentive to establish that behavior. I know here at FastSpring, some of our bigger clients see something like ninety percent return rates for people that are buying on the web store. They’re just coming back again and again and again. And so it’s about establishing this behavior and rewarding them. I mean, if you’re gonna reward yourself by having higher profitability, why not reward your players?
I’m guessing, like, if you’re giving the additional incentives though, whether it’s, you know, ten extra gems or twenty or whatever on a on a hundred pack, how does this affect your sources and sinks? Do you feel like it has a huge impact on the economy management? Is it negligible? How does it impact your economy management in your games?
Absolutely. Your economy management is critical, and that’s why it’s where we started when this conversation when it came to how we think about pricing and packaging in general for mobile games. Because if you introduce let’s say you’re wildly successful and you get fifty percent of your revenue driven through d to c channels. Well, now if fifty percent of your revenue has ten percent more that players are getting per dollar, you’re injecting, what, five percent more into your economy than you were before for all of the purchases being made.
You’re creating a lot more sourcing, and so your economy has to be elastic enough to accommodate that and sink that additional currency. Otherwise, you’ll incur inflation, you’ll jeopardize long term future purchases, and so that sounds scary, but I only say that to say it’s why economy management is so critical. You obviously can’t just say we’re gonna give out twenty percent more on purchases without thinking about how you’ll sync that from those players.
Very salient advice. Alright. Next question. Do you think cheaper prices or more entitlements are better for D2C pricing? You kind of framed it earlier as like most people do more entitlements, more gems per pack or whatever.
But what do you think is better?
And maybe that’s a nuanced answer.
Yeah, I actually anecdotally, I was part of an AB test that tested this exact question to say, let’s take our audience and let’s split them and segment them and say, I’ll use my ten dollars for one hundred gems example from earlier. So say half the players for ten dollars get one hundred and ten gems, they get the more entitlements, or half the players for nine dollars get one hundred gems. So instead we’ll give them a ten percent discount if they go purchase on the web store. And what we found was that the additional entitlements ended up being a net benefit.
And I’m choosing my words carefully there and saying net benefit because there’s a number of factors. Yes. It’s conversion, and, yes, it’s getting players over to the store, but it’s also economy. Right?
And it’s it’s thinking about if you’ll be able to accommodate that sync. I could see certain games where maybe that lower pricing is preferable because in that lower pricing example, you’re not changing the ultimate amount that you’re sourcing to the player. Yes. You’re getting less revenue for that.
But in both instances, they’re getting a hundred gems. It just cost them ten dollars on mobile or nine dollars on the web store.
Typically, from what I’ve seen, it’s better to get more entitlements provided that your economy is able to accommodate that.
Oh, that’s a really interesting lever to maybe get around some of the economy impacts of this. But it sounds like managing the additional entitlements or, virtual currency that you’re contributing to your sources is fairly manageable. It’s not like it’s some insurmountable problem that you’re gonna upend your life over. Is that is that really what I’m gathering here?
Well, certainly not that, but I I think it really depends on the game.
Some games have more rigid economies than others, and some have much more sensitive economies. And so what is easily manageable, for example, social casino, that is typically very easy to sync currency into just by virtue of the mechanics of the game, whereas maybe a mid core game could have a bit more challenge if you don’t have the appropriate features inside of that game to sync whatever currency it is that you’re sourcing. And so I think it really will come down to the game having the appropriate levers. I think for most successful games, they will be able to easily accommodate an e ten percent additional currency and be able to accommodate that with their players. The other reason I didn’t touch on for more entitlements being appealing is, of course, the revenue to use the publisher. So if you’re selling things at a discount, you’re inherently earning less revenue for that purchase, and that’s less desirable.
So that was another factor we considered in this AP test was, in addition to the conversion, just how much revenue are we taking in because we are offering them more, but at least this way, the revenue we’re getting in is staying, the same for mobile versus And in that test, more entitlements won.
Yes.
Yes. To be clear, the test I was part of, more entitlements was preferable for us as the publisher when taking into account all those different factors.
Yeah. Because you I mean, obviously, people need to AP test their own scenario to find what’s best for them. But but an alternative option could have been that the players love the cheaper prices and bought way more of the items than they would have otherwise versus it seemed like in in this test that maybe the the number of transactions was maybe, I I don’t know, around the same or something, but it was really the revenue, I guess, difference that I don’t know. Was it the number of transactions? Was it higher when you offered more entitlements? Was that the measure?
Yeah. In our case, it was the revenue we made and also the conversions we were driving from mobile to web. We were trying to create D2C customers in this. That was another metric that we measured, was the number of new customers we were creating, and we saw that be successful between the two.
The other interesting part was that the discounts didn’t drive the proportionate lift that we would have wanted to see to justify that discount. And I think this gets into a little bit of the nuance of the mental friction between the two platforms and how you treat pricing. Just inherently, when you as a player see this is ten dollars here, this is ten dollars there, but this one’s worth more, well, that’s a really easy conclusion to draw. As opposed to this is ten dollars here and this is nine dollars there.
Well, are they worth the same? Even if they have the same amount, it takes me maybe just a little bit more processing to draw the conclusion that that’s actually much better, And so I think it’s just a more intuitive angle as well to take to offer more entitlements.
Yeah. That makes a lot of sense. And I guess the ultimate measure in these AB tests is profitability because it’s a blend of the number of transactions, the average order value of the transactions, the total revenue, but then the revenue versus the profit margin on one platform versus another.
You know? And I think that’s an interesting way of looking at things, this idea of measuring by profit over, like, the number of transactions.
I know there’s there’s a couple of applications that d two c is kinda turning that on its head as you think about your ad campaigns and your just overall monetization. But I do wanna stay on pricing and packaging here because this is the topic of this episode. But my next question for you is what are the advantages of keeping the same prices between *** and d two c? So we talked about, you know, having cheaper prices or having same prices but different levels of entitlements. What if it’s like all the same? Like, do you do you think that that’s worth testing, or do you think players aren’t getting enough value to to do to basically not offer incentives?
I’ll answer that in a slightly different way to say, if one keeps the same prices between *** and D2C, what is the incentive for the player to go purchase D2C? And I think you, as the publisher, could offer that in different ways. So if you do wanna keep it the same, the advantage is just economic management is much simpler. You you don’t have to deal with the additional sourcing that comes from more entitlements or lower pricing. You don’t have to worry about any of the things we just discussed, but you’re also not giving them that heavy incentive of more entitlements or less pricing to go to that direct to consumer channel. So in that instance, the incentives I’ve seen have been either loyalty driven or content creator driven. And these are ways you can incentivize those purchases without changing the pricing and entitlements between the two platforms.
So to elaborate on those, for the content creator side, it’s saying, hey, any purchases made on this web store, well, there’s a content creator code. And we have a great partnership with Nexus that helps facilitate that. And what that does is it shares some of the revenue with those content creators. And those content creators can become an inroad for your web store that helps you to drive that awareness and purchasing for the web store. And your players are happy because they’re getting to share some of their purchasing with the content creator. And so it creates a really healthy flywheel of engagement where content creators are bought in, players are bought in, and you as a publisher are driving more revenue through that web store channel. And so that’s one example of a way to keep the prices the same but still drive that incentive.
The other is through the loyalty system, which is where you say purchases made on the web store earn you a loyalty currency. Let’s call it loyalty points or VIP points or some special diamonds that you only get through purchasing there.
And then as they make more direct to consumer purchases, your players can redeem them in the diamond shop. But that diamond shop only exists also on your web store. It’s just a different section of your web store. And so by purchasing there, they’re getting additional entitlements, but through this form of this additional currency you’ve created. And then to redeem that currency, they have to go back into the web store, and they redeem it there for additional items. So again, this one creates a healthy flywheel now of purchasing and engagements and redemption within the web store itself. So it’s a couple of ways that even if you keep the prices the same, if you can drive that awareness for your players of these incentives, you can still drive really healthy engagement and monetization on your web store.
So it’s really because, again, the the slight additional friction of having to jump between platform a to platform b is some sort of incentive to kinda keep you coming back, whether it be with the creator side or with things like a loyalty program and delivering some sort of additional value to the player in that medium of of the web store. So that makes a lot of sense. So let me go to my next question, and you kinda touched on this a little bit, which is, should I offer different products in game versus my web store? You talked about the loyalty rewards, maybe a diamond club, and I’m gonna go, you know, redeem those diamonds for something that I can use in game.
What about, like, specific products, like a exclusive skin that’s only available on the web store or special items, something like that?
I would say it’s not a prerequisite to have a different product catalog for your web store versus inside the game. So I think you can be plenty successful without it, but it’s a very powerful lever to drive that behavior to your direct to consumer channel. So exclusivity is a really powerful thing.
If I know I can only get this item if I purchase it on this channel, well, I’ll go to that channel to purchase that item, whether that’s a web store or something else. And so I think it is something to consider, absolutely.
I worked on a game once where we created the new subscription, and that subscription could only be purchased through our web store instead of inside the mobile game. We had other subscriptions inside the mobile game, but it was a challenge to create that subscription because we needed a very unique value proposition, something you could only get by purchasing that subscription. But we created that, and it became a really healthy revenue stream on side of our web store because that was the only place players could get it. And so I think when you think of something like that, something you’re creating that only exists on the web store, you have to consider that not only do you have to drive the awareness about it and get players interested in it, but you have to make sure the incentive is inherent to whatever that product is that you’re putting there such that it will drive players to go purchase it.
Did you find that players that didn’t wanna buy it on the web store were like, why did you do that? I don’t wanna go buy from your website. Did you see negative player sentiment when you tested products that were only available on the web store?
No. No. Typically, web stores, I think, are becoming very normalized for players, and so I haven’t seen particular concern or objection to go purchase it on a web store instead of on a mobile game. If you had asked me that question four years ago, I think web stores were still kind of novel to players and there might have been more skepticism and pushback. But in the current environment, web stores have become such table stakes for the major games out there that I think, at least that I’ve seen, I haven’t seen much pushback from players on items to go purchase there.
Have you seen the opposite? Do players, do you think, internalize the higher profitability can lead to faster game development, more releases, more capabilities? Like, is this translating, or do you feel like this is just not even on their radar as they think about it?
I think for some of your most engaged players, it is. I don’t think it’s at the forefront where they’re saying, I want to reward this publisher, and therefore, I will go purchase on the web store channel so that they have a higher percentage of this revenue versus that platform that I don’t like. I I don’t think it’s certainly as transactional as that, but I do think there is some more maybe subconscious benefit to it where I think it’s pretty well known about the impact web stores are having on the industry and that they are inherently good for this industry and democratizing how payments are done and how profit is shared. And I think this is especially true when you layer in content creators where there is that direct benefit of saying, Oh, I get to reward this content creator I’m watching, and now I’m rewarding the publisher I’m playing.
So I do think we are starting to see a little bit of that behind the scenes. I wouldn’t attribute a lot of web store growth to it, but I do think there is some maybe subconscious influence there.
Yeah. It probably depends on the game too. I’m sure some hyper casual games or players aren’t thinking like, I wish I could have more options in where I buy my game stuff from.
So obviously, it depends on the game and the player. Last question. What is the number one thing you want folks to remember as they think about their in app purchase versus D2C pricing and packaging strategy?
I think the number one thing to do and what I would do if I started on a game tomorrow managing a new direct to consumer initiative is find what fits for my game. This everything we’ve talked about today is great in terms of best practices and fit and what we’ve seen be successful, but what works on one game will not necessarily work on the next game. And so this is true when it comes to the amount of entitlements that you’re giving out, whether additional entitlements work versus discounts, whether you think about a direct checkout page versus a web store page, when you think about the way to leverage content creators to grow a web store, all of these things will vary so much, not just between genres, but even between games within the same genre.
And so I would take all of these ideas and jot them down and think about what I think will be most effective, but then I would start to roll them out and see what players latch onto versus what maybe doesn’t land as well as I would like, and I would iterate from there. But the key thing is that there’s no silver bullet. There’s no singular recipe for direct to consumer success. And so it’s really about coming up with great ideas, trying them out, and learning quickly.
Excellent. Sage advice. Thank you so much for joining us today, Chip.
Thanks, DB. Always a pleasure.
And thanks everybody else for joining FSLearn, an on demand premium webinar series by FastBring. We hope you enjoy learning a little bit about in game versus web store pricing and packaging. We wish you the best of luck as you go on your journey to get the most out of your web store.
Buyer Support
Seller Support
