Post a Comment On: Video Games Business & Marketing

GameDaily Biz had an interesting (and unfortunately difficult to read) article today on the Conversion Rate within the casual games industry being too low.

I've written before at length on Gamasutra on going beyond Conversion Rate to increase sales, and I don't want to repeat that discussion here, but I do want to consider the numbers from the GameDaily article, which if representative of the casual games market are interesting, and not in the way that the writer expected.

The article puts forth the common thought that free demo downloads, when connected to a low conversion rate are a threat to the industry.
Consumers are willing to play the free trials and very occasionally buy a game. But for this industry to be really big, gamers will need to more regularly purchase new downloads...
Here is the data that is used to support the point quoted above.
1 - 20% of Internet users between 12-64 downloaded a game last year
2 - 8% of Internet users between 12-64 downloaded a try before you buy game
3 - 64% of that 8% bought a minimum of one game last year
4 - 32 % said they were likely or very likely to buy one game in the coming year
5 - Conversion ratio is estimated to be 1-2%
(unfortunately a games sold / person breakdown isn't given)

I'm a big fan of "Try before you buy" game downloads. I believe it opens up the games to more people, which increases sales. I believe increasing sales is more important than increasing conversion. I think of it like a Lemonade stand. If I have a stand on my street the number of lemonades I will sell per passerby will be much higher than the number that I would have per passerby if my lemonade was on a shelf in Walmart (my neighborhood knows me and are predisposed towards me, most Walmart shoppers don't go there for lemonade). However, being in Walmart stores across the country will sell more of my lemonade than I could ever do on my street! As your audience becomes wider and less targeted, CR goes down. However, that pales in the face of how many more sales you can achieve with an expanded audience.

So a couple of points/questions to consider.
- 64% of an audience purchasing games is a fantastic number!
- If they hadn't had Try Before You Buy downloads, would 64% of the audience have bought a game?
- Considering all the numbers reported above, what number would you try to increase first in order to increase sales?

For me, I expect conversion ratio (CR) to continue to decrease. I expect CR to continue to go down as casual games gain audience. CR is definitely something to try and work on increasing, but it isn't the number that intrigues me most out of the report.

64% is a number that intrigues me. When people use the 1% CR, they often state that 99% of the customers aren't paying. According to the article, only 36% of the customers aren't buying games. Most of the customers are buying at least one game. By trying to increase CR, you're really trying to increase the number of games sold per customer, which is a great goal, but with 64% of the audience already buying games, it's not likely to increase the number of paying customers very much.

8% is the number I would focus on increasing. If 20% download games, but only 8% download try before you buy games, there is a lot of potential market available. 8% is a low number with a lot of room for growth. It may be easier to get that number to 9% than it would be to get your already paying audience to buy more games per download.

What would have been really interesting would have been the number of game purchases per customer and the frequency of purchases. I do agree there may be room for growth there. However, the numbers in the article don't give us any information in that regards, which can only leave us guessing as to the potential for multiple game sales in increasing the market size.

For the casual games market to get really big I believe it needs what every other market needs. More customers! Increasing that 8% to 9% will definitely increase customers, and more customers would definitely make the casual games market bigger :).