NZGDC14: Would you like fries with that? Part two
27 September 2014

This article originally appeared on By Keith Barclay.

Just as Skylanders might have seemed a crazy idea back in 2009, there was also some cynicism that year about the decision of NHNZ to set up a game company. Five years on, there’s a lot less skepticism and the decision to establish Runaway, made back when Michael Stedman was still running NHNZ, looks like very smart thinking – despite Tim Nixon’s opening statement that the story of Runaway was a story of failure.

NHNZ’s decision to back the idea and then company, Nixon and his team’s ability to learn from failure, stands in stark contrast to some ventures by other content creators into unfamiliar territory: TVNZ’s investments in TiVo and Igloo, for example, if one wants to be snarky.

However, TVNZ’s experience building and growing its ondemand service bears a closer relationship to Runaway’s experiences. Both ended up with a stronger and more appreciated product in part because of the changes made along the way, not least to the monetisation of the models.

Flutter is Runaway’s fourth game, or the second go-around for its first game, the one where the company has come closest to “getting it right”, and the example Nixon used for most of his presentation.

Set up in 2009, Runaway launched Flutter in August 2010, on Facebook – for those old enough to remember when Facebook was the place where people who weren’t hardcore gamers went to get addicted to games that weren’t hardcore.

Shortly after that launch, Runaway announced a partnerships with the World Wildlife Fund, and joined forces with National Geographic, for whom Runaway created Puzzle Planets. They rode the demise of the Facebook wave, climbed aboard the rapidly growing iOS wave, made a second game with National Geographic, Howling Mouse – adapting it during development to the f2p model which was then becoming dominant. It was all good apart from a 44 spending cap in the game. According to Nixon, “It worked every which way except financially.”

In and amongst was the second time around for Flutter. Pulled from Facebook in 2011, it reemerged in 2012 on iOS.

While that might amount of shifting sand might seem normal for a game company, Runaway was owned by a TV production company. Since being part of TVNZ back in the days when TV came in two colours, NHNZ has seen plenty of changes but none at the pace at which change occurs in the game development world.

Without divulging actual numbers, Runaway’s introduction to the session noted “Since launching in February last year, butterfly nurturing game Flutter has gone on to be a highly profitable product for developer Runaway and their publisher DeNA. The title has improved it’s financial performance month on month, as careful iterations and updates from the design team have worked to deepen players engagement, and provide more opportunities for dedicated fans to support the game through monetization.”

Having had Mesmar’s warnings about the theory of good practice, Nixon spelt out in some detail what Runaway had done and not done – and what the results had been.

Nixon promised “a deep dive into the mechanics we use to monetise.”

His overview of the gameplay was “Collect new species, expand the environment”. The majority of Flutter players are 18-35 and the relaunched game has been out for around 18 months.

Describing it as “a very profitable game”, Nixon noted it was one of the top retaining games and had been downloaded 1.5 million times. “And we’re far from done with it.”

Perhaps Flutter is an exception to some of the f2p rules. Compared with other numbers bandied about during the day (including 30 million players for PikPok’s Into the Dead and five million downloads in the first month of release for Ice Age Adventures from Mesmar’s Gameloft) 1.5 million doesn’t seem like a lot – especially when one remembers that 5% or less of those users (<75,000 people) will provide 90% of revenue.

While Flutter isn’t a game that you can win, Nixon agreed with Mesmar that it was necessary to preserve “the freemium continuum”: it had to be possible for players to achieve results by grinding. Paying to accelerate a process was fine, because time = money: people should be able to choose which resource to deploy to achieve a goal.

So, where and how is the money coming in?

Just before he got there, Nixon gave a quick run through of some of the data Runaway and DeNA collect and measure – the important one being Average Revenue Per Daily Active User (ARPDAU). That number, a player head count and the retention rate allow Runaway to determine what monetisation strategies are successful or not.

The mistakes along the way? Two big ones came to mind. Having achieved 400,000 downloads in the first week of release, we fell back to an average daily user count of c30,000 “because our strategies weren’t good enough.”

Also, the introduction of a helper character which was incorrectly priced. At $8, it was perceived by many players as the equivalent of a paywall – I can’t remain productive in the game without this item, but I’m not prepared to spend $8 on it. At $8 it was also way too cheap for the hardcore players who would happily have parted with a larger sum to have an item which had some sense of exclusivity attached to it.

That mistake cost both players (people quitting because of the perception of it being a paywall) and payments (because the price could have been higher).

There have been other mistakes, some of which are beyond Runaway’s control. In the last week there;’ve been some server issues making the game unavailable at certain times. When people can’t play, they cant pay. That’s obvious and immediate, but it also raises issues of trust.

Is the game coming back? Is it going to stick around when it does? Why would I invest my money into something that might not be here next week.

What boosts income?

In this, Flutter is no different to many other f2p games. Fixed-time offers boost income, as do sales and events.

Crediting DeNA for much of the strategy around monetisation, Nixon noted that fear of missing out (FOMO) drives engagement. During events people spend twice as much time in game as at other times. ARPDAU also doubles during events.

It doesn’t follow, however, that the more events a game runs the more time its developers will spend collecting twice the baseline earnings. Allowing sufficient recovery time between events was very important, Nixon claimed.

What do people actually buy? Hurry ups, premium butterflies, and various forms of upgrade that allow them to be more productive in increasing their stock of butterflies.

How much do they spend? Unsurprisingly, most people spend smaller amounts. 60% of purchases are for $1.99 or $4.99. However, Runaway takes home more actual cash from the smaller number of sales of higher-priced items, the $10 and $25 items.

Flutter operates a monetisation strategy which roughly goes: an easy event, a sale, recovery period, a medium-difficulty event, an update, recovery period; a hard event, a sale, a recovery period. Rinse and repeat as a 3 month cycle seems to hit the sweet spot – at least for Flutter.

In broader terms, Nixon offered some general advice.

For Runaway, Nixon also noted that the company operated within a niche and was focused on that. “We want to be the most trusted brand. We encourage players to connect with nature in real world. Our relationship with the World Wildlife Fund converts player empathy into action.

“Know what you’re, what you’re not, and be completely unapologetic about not being for everyone. If nobody hates you, you’re doing it wrong.”

He shared that the next Runaway game would be set “under the sea”. And, having told his tale of failure, Nixon closed with, “We’re hiring like crazy – if you’re interested.”