Ngmoco Shares How It Is Making Successful Mobile Social Games

Mobile gaming appears to be a console-style business, at least judging by its premiere platform, Apple’s App Store. Only a small fraction of games and developers get enough users and make enough money to be meaningfully profitable. Due to minimal social features, apps need to get a lot of attention to break through — from ads, the press, being featured by Apple in the store, etc.

But all this is changing, for mobile gaming startup Ngmoco. It now has what may be the first big social gaming business primarily based on the iPhone and iPod touches.

I had the opportunity to do a question and answer session with Jason Oberfest on the topic this week at the South by Southwest Interactive conference in Austin, Texas. He’s the company’s vice president of social applications, and a former business and product leader at MySpace. Having worked on MySpace’s developer platform, he has an especially clear understanding of how the mobile and social gaming worlds intersect.

Here are some tips he shared for any developer looking to make a successful social mobile game.

Identify and closely track all key metrics: Ngmoco has “instrumented” all of its software, meaning that when it can measure a wide variety user behaviors that happen within its games. But its not enough to use analytics. You need to know what to track — you don’t want to measure then build around the wrong features. Like social gaming companies, Oberfest says Ngmoco focuses on: the number of daily active users in a game, including the number of sessions they have each day; the viral coefficient of a game; user churn rates over timenumber of friends each user brings in for a game; the average revenue per user; the average revenue per paying user ; the effective cost per thousand impressions (eCPM); and other related factors.

Understand the trade-offs between reach, retention and revenue: Some features might make your game spread fast, others might get people coming back, but they need to be balanced with how you plan to make money. Charging for your application, for example, is a great way to discourage friends from sharing it with each other — free and social have to go well together, he says. And yet, making it really easy for users to share, say, a gift with lots of friends might feel spammy, and discourage users coming back every day.

Plan for virtual goods from the start: Ngmoco has benefited from Apple’s decision to allow free-to-play virtual goods in games, last fall. It can include gifts and other features that encourage users to spread the game for free, then monetize those users through virtual goods purchases later. The company retrofitted some of its games to include virtual goods, but Oberfest says that the real revenue is in designing the game around virtual goods. For example, its forthcoming medieval city-building game, We Rule, features a FarmVille-style ability to raise crops and produce other goods, but also an ability to build stores and then exchange them goods with other users. He also notes that while virtual goods provide a strong revenue base for free-to-play games, brand and app-install advertising can be layered on top; Ngmoco currently makes 40% of its revenue on average from in-app virtual goods purchases and the rest from other revenue sources.

Decide if a mobile social platform is right for you: Ngmoco, along with competitors like Scoreloop and Open Feint, provide social platforms for game developers. They include leaderboards, achievements, and other social features designed to integrate with a variety of mobile applications, thereby encourage users to do things like invite friends to compete. In addition to social features, ngmoco also offers a monetization platform for mobile game developers and a virtual goods platform as well. Mobile game developers should carefully consider these platforms to see how they might improve reach and retention as well as create additional revenue streams in-game.

For more background on Ngmoco’s experiences going social, read our February interview with chief executive Neil Young.