In the early 2000s, Electronic Arts (EA) discovered a surprising correlation between their video games' Average Revenue Per User (ARPU) and their likelihood of success. Games with an ARPU below $2.50 tended to flop, while those above $3.50 consistently performed well. Despite this, many game developers continue to prioritize maximizing ARPU over creating engaging experiences. This myopic focus often leads to a homogenization of game mechanics and a lack of innovation, resulting in a crowded market where few games stand out.
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Building & Strategy
"The One Metric That Quietly Sank 90% of Video Games"
"Over 9 out of 10 video games fail due to a seemingly innocuous metric called Average Revenue Per User."
Key insights
The Average Revenue Per User (ARPU) metric has a direct impact on a game's success, with games above $3.50 performing significantly better than those below $2.50.
Developing games that cater to specific niches can be more lucrative, but requires a different design and go-to-market approach.
Ignoring the importance of innovation and player engagement can lead to a crowded market where games struggle to stand out.
Prioritizing ARPU over player engagement can result in a lack of innovation and a homogenization of game mechanics.
Why it matters
By understanding the role of ARPU in game development, professionals can make more informed decisions about resource allocation, product design, and go-to-market strategies, making them more valuable in the industry.
This metric changes the way game developers evaluate new features and gameplay mechanics, enabling them to focus on creating experiences that appeal to a broader player base.
Most peers miss the nuanced relationship between ARPU, player engagement, and innovation, giving professionals who grasp this concept an edge in creating successful games.
Use this tomorrow
1
In your next game development meeting, ask: "What is the current ARPU for our game, and how does it compare to our industry peers?"
2
When planning a new game launch, consider: "What is the target ARPU for our game, and how will we balance it with player engagement and innovation?"
3
When evaluating game design and development, watch for: "Does our game cater to a specific niche player base, and are we willing to sacrifice ARPU for a more engaged user experience?"
Go deeper
The concept of ARPU as a key driver of game success was first identified by Electronic Arts (EA) in the early 2000s. Since then, numerous studies have reinforced its importance, including a 2015 paper by the Entertainment Software Association (ESA). The relationship between ARPU and game success is complex, and developers must balance competing priorities to create successful games.
The implications of ARPU extend beyond the gaming industry, as similar metrics are used in other digital markets, such as mobile apps and subscription-based services. Understanding the role of ARPU can help professionals in these industries make more informed decisions about product design, pricing, and go-to-market strategies.