Gamasutra is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


Gamasutra: The Art & Business of Making Gamesspacer
Managing Risk in Video Game Development
View All     RSS
April 4, 2020
arrowPress Releases
April 4, 2020
Games Press
View All     RSS







If you enjoy reading this site, you might also want to check out these UBM Tech sites:


 

Managing Risk in Video Game Development


May 3, 2013 Article Start Previous Page 4 of 9 Next
 

Sample Project

To illustrate discovery-driven planning, we'll build an example of a freemium mobile game to be released on iOS and Android.  We assume that this game is published by a major mobile publisher and is able to use that publisher's network to drive a significant number of new installs every month.  We will drive revenues entirely through in-app purchases.

The numbers used in these examples are guesses and are not intended to be accurate representations of what these values would be for any other project. 

Similarly, the choice of a freemium model is only for the sake of this example.  You could just as easily use DDP for a paid-up-front revenue model, a subscription-based model, an ad-driven model, or any other.

Let's go through the seven steps one by one and show how you would build the DDP for this project.  All of these steps are available in the separate "DDP Template for Games" spreadsheet.

1. Specify required profitability

We need to state our required operating income and operating margin up front.  Assume that our executive team tells us that the company expects a minimum of $1.3 million in profits and a 20% operating margin from this project.  This implies that we'll need to make at least $6.5 million in revenues and no more than $5.2 million in total costs.  These are our initial hurdles for the project.

Here and in the attached spreadsheet, we will use numbers in blue to represent requirements.  Numbers in grey cells represent calculations based on previously stated requirements or assumptions.  Numbers in light orange cells represent assumptions.

2. Estimate Revenues

In this step, we'll estimate our most likely revenues.  Assume that our marketing department estimates 75,000 new users per month with a simultaneous launch across multiple platforms and a major marketing effort assisted by our publisher's cross-game promotional network (again, these numbers are not to be taken literally). 

They also believe that we will retain 60 percent of new and existing users each month and lose the remaining 40 percent.  We assume the game will have an effective lifetime of 3 years.

Based on this, we project average Monthly Active Users (MAU) over the project's lifetime -- this is calculated in a separate page on our spreadsheet ("MAU").  Our marketing department also estimates that 15 percent of monthly active users will be active users on any given day.

Also note that we list a number with each assumption in the third column.  This is a unique identifier for each assumption that we will use to refer to it later, during the sensitivity analysis stage.

 


Article Start Previous Page 4 of 9 Next

Related Jobs

Visual Concepts
Visual Concepts — Agoura Hills, California, United States
[04.03.20]

Animation Engineer
Visual Concepts
Visual Concepts — Novato, California, United States
[04.03.20]

Senior Server Engineer
Visual Concepts
Visual Concepts — Novato, California, United States
[04.03.20]

Gameplay Software Engineer
Visual Concepts
Visual Concepts — Foothill Ranch, California, United States
[04.03.20]

Graphics Engineer





Loading Comments

loader image