Economists like Tyler Cowen or Brad DeLong are too self-respecting to study reality shows. Fret not, this economist has no such self-respect. Previously, we examined the economics of the reality show genre but just as interesting are the economics of the a particular reality show’s design. To Hot Too Handle introduces of the most interesting…
In case you haven’t been paying attention, Netflix just re-discovered the reality/reality-doc genre. In 2 weeks: Tiger King To Hot Too Handle (international cast) The Circle (4 international versions already released) Love is Blind I chuckled a bit when when Netflix remarked that they saw Fortnite as their biggest threat, but after 6 weeks in…
In the 1950’s, Peruvian inflation forced Coca-Cola to charge more per bottle of Coke. Unfortunately, their vending machines required physical updating to accept a new and larger domination. Instead, Coke devised a probabilistic system: the machine would charge the same amount as before, but randomly refuse to give a bottle. This raises the expected price…
Previously, I wrote about ads as a way to monetize non-payers, but there’s more to the ad exchange and what I’ll coin as ‘portfolio pumping’. It’s like portfolio theory, but not really. These terms reference two growing phenomenon in F2P games. King is at the forefront of portfolio pumping, in which a given firm pushes…
Will Luton argues on the dangers and solutions to F2P inflation over at gameindustry.biz. While there are some missteps in the opening of the article, Will makes a powerful and elegant point: …a sale can only be considered profitable if the net revenue from the start of the sale until resource equilibrium, and so demand, is…
Everyone’s favorite former Rovio employee is a prolific writer on F2P games; the closest we have to a Fukuyama. Seufert has covered a range of topics, but none more important than internal organization. Seufert argues for a number of institutional policies to surround analysts with within an organization. Frequently, analytics and data are as much about…
Steve Levitt, the last price theory samurai, and John List, future nobel prize winner, have published a paper on free to play economics. In a textbook neoclassical experiment, Levitt alters the quantity of Candy Crush hard currency at a given price point. While economists generally think of price variation as the way of deriving demand…
You’ve soft launched your game, done a UA push, and a string of hope appears. Against all odds, a dominant cohorted ARPU curve emerges! Is this this an anomaly or have you caught a whale? The first way to examine this is to perform cointegration tests between the cohorted ARPU curves, testing for stastistical significance.…
F2P is as much of a design choice as it is a business choice. Given this, F2P has its own set of design challenges among which is the content problem. Developers will only continue making additional content until the benefits are greater then the costs. This is specified when expected marginal revenue from content…
Predicting the average cumulative spending behavior or Lifetime Value (LTV) for players is incredibly valuable. Being able to do so helps figure out what to spend on User Acquisition (UA). If a cohort of players has an LTV of $1.90 and took $1 to acquire then we’ve made money! This helps evaluate how effective particular…