ABOUT SHARATH: LinkedIn | DieNo Games

ABOUT ADIKTEEV: Website | LinkedIn  | Retention Club 

ABOUT ROCKETSHIP HQ: Website | LinkedIn  | Twitter | YouTube


KEY HIGHLIGHTS

🧗🏻‍♂️ Retention is paramount for apps at any growth stage, often taking precedence over immediate monetization strategies.

📈 Effective user acquisition and retention strategies require a deep understanding of your audience and their engagement patterns.

↗️ Day zero engagement metrics are critical for gauging a game’s initial appeal and potential for long-term success.

💠 High-quality games distinguish themselves through unique features and strong user engagement from the outset.

⚖️ The challenges of game development are intensified by the need to balance multiple moving parts, including core loop, meta loop, and software stability.

✅ Creative alignment between ads and game content can significantly impact user retention and monetization.

🚦Early re-engagement and retargeting strategies are essential for maintaining user interest and extending lifecycle value.

🚀 The mobile gaming industry’s high-risk, high-reward nature demands continuous innovation and adaptation to thrive.

FULL TRANSCRIPT BELOW

Shamanth: 

I’m very excited to welcome Sharath Kowligi to the Mobile User Acquisition Show. Sharath, welcome to the show. 

Sharath: 

Thanks, Shamanth. 

Shamanth: 

Sharath you manage marketing at DieNo Games. Before that, you were the Head of User Acquisition at Tactile Games and you were a product manager for ad monetization at Gamehouse. You’ve worked with over 50 games and you really know and understand all things UA and product and monetization, which is a very rare combination. So for all of those reasons, I’m excited to have you back on the show.

Sharath: 

Thank you for that kind introduction.

Shamanth: 

To get started, you have worked with apps at very different stages of their growth.

You’ve worked with apps that are in multiple millions in spend and audience and also with relatively small apps. For the small apps, why do you focus on retention rather than monetization? Monetization matters to some extent, but I get the impression that retention is a primary focus. So why is that the case? 

Sharath: 

It’s a very different challenge taking something from a PowerPoint presentation or a document into the first APK and then having something that people engage with. I focus a lot on consumer apps, mainly games, and right now, especially in this environment, there’s nothing that I think investors and teams would like more than having something that monetizes.

I get where that comes from and you could do that. I’m a bit traditional that way. I think that’s very much putting the cart before the horse. You could do premium games if you want to test whether you’re in a segment that monetizes, and you can do paywall games, there are stable niches there. And hypercasual isn’t dead, so you could also put 50 ads on day zero. But the likelihood of growing a game that way, let alone a company, that is diminishing. 

When you and I were first doing user acquisition way back in 2011-2012, before the MMPs, tracking wasn’t super great. We’re in that situation now where tracking isn’t super great.

It’s going to get worse on the major platforms. This is fine from a consumer point of view because it affords some sense of privacy but it puts a lot of pressure on game makers because it’s harder and harder to find this super niche 3 to 5 percent that tends to monetize. So you want to build something that can keep people in for a longer time.

There are a lot more games out there, so a good way to do that is, to separate yourself from the pack. Focus properly on quality games, especially with day zero which has so many moving parts. It’s one of my secret theories as to why I think multiple game hits are so much harder than say, multiple movie hits. While there are very real challenges in other forms of entertainment, with games it’s just so much harder because you have multiple moving parts. Just focusing on retention reduces the number of ways you can go wrong.

And there are so many ways to go wrong with games I do think that retention is the one continuing North Star for good game development. 

Shamanth: 

You said there are many ways to go wrong, some of those can be redeemed by retention. I worked on a very popular, game for a publicly traded company. The early monetization was terrible, but their year two retention was very close to 10%, which meant, they didn’t need to monetize people in year one. They did monetize to some extent, but they didn’t need to be profitable at user acquisition.

They said we lose money in year one on user acquisition because we will make money in year two and year three and beyond. You can go a lot more easy with monetization if your retention is strong. Granted, that was a very extreme situation, that kind of retention is very difficult to attain. We can talk about why that was the case, but certainly, retention can redeem monetization among other things. 

Sharath 

It’s very difficult to do monetization also. It’s not easy either, because of what retention represents. People are, always on a finite resource when it comes to time. With money, it’s a slightly different thing. 

Amongst the million games out there in the app store, even before you’ve figured out the entire game the assumption is that if you haven’t figured out monetization, your game isn’t properly done, which is a fair assumption. Before that, if you’re already seeing stronger retention signals, it means you’re doing something right because they could be playing any of the other million games. I know that this is going to sound bad, but anybody who has two years of retention and is unable to monetize should be able to solve that problem eventually.

Now it’s a much more urgent problem because the cost of cash is much more real than it was a few years ago. The two-year LTV projection is a bit rare and I think it takes someone really brave right now to do a user acquisition on day 720. It’s not like those folks aren’t out there, but who knows what that could be in 2026.

Shamanth 

You briefly mentioned day zero metrics. You’re among the few people I know who speak about and focus on day zero metrics. Talk to me about intraday zero retention metrics, and why these are important.

Sharath 

I got into looking at games from the marketing side, and I remember when I was in a dozen soft launches I kept saying, get day one retention to 50%, get day seven to 20, and then get day 30 to 10, like everybody used to, 8-10 years ago.

I then got into the other side of it with product. And suddenly I realized how that was not very useful as input for marketing. The obvious question then is how? Day one is a child of day zero behavior. It’s also a little bit easier to focus on the day of install both in terms of delays and how much coordination there can be between product and marketing. 

Then there’s the fact that games are three things all at the same time. There’s the core loop, there’s the meta loop, and then there’s just the software stability of it. After you get past the initial install, there are also things like the art theme and everything, but hopefully, you’ve solved that problem with user acquisition because, some art skins will have $5 CPIs and others will have $2 CPIs, and that’s also a thing, and you have to be careful about that. 

But once you’ve solved that problem, you have to look at the game, and if you have consistent day-one retention of around 25%, You’re in this zone where your game isn’t terrible. It’s not like no one’s coming back, but it’s also far from viable because you’re not hitting any profitability metrics at that point even if you monetize right away. 

So then what do you do?

We promised them something in the ad, we gave them something in the software that we think is close and that we think is cool and yet they won’t even come back the second time when they’re opening their phone 40, 50, 60, a hundred times a day.

That’s a tough signal to read. I do find that the biggest improvements to be had are right at the top of the funnel. For me that day zero metric of getting 30 minutes to 45 minutes on the day of install, that’s very clearly the mark of a good game. It’s also the mark of a game that tends to get a lot of organic traction.

Back in the day, there used to be this thing called 666, which was, get six sessions a day for six minutes for six months and you’ve got a good mobile game on your hands. I don’t know if that number is valid anymore, but getting 30 minutes or more in day zero as a median playtime, that’s very much a thing. And that’s very much something that we want to be doing with any of the new products because that will give a good indication on day one. I’ve seen very few games that have good day ones. 

I’ve worked on about 50 release products, but I’ve worked on hundreds of prototypes. And some of those we went through together after a giant hit. Then there’s the next game, which suddenly, forget about a giant hit, it’s just not even a game, and then gets pulled because we aren’t able to solve day one. 

That quite often happens because there is a session two problem, there is a day zero engagement problem, There are huge drop-offs in the first ten minutes, let alone day one of people coming back. I do find that day zero is hugely actionable. It’s also something that can be tested a lot cheaper. 

Right now in the world of Sensor Towers and their detailed analysis for some of these things for benchmarking, even though it’s not precise to the last decimal point. I don’t think any business intelligence tool can be that. I think it gives a good sense of specific benchmarks within subgenres. I like the fact, that we have a broad-ish map for day zero behavior, and then we can take that and start tuning the game and do rapid iterations, and that saves a lot of time.

It also tells you when there are games that we don’t know necessarily how to save and we have to move on. I do enjoy working with day zero metrics a lot more because it’s just a lot more fruitful than say just hit the benchmarks for day one and day seven.

Shamanth 

I like how you talked about how you have to get the session two. Session one is somewhat easier to fix if you fix the software. You can get it through a reasonably good ad. Even with a terrible ad, you can get session one. 

If the software is working session two, are they coming back because there’s nothing to bring them back in? We will talk about some of the retargeting that you could do, but that wouldn’t happen in session two. That’s a good mark of whether are they engaging. And that’s always a good sign. And if they’re spending 30 minutes, there’s something they like.

 The game with the two-year retention, if they’re playing for 30 minutes there has to be some way to figure out how to expand on those 30 minutes.

To go past day zero, what are some of the things that influence early retention past day zero? You have one session two, you have one day zero, there’s day one, day seven, and beyond. What are some of the factors that influence the retention numbers after that? 

Sharath 

This is pretty much where product and UA have to become good friends. And it’s not good to necessarily have people who are not invested in it. I wouldn’t even treat them as two different teams. I wouldn’t necessarily have a separate data team. I would put them all within the same pod to just make the game not suck. It’s very easy to say that the game sucks.

It’s a bit of a tail-wagging dog situation. If it’s not something that everybody has bought from the beginning. If everybody is the same pod or the same tiny team then you don’t have the situation where, oh, but we’re changing the game because of the ad, which always feels like a bad thing.

But suddenly when it’s framed as, we have product marketing research or product research that says, people are responding to this visual or people are responding to this mechanic. That’s a very different conversation. Even though the substance is the same conversation. People are feeling machines that happen to think and it’s important to take that framing into context, when these things are edited or when these experiments are being designed. For day one and day seven, it’s surprising how ads can influence the kind of traffic you get And even if it’s the same channel, the same targeting, a different creative will impact day one.

Recently I saw something that I found hard to believe.  A difference in creative, which was not a fake ad by any means, was much closer to the most boring part of gameplay that we saw a 10 to 20-point lift in day one retention. Those are things that happen.

And day seven and onwards, it comes down to whether we are meeting the core needs of the user. And that’s something that is much more pure design. Are you making that kind of impact? And is the story of the game the same as the story of the ad? Which I have a huge love-hate relationship with. Because the moment you put a story in the game, you have three moving parts at the same time, and then everybody thinks that the part that they influence is the most important. For marketing teams, it’s the ad. For the narrative design team, it’s the story. And then for the pure game design, is the mechanics.

All three of those things have to work for you to get day seven right, and that’s hard. It’s very hard to first evolve internal consensus and then for the market to care about that internal consensus. And very often you end up splitting the difference and then you create a bad story a weird mechanic and an ad that has just kind of okay CPI.

That’s how a lot of themes die in the prototype phase, unfortunately. Or they get to the market and then don’t make an impact. Because of those kinds of suboptimal compromises that the market hasn’t validated. It’s very often a tough negotiation to get to those things. 

If you can get further retention going and if you can bring people back on the hook that matters, whether you’re doing it intrinsically, which is the best way to do it, or extrinsically, which is through the local notifications, the retargeting campaigns, all of those things, anything that enhances the day one almost always impacts day seven. So there isn’t a perfect time to say, now I want to bring users back. The perfect time is now. So bring users back at day zero, at day one, at day three, on the weekends, and on day seven. And every time you do live ops on day 14, I would definitely do all of those things.

Shamanth 

It’s interesting what you mentioned about ads and the traffic sources that have a very disproportionate impact on retention.

I was talking to somebody a couple of weeks ago, and this person said, we were running these ads we were just measuring day one ROAS. Our day one ROAS was amazing and our retention sucked. So we just thought our game sucks. The ad is great. We turned off that ad for a little bit of time and our retention improved like crazy, even though our day one ROAS was worse. 

It turns out you could have a very good day one ROAS because of the creative, but that may not translate into day 10 retention, day seven retention, and beyond. If someone comes and makes an impulse purchase, maybe buys a starter pack or something, the day-one device is going to be very good. It was also somewhat scary for me to hear because this person could have bet the future of his company based on a single bad ad that looked good.

It’s very important to be very careful in these regards. This ties into what you said about being mindful of the traffic and traffic sources and the ads themselves as well. 

Sharath 

That’s kind of the stakes that we’re playing for, especially like in the beginning of the product’s life cycle. Most gaming companies are not fortunate enough to have an infinite runway.

A new game is very often something that you are at least betting a studio on, if not the entire company on. And that’s the nature of the industry. It’s high risk, high reward. In the last couple of years, tourists joined the industry, especially on the investment side of things.

Some of them will leave because of the nature of things. It’s now harder to build higher-quality games. It’s very hard to release new games that are successful, that can sustain an entire company. It’s not impossible. And the people who want to make games, and enjoy making games are going to still make good games.

I don’t think any genre is beyond disruption. For example, just with match three, I’ve heard that only to have a new 10-digit player join immediately after someone does a detailed analysis of how this genre is saturated, is a testament to that. It’s tough weather, but more good games are coming in all genres. 

Shamanth 

The tourists don’t have it very easy now. 

Sharath 

It’s tough. And I sympathize because it looked like anyone could come in and make a good day zero or day one ROAS like you said and then we would have it. And now hypercasual is going through a tough phase.

I don’t think it’s dead by any means I know a lot of people do. I do think that a fraction of those games will survive. I think that part is clear. 

Shamanth 

We talked about the different stages of retention, day 1, day 7 and beyond. And you talked about the different factors that contribute to downstream retention. When would you say is the right time to consider re-engagement or re-targeting ads? And what are some of the considerations that an app needs to keep in mind for getting re-targeting ads right?

Sharath 

Whether it’s paid or unpaid, we should do retargeting and re-engagement with the users throughout their life cycle with different messaging. On day zero, I want to use something to bring people back for session two. Very often that’s an intrinsic game reality thing.

So if you’re running a fashion game, then, the clothes that you ordered are being delivered. That’s a very natural in-game “come back to session two” re-engagement. But more and more, there’s value in engaging people over the old-fashioned ways through email and those kinds of things.

Certainly paid ads, especially for a game that has proven itself. It makes a lot of sense to re-engage, even at that point which seems kind of silly. I mean, why would you re-engage in session two? But you’re fighting for people’s attention. And if you have a product that you believe in, if you have a product that has the metrics to justify that belief, I would start even at that point.

And then, the entire phase of it, which is, after day zero, then day one, session two, day one, and day three, certainly the first weekend post-install is a good time to do it. And then of course before each of the live ops that goes into the game, I would hit all of that.

I wouldn’t overspend on it thanks tothe removal of some of these mobile identifiers and the quiet resurgence in some of the other platforms like PC. We initially worked on a game you and I, the first game that we worked on it was available on PCs, tablets, phones and all platforms. 

People misinterpreted mobile-first in the last few years as mobile-only and that was a mistake. Because it gave undo control of the platforms over our games. And I think now, once again, we’re seeing quite a resurgence in the web and those kinds of platforms.

It’s pretty easy to hook all of these things into specific tools, and specific platforms. I read somewhere that, with AI, there’s the possibility of the single-person unicorn. I would go so far as to say that there’s a high chance that that unicorn is a gaming company. One person could do design, development, marketing, acquisition, and re-engagement all at the same time by just coding in these bots for possibly a game that would be pejoratively referred to as a hypercasual game. We’ll see how that goes. 

There’s a certain class of games that have consistently put in hundreds of millions of people’s time and enjoyment. I think that that’s very possible. Certainly, that’s going to happen if people remain engaged. I don’t think it’s going to happen with premium games. 

Shamanth 

Sharath, this has been great. Thank you for going so deep into all things retention and re-engagement at every stage of an app. Every time we speak, I always learn something. So there’s been a great conversation. This is perhaps a good place for us to wrap.

But before we do that, can you tell folks how they can find out more about you and everything you do? 

Sharath 

I’ve recently returned to LinkedIn and social media. I’m easy to find that way. 

Shamanth

I will leave a link to that in the show notes, but for now we will let you carry on.