Paid user acquisition a must for major pubs, says Sega exec

Director of online operations and Three Rings CEO lay out strategies for staying ahead of the curve

It's been eight years since Three Rings introduced a free-to-play option into Puzzle Pirates. It was one of the earliest free-to-play success stories in the West, and has proven itself to be a long-lasting one as well. Speaking with GamesIndustry International at last month's Game Developers Conference, Three Rings CEO Daniel James said the game continues to perform well enough that he hasn't yet had to give any consideration to an eventual sunsetting of the title. (In fact, Three Rings is only now readying an iPad version of the game.)

"When you make a game that rings true, that has a harmonic to it that captures the player's imagination and builds a community around it, it's astonishing how strong that community can be," James said. "We have players who've been playing Puzzle Pirates for a decade and they're still quite happy."

"What's really important to us, is not just to chase what's popular now, but to try to figure out what's going to be big with people in the next six months."

Ethan Einhorn

So Three Rings was clearly ahead of the curve, establishing a foothold in free-to-play long before it became the ubiquitous trend it is now. That early success drew competition for Three Rings, as well as the interest of Sega, which acquired the studio in 2011. And now that the rest of the market has caught on to free-to-play, Sega director of online operations Ethan Einhorn said the challenge is to continue staying a step ahead in a fast-moving market.

"I think the natural tendency is as aggressively and as quickly as possible to follow the leader as faithfully as you can," Einhorn said. "As a result, my prediction is that we're going to see a lot of Rage of Bahamut clones this year. But I think Three Rings clearly demonstrated that it was important to be ahead of the curve...[W]hat's really important to us, is not just to chase what's popular now, but to try to figure out what's going to be big with people in the next six months."

As an example, Einhorn pointed to Demon Tribe, an iOS game Sega released in Japan last month. He described the game as a MOBA mixed with resource management, "a little League of Legends, but a lot of Tiny Tower as well." Combining genre elements and existing gameplay structures hopefully straddles the divide between creating something people already like while also making sure they're getting a new twist.

"You don't want to reinvent the wheel; you want to give a +1, what's popular now plus something new," Einhorn said.

"I think that you can't not do paid acquisition at this point if you're a major publisher. I think that's a key part of driving users..."

Ethan Einhorn

Interestingly, the "what's popular" part of that equation doesn't need to be an established brand. Gaining visibility in the market is challenging and increasingly expensive, Einhorn said, but leaning on familiar intellectual properties is far from essential. For example, Sega has seen success with Sonic the Hedgehog titles like Sonic Dash as well as original projects like Kingdom Conquest. When it comes to gaining visibility, Einhorn sees paid user acquisition and cross-promotion as more mandatory practices.

"Both strategies are important to use," Einhorn said. "I think that you can't not do paid acquisition at this point if you're a major publisher. I think that's a key part of driving users, and if you're a major publisher, you're in a good position to shuttle players from one game to the other through cross-sell. I think that's valuable. But at the end of the day, quality is the most important piece to getting people engaged and willing to play the game. That's what makes something truly viral."

As for the "next big thing" after free-to-play, it may be a bit premature to think of that.

"I don't think people are going to get tired of getting things for fee," James said when asked if there were any concerns about free-to-play fatigue. Beyond that, the audience for free-to-play is still growing with every new tablet sold and every new Facebook account created, so James sees plenty of room to grow the market.

"We're still very early in what is an extremely subtle business model," James said. "Free-to-play is not an easy or simple thing; it's very complex. And we as an industry are just working that out. So I would expect that over the next few years, as we work it out and the right balance between gameplay and monetization and those aspects are better understood, we'll see an improvement in the revenue side as well."

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Latest comments (3)

Paul Johnson Managing Director / Lead code monkey, Rubicon Development6 years ago
Time to rethink, guys.

Paid user acquisition is a nice extra channel to monetise with, like other forms of PR and Marketing. But if you literally have to buy your audience from the get go, you need a better product.
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Daniel Hill Marketing and Business Development 6 years ago
Completely agree. And if major publishers don't already have a massive audience of users that they can leverage through CRM, recommendations etc, then they're doing something wrong. Not saying paid acquisition is never right, just that some companies tend to default to it without thinking about more organic ways of growing their user base. And by releasing a great product in the first place, as Paul says.
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Ethan Einhorn Director of Online Operations, SEGA of America6 years ago
Thanks for your feedback! Investing in user acquisition speaks to our confidence in the quality of our games. The strategy works very well when youíre delivering a product thatís of high value to consumers. Visibility within the App Stores is critical, but given the enormous volume of game content being released every week, itís also important to be able to reach players outside of that ecosystem. At SEGA, we use a mix of paid advertising, PR, community, and cross-promotion to achieve our business goals. Itís true that some games have been able to demonstrate a strong return without a UA spend, but these are increasingly becoming outliers. Itís a publisherís responsibility to mitigate risk, and paid user acquisition is (presently) the most reliable way ensure great F2P smartphone games can reach a significant audience base.
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