On January 16th our CEO William Grosso will be a featured speaker at Pocket Gamer Connects in London, where he will explain ‘How to Design A Simple Annuity’. Pocketgamer.biz interviewed him to get an early preview and better understand why annuities are a powerful monetization tool which maximizes IAP revenue and which mobile game developers should consider adding to their games. The interview begins by discussing the basics of annuities:
An annuity, as thoroughly explained in a blog by Scientific Revenue's resident economist Isaac Knowles, is a monetisation system whereby virtual currency/items are offered at a vastly discounted rate, but distributed in daily instalments over a fixed period rather than all at once.
It's a technique that's often been praised in the Pocketgamer.biz IAP Inspector column, and one that's growing in popularity - particularly in Asian games.
For Grosso, it's a great way of monetising a subset of players who aren't necessarily prone to impulsive purchases, and are therefore less susceptible to techniques like starter packs or flash sales.
‘It appeals to a very different psychological group than the impulse purchases or the gotta-have-its,’ he tells PocketGamer.biz.
and continues with a discussion of how annuities relate to player psychology and purchasing patterns
Indeed, the people to whom annuities particularly appeal are what he calls “planners” - the same kind of people who have the patience and foresight to save up coupons from a newspaper for the long-term reward of a discount, rather than leaping in at full-price.
“The cumulative value is enormous - the discount you're getting off regular currency prices is huge - but you get it incrementally,” says Grosso.
“[Annuities are] a very nice idea from a monetisation perspective and a retention perspective, and the players like the game more when they commit to it.”
before concluding with a discussion on how to target annuities and a section on metrics.
We recommend reading the whole article at PocketGamer.biz and attending the talk (if you can make it to London).