Have a great game idea but want to make sure if your investment worth’s the return? The post helps you estimate expected return from a game using simple calculations.
To have a game idea is great, and to be able to draw returns from your game is what helps you build strong business. From Role Playing games to Simulations, Social games to Arcade, Casino to Quick Fix, games provide decent return on investment. Just to share that top grossing game, Clash of Clans generate over $1,000,000 in revenues / day from iPhone alone.
Our estimation sheet uses a key matrix: Average revenue per daily active user that is calculated as = Average daily revenue / Average daily active users.You can learn more about various matrices by reviewing other post “Measuring Game App Performance“.
Where daily active user ( DAU ) describes how many unique users play your game each day. Active user count is dependent upon returning users and new users.
- Returning users: these are the users who would come back to play your game again after playing it once
- New users: these are the ones who are downloading your game for the first time and you do not know whether or not they would play it again after playing it once.
Engaging games have higher DAU since there are more returning users.
Here is rough industry estimations used for various games genres
|Game||ARPDAU ( $ )|
Analyst suggests that for most games, $0.05 is a good benchmark. Games with excellent monetization will have ARPDAUs between $0.15 and $0.25.
Games with only ad-network and no in-app purchases can expect ARPDAU to $ 0.01. In order to calculate monthly revenues we have to estimate downloads. Download can either be generated virally or through marketing. Please refer to “Marketing Plan for Game Apps” for details.
Daily Revenue = DAU * ARPDAU
Lets assume our average daily active users are 10,000, hence a game with low monetization would generate 10,000 * 0.01 = $ 100 daily, and approximately $ 3,000 monthly.
Similarly a game with first benchmark target 0.04, should generate $ 12,000 / month.
|Monthly Revenue Estimation|
|DAU’s||0.01 (V.Low)||0.04 (Low)||0.1 (Average)||0.4 (Good)|
|After 3 Months – Marketing and Monthly Revenues|
|With 1 Million Daily Users|
|2 Million DAU’s|
|2,000,000||$60,000||$ 240,000||$ 600,000||$ 2,400,000|
The chart clearly indicates that games with higher DAU and ARPDAU are the winners.
While thinking and designing games, users must evaluate options for selling in game / premium content. This must be well thought during game design phase.
Once you have your monetization tactics setup, we must plan for marketing to generate higher DAU’s. The chart clearly demonstrate that once the project has got its marketing and monthly revenues there is a major change in the total revenue estimations. This suggests that effective marketing really counts in generating more revenue.
The above numbers can help us evaluate expected return from a game. Lets assume that it would take on average $20,000 to build a simple arcade game. With the numbers here are few possible cases
|Return on Investment (20,000)|
( ARPDAU )
|Decent||5,000||0.04||$ 6,000||4 Months|
Over past 4 years our company has built over 300 games, amongst which approximately 33% of games recouped their cost within 3 months and other 33 % within first year. Remember the income is perpetual.
While most people consider games as means to provide entertainment to consumers, they are clearly an additional source of income and opportunity to build a gaming empire. GenITeam specializes in providing consultancy to build all types of games from scratch to finish. Contact to get your game built by professional game developers.