Post

I think if I had to name a villain for the woes of the game industry (beyond the obvious RAM shortage one), I would probably pick performance marketing. This is what drives the economics of the typical F2P game that represent an increasingly large share of industry revenue

Basically the way this works is that you typically pay for online ads by the impression (CPM) or click (CPC). Multiply this by the ratio of people that "install" your game after an impresison/click and you have a cost per install. Attribution lets you tie this cost to individual converting users.

As long as the ARPU (average revenue per user) of these new users is less than CPI, you can keep pumping more money into advertising. Now strictly speaking, this is true of any game and not just F2P ones, but the conversion ratios make it much more favorable to F2P games

For a normal retail game, converting after clicking an ad requires you to pay money up front. F2P games generally only start putting up pay gates once you're already invested in the game and the amount you need to pay to keep progressing at this first "pinch" is usually pretty small