Best Practices To Maximize Game Lifetime Value

July 31, 2023
July 31, 2023

Most mobile games are free to play and rely on a mixture of ad revenue and in-game purchases to make money. Because these revenue generation strategies depend on accumulating numerous small transactions over a long period, game companies must find ways to maximize game lifetime value to ensure their games are profitable.

Key Takeaways:

  • Lifetime value measures an individual player’s value from the time they onboard to the time they churn. A higher LTV correlates with a greater market value for your game.
  • There is no one set way to calculate LTV. Instead, you must choose a formula that works best for your company and game and stick with it.
  • Player retention, monetization, engagement, and virality are the four factors you must maximize to achieve an optimum LTV.
  • A variety of strategies can maximize the four factors that affect LTV, and Sonamine can help you with all of them.

Understanding Game Lifetime Value

Lifetime value measures an individual player’s value from the time they onboard to the time they churn. The higher the average LTV of your players is, the higher your game’s total value is.

How To Calculate Lifetime Value

There is no one set formula for calculating lifetime value. Game companies choose their formula based on factors such as genre, audience type, data availability, and competitor benchmarks. LTV is generally easier to calculate for companies for which the main revenue source is in-app purchases rather than ads.

A simple formula is LTV = ARPDAU x User lifetime

This straightforward example multiplies the average revenue generated by daily active users by the average user lifetime to estimate LTV. You can make your LTV formula as simple or complex as you want, but once you pick one, stick with it so that you can compare how it changes over time.

Illustration of a simple lifetime value formula

The 4 Factors That Influence Game Lifetime Value

Four main factors influence LTV.

1. Player Retention

Because players usually don’t pay an upfront fee to play free-to-play (F2P) games, most F2P game revenue comes from microtransactions and ad revenue. To earn a substantial profit from these revenue streams, you need players to play for as long as possible. Retention measures the percentage of players that continue to play your game over a specific period.

2. Monetization

Monetization measures how much money players spend on your game from the point they onboard to the point they churn. Your player’s spending habits and the effectiveness of your monetization strategy influence this factor.

3. Engagement

Engagement measures how much time players spend in your game. The better engaged your players are, the more money they are likely to spend.

4. Virality

Virality, also called the K-Factor, measures how many additional users each player brings to your game. The more users your existing players recruit, the lower your cost of acquisition is, which increases your profit margins and lifetime value.

Illustration of the formula used to calculate K-Factor

Maximizing Game Lifetime Value

There are several steps you can take to maximize your game’s LTV.

Acquire High-Quality Users

While even non-paying players can generate ad revenue, for most games the biggest spenders generate the majority of a game’s revenue. This makes it important to target your user acquisition campaigns to players you project will spend the most money on your game.

You can improve your player acquisition efforts through targeted advertising and influencer partnerships. Convert high-quality users into paying customers by optimizing your onboarding process to ensure it is simple and quick, and involves as few steps as possible.

Encourage your best customers to recruit their friends, family, and social media contacts by integrating social sharing options and rewarding players for referrals. Deploy your game across as many popular platforms as possible to increase your potential user base.

Enhance User Engagement

There are almost 9 million smartphone apps worldwide, and average users have 40 apps installed on their mobile devices. However, smartphone users spend 88% of their time on just five of those apps. Increasing engagement boosts your game app lifetime value by ensuring that your game becomes one of that coveted top five.

Optimize your game and your user acquisition strategy to encourage long-term engagement. Keep adding new content for high-level users so they don’t run out of things to do and quit. Offer loyalty programs to re-engage lapsed users and encourage long-term players to stick around.

Make your game as addictive as possible and keep adding new features and other content to prevent boredom. Consider adding meta layers to add variety to your game, attract a broader audience, and introduce monetization opportunities.  

Find pain points that may lead to player churn, such as challenges that are too easy or too hard. Identify struggling players and offer them help through hints, tips, and power-ups. Smooth out the difficulty curve if you notice a lot of players are quitting at certain places in your game.

Improve Monetization Strategies

Experiment with different types of monetization, such as in-app purchases, advertisements, and subscriptions to improve your game lifetime value. Offer discounts to encourage first-time purchases and re-engage inactive users. Price your offers correctly and provide real value to users.

Consider adding rewarded video ads. Rewarded ads boost engagement, ARPDAU, and retention rates and cost less money than interstitial ads.

Utilize Data Analysis

Players are constantly generating useful data. Take advantage of it to identify which users have the greatest LTV and where and how you found those users so you can target your acquisition efforts toward finding more of them.

Compare your LTV to your customer acquisition cost to ensure you aren’t over- or underspending. Your average LTV should exceed your average CAC to produce a positive return on investment.

Use the insights you gain from your analysis to target special offers to different player segments. For example, you can create offers specifically designed to encourage players to make their first purchase.

Maximize Game Lifetime Value With Sonamine

Sonamine offers engagement, monetization, and retention services to achieve your game lifetime value goals. We can help you with live events and engagement campaigns to ensure players always have fresh content, convert non-paying players into paying players, encourage repeat purchases, prevent churn, and more. Contact us today to get started.

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