Infernum: investors in free-to-play have unrealistic expectations
Zynga's "abnormal market valuation" has put pressure on market, says founder
Shareholders and investors in the free-to-play market are expecting too much growth too quickly, according to Infernum founder Andreas Weidenhaupt.
Weidenhaupt partly blames the abnormally high valuation of Zynga earlier in the year for putting pressure on free-to-play companies to hit unrealistic targets.
"Since Zynga reached an almost abnormal market valuation investors and shareholders tend to expect much too high growth rates in much too short a time," he told GamesIndustry International.
"By now, one-digit growth rates are not even regarded as good enough. If you plan double-digit growth rates you run the risk of threatening your whole business model, if the presumed growth rate is simply not happening.
"This affects the company manpower planning as well as product schedules and licensing. The market is dominated by the propensity to copy each other in order to be able to communicate these expected growth rates. We have to grow sustainable, healthy and not at any cost."
Yesterday Koch Media confirmed it had acquired a stake in developer Infernum as it looks to increase its footprint in free-to-play. Infernum's first release, Brick Force, has over 1.5 million players.
The company employs 32 people but expects to grow to over 50 during the new year. Weidenhaupt said that his company is ignoring the stats bandied around the free-to-play market, and is instead focusing on the product.
"I have to ask myself, for whom essentially are numbers of 300 million registered users communicated in the end? If you see this from a logical standpoint, you could stop any marketing activities immediately because you have already reached the available audience many times over already.
"An online marketing manager has to be able to market a game on a quality level instead of only buying traffic."
Every serious business person knows that "registered users" is a totally useless vanity metric. It tells you how long you have been around and possibly how much marketing money you have spent, but not much more.
Active users is a vastly more useful metric, but long gone are the days when user numbers are a proxy for revenue. When everyone pays roughly the same amount, it works; now that we have enabled players to spend whatever they want along the demand curve, it isn't useful.
There are businesses with barely 1m registered and 200k MAUs making over $10m a year and there a businesses with 30m MAUs struggling to do the same. I totally agree with Andreas that focusing on user growth is a mistake, if you could be making a great game that keeps players and encourages them to spend money.
Posted:5 months ago