3 Big Data Insights from Mobile Gaming Superstars Kabam

Technology on all fronts has enabled online gaming to reach nearly every type of person who owns a smartphone. Almost half of gamers are now women and gamers in their mid-30s comprise the largest market segment. Mobile gaming is quickly moving up the list to becoming the top form of entertainment in the world.

Interesting, but who needs to know? Any professional tasked with driving value from the most prized endeavor in IT- data science. Technical and non-technical professionals tasked with understanding and delighting customers will benefit from gaming experts’ unique experience with data and the assumptions they debunk.

The top mobile gaming companies constantly monitor their users to try to understand and predict behavior. Value is key but money talks. Striking the balance between a great experience and monetizing that experience is a never-ending pursuit. The top games now gross more money than movie blockbusters. But unlike moviegoers and movie downloaders, more than 99 percent of gamers never venture past the free version of a mobile game. So it’s the big spenders, the “VIPs”, that mobile gaming providers rely on. Or is it?

Facts and Figures:

• The global mobile gaming industry is expected to reach $30 billion in 2015 and reach $40 billion by 2017.
• The U.S. smartphone and tablet gaming audiences each exceed 100 million users, representing more than 70 percent of all such devices in the US.
• The top grossing game, Supercell’s Clash of Clans, grosses an estimated $80 million a month – a 1750 percent increase from the top game in 2012.
• Transactions within free-to-play games comprised 79 percent of all revenue in the     iOS and Google Play stores in the US in January 2015.

Mobile gaming company Kabam grossed $400 million in revenue in 2014. Chinese online retail giant Alibaba has recently invested $120 million in Kabam as a prelude to the gaming company entering the China market. Kabam’s products have their roots in art and science. The latter is where the industry shares its challenges and potential success with the rest of the subscription economy.

Kabam launched its latest game, Marvel Contest of Champions, in December 2014. It rocketed to the top ten list of highest grossing games with monthly revenues enough to keep it in the ranks of the most popular games. Sure, it’s no Clash of Clans. Yet. But it’s estimated there are more than 1 million mobile gaming alternatives to choose from.

Data-driven doesn’t mean data first

When Kabam’s gaming platform took off in 2009, the customer data started rolling in. “One of the pitfalls you can run into is using the data to trump your original goals for the product,” said Kabam General Manager Tim Ernst.

In the early days, Kabam put Product Managers over Game Designers – people who were solely focused on data-driven decisions instead of those who had a broader concept of the product.

“So a seemingly mathematical optimal curve may not be the emotional curve that we’re trying to pull people on. And you need to use data to vet decisions and be a part of the input. But ultimately, we as a gaming company can’t lose sight that the quality of our product is driven from fun, excitement and delight, and the data needs to support that,” Ernst said.

He used an example of the popular A/B or split testing method that tests multiple versions of the same offer to different audiences to see which one fares best. But the structure of the test is where the art of gaming can get lost.

“We could split test in many different ways a lot of the prices of our goods. And we expect that we’ll deliver a reasonable return. However, if we use the data to validate our estimated value of the goods and look at that across systems we could drive a multiple result. Will more people spend because a package is priced differently or because the game is better?”

In January, Kabam announced it new strategies to generate greater long-term customer loyalty using feedback and data collected from its customers.

Gaming is rethinking its data strategies

Other gaming vendors are doing the same to balance art and science. Kixeye CEO Will Harbin says his company has cooled on data-driven decisions.

“At this point we only use data science half the time,” Harvin says. “A year ago, we probably were doing way too much, you know, data-driven decision-making. I think that hurt us in some ways. Now we’re probably going to err on the side of doing something which is fun even if the data doesn’t justify it.”

NativeX co-founder Rob Weber says his team whittles the list of data points down to a handful of the potential endless possibilities.

“Our data science team looks at thousands of variables and analyzes the predictive value of each one,” Weber says. “Then they boil down the data to 15 to 20 key indicators that tell us which ad and ad format has the best chance of converting for each player.”

Find the metric that’s important to your business

“I believe we can get lost in some of the metrics that we can’t control,” Ernst said. Gross retention is a popular one, he says, but it’s tough to control because you’re actually tracking the absence of something.

“Retention is a low fidelity metric because churn in our business is non-engagement. Trying to track a negative is really tough because there’s a lot factors that apply to it,” he says. “So, if we really want to impact retention we actually need to track engagement because it reveals the trends that people are showing. It’s important to find the metrics you can control, metrics that drive your business.”

Retention is important but the best way to impact retention is look at the people who are using your product, how they’re using and not how they’re exiting the product, he says.

Use your data to break assumptions

“You make an assumption as you build a product and a business to say ‘what’s the value of each of these types of customers’,” Ernst says. “And you need to be open to using the data to break some of your assumptions or validate what you think the value is from each of these customers.”

As the computer game industry transitions more into a service, vendors need to work out how much attention needs to be spent on people downloading and also paying for the game, different levels of payment and different levels of engagement, Ernst says. Kabam has found it needed to start breaking some of its assumptions about the constraints for which games are designed.

Remember, you’re selling a service

The average gamer will stay loyal for about two years. But they want something for their loyalty – surprise and delight.

“It is not just a subscription product,” Ernst says. “It is a subscription to a service and a service that is going to continue to evolve with time and technology. Our customers want change. They’d love to be engaged by another game but they’re also driven by quality.”

The facts about big data and analytics

Big data implementations driven by CIOs have only a 11 percent success rate. CIOs expect the biggest IT skill shortages to come from the most dynamic technology domains: big data, business intelligence and analytics.

Global management consulting firm McKinsey says that exploiting data and analytics requires three core capabilities:

• An organization must be able to choose the right data and manage multiple data sources.
• Companies must also turn the data into insights – combine deep analytical talent with commercial judgement.
• Management must transform operations and staff culture so the insights yield better business decisions and generate effective, frontline action.

The following factors for success can help keep big data and advanced analytics efforts on track:

• Secure quick wins by focusing your investments in projects that can prove a     business case quickly.
• Require an energetic senior sponsor who will dedicate at least five percent of their time to the success of the initiative. They then must help validate results and influence the rewrite to affected business processes.
• You may not have all of the talent you need to get started. Consider an open source approach by consulting external experts and networks for help.