We are delighted to announce a one million dollars deal with southeast asian Playlab. We have been in talks since we met in GameFounders in 2015, where the Cupcake team was mentored by Jakob Lykkegaard Pedersen, Playlab’s CEO.
Cupcake has shown impressive growth of 45% a month over the past 18 months, including an impressive 3x growth in revenue since last September by reinvesting its own money in its 3 games, Letters of Gold, Words of Gold and Numbers of Gold.
Playlab’s financing arm is now stepping in to finance user acquisition, to grow the games even further. “We have been following the team closely due to their passion for the community and finally found a good way to help.” Said Jakob Lykkegaard from Playlab.
“We have a pile of credit cards and use all of them to invest more and more in user acquisition. We are aggressive and it pays off.” said Gabriel Stürmer, Cupcake’s CMO, in his talk about UA in PG Connects London 2017.
“Cupcake Entertainment’s goal is to be the #1 casual brain puzzle company in the world and the biggest games company in Brazil. This deal will get us there faster” said João Vítor de Souza, CEO.
Over the past couple of days we interviewed a variety of people for a Full Stack Developer position. Dozens of people have applied and some went to the first interview. They all had potential according to their resumes, but many let us down due to basic stuff.
I’ve decided to put together a list of basic things you should do before applying and going to an interview in a games company in hopes that future candidates will go as far as looking at this blog post or that it will help you get the job you want in other companies. I’ll use Cupcake in examples, but I’m certain this will help anywhere else.
If you are interviewing with us and read this post, make sure you mention it as you will get extra points.
Here you go:
Read the job description
We’ve had an artist who’s aspiration is to be an artist applying for a programmer’s position for which he doesn’t have any experience.
Have a decent CV
No pictures, it’s 2016. Decent and well structured information. Careful with typos. Tailor your resume for each position you apply with information you think is the most relevant.
Research the company
Read the news, learn about what they do and try to gather any information available about the company. Look at the website, social media.
Make sure there is a cultural fit
The Cupcake Manifesto contains everything you need to know about who we are and our aspirations. We are bold and aspire to be a successful multi-billion dollars company. We do casual and work with women over 35 years old.
If you only want to make hardcore console games, you are nor for us. If you only want to work on a small and cool indie studio making pixel art games, we are not good for you either. There must be a synergy.
Google the people emailing you
You’ll be less nervous if you know more about the people interviewing you (“He likes The Walking Dead and so do I!”).
PLAY THE GAMES
Seriously people. This is by far the most important one.
Games are the essence of what a games company does. I play all the games of people who apply to work at Cupcake.
Finding good people is the most important thing when growing a company and we are doing exactly that right now. Also incredibly hard.
Last week João briefly discussed some acronyms that are common among the #gamedev community. Now I’ll dive deeper into two of them: CPI and LTV. These two have a direct impact on the ability games have to make money which is deeply important for any game company.
Let’s start with CPI, or Cost Per Install. It basically is how much you spend to bring one user to your game. Let’s say you pay the average $1 to bring one user directly from your advertisement, so if you spend $10 you will get 10 users. If that one user brings another friend to play your game, you spent $1 for two players, or $0,50 per player. That’s your eCPI (effective CPI), which is actually the best way to look at UA (user acquisition) costs because it considers organic users and virality, the ones you don’t pay for.
LTV means Life Time Value, the average money you make in your game for each user during the time they play it. Some people spend thousands of dollars, some people won’t spend a dime. Some people will play for 800 days straight, some people will abandon on the first day. Usually 20% of the users will bring 80% of your revenue. There are many ways to calculate LTV, but we use LTV = Average Revenue Per Daily Active User x Average Days Played.
In every business, if you can make more money selling your products than you spend on bringing new customers, you have good ROI (Return On Investment). If you get to make a game with a higher LTV than CPI (or eCPI), it means that you can invest money in user acquisition and make more money on top of it, fuelling a money making infinite loop, you made it.
Getting to this level requires a lot of work and there are only a few companies that get to that point at scale, usually the ones with games in the Top Grossing charts. We at Cupcake have a higher LTV than CPI. See you at the Top Grossing!
However, I’ve noticed that many game developers lack focus on a target audience for their business. First game is a Mario clone for males under 25 yo (Marcio Broz); second is a puzzle for women over 35; third is a shooter for males over 25; and forth is an adventure for males over 25 who don’t shooters. That’s a problem! Why?
To clarify the issue, let me talk about the benefits of working with a specific target audience:
Creates a community of people who play all of your games;
Reusing knowledge acquired in previous games;
Cross promotion among your games, lowering UA costs;
Keeps high quality players circling around your games and spending in all of them (71% of Installs and 78% of Numbers of Gold’s revenue comes from our other two games);
People playing all of your games makes revenue grow for all of them;
Increases retention of your games.
The three larger mobile games companies all have very specific target audiences. King is casual, Supercell is midcore and Machine Zone is Hardcore. Cupcake is focused on Casual Brain Puzzles, where all of our current and future games fit. Not as casual as King, as all of the games of Golddemand higher brain effort than it’s necessary to shuffle candy.
This article will give you a high level strategy about how games make money, including ours. I’ll touch base in some key aspects that impact your game’s ability to make money.
Defining your demographic: No game can make money without users. Also, no game can make money without the RIGHT users, so get to know your target demographics upfront as it will impact many key points of your gameplay and art. Are they casual or hardcore players? Male or female? Age?
Acquiring users: Now you must let them know about your game. There are several ways to acquire users, both paid and free. Advertisement, app store organic and featuring, cross promotion and PR (not very effective) through blogs and youtubers. Free users are free, which is good, but high quality users are more escarce. Games that depend on purchases also depend on high quality users, usually from ads.
Monetizing: The good $tuff. There are three major ways to monetize nowadays. Ads, in app purchases and premium. Crossy Road developer Hipster Whale made $10M from ads in 90 days, which is a lot of money. Or is it? When you compare to Supercell’s whopping $6.3M a day, it doesn’t look that way. And that’s before Clash Royale.
It is clear that IAPs are the way to make big money in mobile, but they are indeed more difficult than making money from ads, as IAPs need to make sense in the overall game design and offer true value to the user. Premium model is dying in mobile, as you can see in the app store’s top grossing charts. Minecraft is the only game to show up in the top grossing charts and it is only 43rd. It is still a thing in PC and console for now.
What about Cupcake? Our demographic is women over 35 years old who like to play games that keep their brains active. Most of our users come from organic, but the top users come from profitable Facebook Ads campaigns. Just like Supercell, we make money from In App Purchases in a model that has proven to be successful, very similar to Candy Crush.
How does your strategy compares to this? Let us know!
Retention is the single most important metric for free-to-play. In fact, any game developer who cares about the quality and life time of their games should track retention. Steam/console premium developers included. So what is retention?
Basically, it measures how many people who started playing your game on a given date are still playing it after some time. For 1000 people who started playing Letters of Gold today (with actual numbers):
530 people are still playing it tomorrow, it means the game has a 53% Day 1 retention;
350 people are still playing after a week, Day 7 retention is 35%;
200 people are still playing after a month, Day 30 retention is 20%.
Industry standard for F2P games is 40-20-10 for the periods mentioned above. If your game is below that, it still needs some work. If it is above, it can also be improved. If you have a low short term retention, you should work on your gameplay, tutorial and overall first time user experience of your game. If your long term retention is low, then you need to work on your meta game.
Letters of Gold and Words of Gold both started with numbers that were worse than those mentioned above and were improved over time, achieving numbers higher than the industry standards. Numbers of Gold however started with excellent numbers (D1 62% – D7 40%).
Like us on Facebook as we’ll post more about how to boost your short and long time retention numbers.
Cupcake’s story is quite nice and we are super proud of it. Getting a game company to the point where you can invest money on user acquisition is something not all companies are able to achieve and we managed to get there.