Archive for August, 2009

Thought Leadership Series: Ritesh Khanna on key metrics for online game developers

Offerpal Media is thrilled to begin its ‘Thought Leadership Series,‘ in which we will interview some of the foremost experts, entrepreneurs and, yes, “thought leaders” in the field of online gaming and social publishing.  In this inaugural post, we interview Ritesh Khanna, President and CEO of Clipwire, who’s Nitrous Racing games on Facebook and MySpace have some of the most active and engaged users on either platform, on what metrics to watch out for when monetizing online games.

Interview with Ritesh Khanna : President & CEO of Clipwire Pte Ltd

App Name: Nitrous Racing

Based in : Toronto, Canada.

Offerpal:  Tell us about the company you are building and your app?

Ritesh : Clipwire is very different from many of the other companies you often hear about in this space.  What we’re not trying to do is build the biggest company, as fast as we possibly can.  We’re instead trying to build a company based on high quality, unique games that are genuinely fun to play and build.  We believe that in the long run, having a company built around this culture will not only attract great talent but also expose us to the best opportunities.

We try to use the bigger names in gaming as role models to help us decide what kind of company we want to build, and we really see two types.  The ones that want to have their hands in everything and build at least one game in every genre; and the ones that build their company around a small group of fantastic franchises, we’d like to be more like the latter.

Over the last 7 months, we’ve taken our flagship game, Nitrous Racing (http://apps.facebook.com/nitrousracing or http://profile.myspace.com/Modules/Applications/Pages/Canvas.aspx?appId=119502) and have grown it into a product we’re very proud of.  We very often get players whose first reaction is that Nitrous Racing is just another one of “those” games, but then dig a little deeper and realize the experience much more unique and engaging.

Our newest product, Monster Defense (http://apps.facebook.com/monsterdefense/) is our first Flash based product.  Based on recent trends, it’s become very clear that the future of gaming on social networks is Flash.  Right now it’s a typical tower defense game, in beta mode while we balance all the monsters and traps. But next week we’re adding a multiplayer edition which will allow people to play against their friends in real-time, which as far as we know is a first for Flash based tower defense.

Offerpal:   What are some of the key metrics to watch out for when measuring the success of an app?

Ritesh: At Clipwire, we divide the metrics we watch into two categories.  The first are metrics related to viral/organic growth channels, the second is revenue related metrics.

For the viral channels, the idea is to optimize on each individual channel.  So what we’ve done is built a model where we’ve taken each channel on both, Facebook and MySpace and ran various test to see how we can drive the most traffic on it.  For example, we’ve tried placing Facebook requests in several places in the game flow and used a wide variety of texts, we then measured the amount of clicks and installs each combination delivered and pursued the best performing one.

Optimizing on revenue is critical to keeping the company sustainable and to allow us to continue to improve our products.  Naturally, an important metric to watch is total sales; we measure it in revenue per user, per day.  But to us, the most important metrics are surrounding repeating sales.  Having people buy more than one thing tells us two things.  One, that they were satisfied with their first purchase, and secondly, that they find value in our product.  Since most purchases from us are considered micro transactions, if a user doesn’t find value or isn’t satisfied with a purchase, we know we have a serious issue we need to address.

Offerpal:  What kind of virtual goods do you recommend for building a robust virtual economy?  How  can publishers drive sales of virtual items?

Ritesh: Although there are some items that are guaranteed to be successful in any gaming environment, such as a mystery box (where the outcome is only know after the purchase), I’ve found there is never really one particular item or package that can work everywhere.

The best way to know what will be successful is to listen to users — what they ask for, and what they buy.  Try various things,  you will eventually come across something that suits your game and users really well.

Offerpal: What are some of your best tips for monetization?

Ritesh : For us the single most important thing to effectively monetize a game is to provide outstanding customer service.  Many users are still uncertain about sharing their billing information online and the whole online payment process.  Just knowing they have quick access to someone at Clipwire increases their confidence and satisfaction with their purchases.

Beyond this, we make an extra effort to ensure users have a full understanding of the product before they purchase it.  We do this by adding images, descriptions and an e-mail address for questions.  I am very often surprised with the lack of detail in the interfaces for virtual goods.

We’ve also found adding more payment options can give sales a boost.

Offerpal: What are your thoughts on spending on inorganic marketing initiatives?

Ritesh: My personal policy is try give most of those opportunities a try.  Generally speaking, retention is lower on this type of traffic, but even with that it can make sense to pursue purchasing traffic.  If after I try it, the cost of acquiring a user exceeds the revenue generated from a user, I won‘t purchase any more.

There is also huge value in having a large user base when it comes to cross promoting apps, so buying traffic makes a lot more sense for companies with a larger pool of games.

Offerpal:   Are you concerned about the current economic downturn as you build your applications?

Ritesh: I hear a lot of talk about certain industries, including games being “recession proof”. Having built these types of games since 2003, I can say for certain that the revenue per user today, is  less than what it was before the downturn.

The reason I don’t see it as a concern is that the channels of distribution available today, weren’t available a few years ago, such as Facebook and MySpace.  They, allow us to reach a far larger audience at a far lower cost, and they’re continuously growing and improving to help us reach even more people.  Those numbers alone are enough to offset any slump in revenue.

Offerpal:   What motivates and inspires you to continue driving value for your customers?

Ritesh: It’s really the players themselves.  It’s very exciting to see thousands of people enjoy our original game ideas and mechanics.  We recently launched a content pack for Nitrous Racing called “Goldfender”, which was our largest, most detailed job line ever.  We spend a huge amount of time on getting it out and the great positive feedback from those who played it was very inspirational!