What will it take? (for HT)

[ccvi]

If Porsche advertises to random poor people looking for a bicycle . They visit the dealers, and then don't buy. Do they have to change the product or the advertisement strategy?

[DmonSlyr]

Porsche advertises their products to me on Fox. Doesn't mean I go and buy one. I sure am more aware of them now. Just like the annoying My Pillow and Volvo Commercials and political commercials, and progressive/Geico commercials. Why do you think these companies waste so much money on advertising? Somehow AH is the only commerical that doesn't work...?

And I agree with you to an extend.

 I'm all for marketing IF if costs less than it makes you.  Though you might need to first fix the retention issue before you waste the money on marketing. The horse before the cart.  Once you have the retention issue fixed, pour on the marketing.   If I get to where I am generating $1.25 in revenue for every $1.00 in marketing costs, I'll pour money into that marketing all day long.

But until your resolve the retention issue, marketing just generates a series of expensive lost opportunities.  You have to prepare the ground so that you can take advantage of the opportunity marketing presents you. 
 

Retention is the single hardest concept for a subscription model. People who view the game thru commercials means more people will subscribe. If people don't know about the game, they won't download it or try it, thus defeating the purpose of solving retention issues in the game. While I think current issues should always be worked on, advertising should also be in full force because you will still get more subscribers and potentially retain them long after the commercial has ran it's course. 

[CptTrips]

If Porsche advertises to random poor people looking for a bicycle . They visit the dealers, and then don't buy. Do they have to change the product or the advertisement strategy?

That is a clever argument, but do you really think that is the issue?  If HTC was advertising on "My Little Pony" websites, I'd agree.  I mean,  think the markets they have advertised are as targeted as could be expected.  Allow me to suggest an alternative:

The worlds premier manufacturer of highly crafted precision buggy-whips has been pouring thousands of into advertising.  They even offer a two-week money back trial.  Sadly, their sales remain lackluster.  They do have a hardcore fan based of rabid Amish who swear-by their product.  However, sales have continued to fall every year, and apparently there just are not enough Amish on the planet to keep them in business no matter how loyal they are.  Would it help to just throw more money into advertising? 




 

[CptTrips]

People who view the game thru commercials means more people will subscribe. If people don't know about the game, they won't download it or try it

I totally get that.  And if it results in a positive ROI, you'd be crazy not to do it.  But surely you realize if it costs me $1,000 advertising dollars to acquire on $14.99/month subscription, that is not sustainable.

1.  You could reduce your advertising costs.  Chose lower cost mediums. 
2.  You could more finely tune your advertising market to increase the likelihood of of reaching a customer fit.
3.  You could broaden the appeal of your product so that it is a fit for a broader potential market. 
4.  Some combination of the 3 above.

But you can't market your way to profitability if the product won't sell.

[Shuffler]

If word of mouth is bad, the small amount of players who play the game will continue to play while many will be turned away instantly by a bad review from word of mouth from a customer who did not like the game. Commercials lead people to the water without opinion first. The word of mouth can result in worse marketing if word of mouth is not great. Again, I've neve met a single person in real life who has heard of Aces High.

What y'all fail to realize is that most people just don't buy very many products. You have to have an extremely wide audience to drag in the bunch that will pay for it. If you cannot reach the majority of the Audience, you will not bring in as many as you could because they will never hear about it.

WW2 movies are not out of favor. Movies like Dunkirk are heavily commercialized to the mass audiance. I didn't even buy a ticket, but I bet millions did....that's my point.

Theres a reason why companies spend tons on advertising with commercials in repetitition. It works.

Word of mouth works great for our business. We take excellent care of our customers. The same evidently was not true for you.

You can spend 1 mil on advertising and a handful of disgruntled customers can negate that money spent. Word of mouth.

You can spend 10 mil to advertise a movie but if folks ain't digging it..... your audience thins. Word of mouth.

[DmonSlyr]

I totally get that.  And if it results in a positive ROI, you'd be crazy not to do it.  But surely you realize if it costs me $1,000 advertising dollars to acquire on $14.99/month subscription, that is not sustainable.

1.  You could reduce your advertising costs.  Chose lower cost mediums. 
2.  You could more finely tune your advertising market to increase the likelihood of of reaching a customer fit.
3.  You could broaden the appeal of your product so that it is a fit for a broader potential market. 
4.  Some combination of the 3 above.

But you can't market your way to profitability if the product won't sell.

I agree with what you are saying. But we are talking about people who may resubscribe the next month and the month after that, it's not always a one time payment. So if 20 out of the 50 new subscribers play for the next 10 months. That means their subscription did pay for the commercial over time. Not only that. We will have higher #s in the game, thus making the fights more fun and larger, thus bringing in more people.

[Vraciu]

See Rule #4

[DmonSlyr]

See Rule #4

[CptTrips]

I agree with what you are saying. But we are talking about people who may resubscribe the next month and the month after that, it's not always a one time payment. So if 20 out of the 50 new subscribers play for the next 10 months. That means their subscription did pay for the commercial over time. Not only that. We will have higher #s in the game, thus making the fights more fun and larger, thus bringing in more people.

You are absolutely right.  I was just assuming that amortization was rolled into the final ROI analysis. 

I'm sure HTC has good stats on the percentage of trials that convert to subscriptions, and the average month player lifespan...accounting for time-value of money, and risk....  The longer it takes the recoup the acquisition costs essentially equates to risk.  If it takes 15 months to break-even on the advertising costs to acquire a user, that is more risk than if it takes 6 months.  A lot of things could happen, job loss, marriage, school, etc that could cause him to drop out before HTC has broke even on the costs of getting his business.

In the end HTC can calculate a reasonable estimation of the amount life-cycle revenue they can expect on average from X number of downloads.  They can then compare that expected revenue to the costs of the advertising needed to generate those downloads.  You can't do that for too long without that ratio being a positive number.  Unless of course if you are Tesla.   

The second argument you made is more interesting.  This is a special business because you are not just selling a piece of software, you are selling a massively-multiplayer experience.  There is a bit of black magic in the idea of "critical mass".  You could argue that you need to burn money for a bit to achieve critical mass so that it becomes self-sustaining.  That's scary and un-quantifiable.    I'm glad I'm not having to bet my money on black magic. 

[Arlo]

See Rule #4

[Vraciu]

See Rule #4

[DmonSlyr]

See Rule #4