E.g., 12/11/2019
E.g., 12/11/2019

Market selection for mobile games using a localization ROI model

By: Denis Khamin - Allcorrect


13 March 2019

Beginning developers often have questions like, “Does this project need to be localized? If so, how to do it right?” We will try to answer them in this article.

If you ask a localization expert when the best time is to consider localization, they will certainly tell you it’s best to do it before the development stage. It’s the dream of every localization expert that immediately after the app’s conception, at the stage of identifying the target audience, creators are already planning for localization and are even taking culturalization into account.

In practice, however, this is rarely the case.

What is success?
Simply put, a game might be considered successful when the number of downloads and the money the project earns pays for the efforts spent attracting new users (LTV > 3 × CAC).

You should be watching these key metrics closely: Customer acquisition cost (CAC), Lifetime Value (LTV), Average revenue per user (ARPU). And keep an eye on these additional ones: Return of investment (ROI), Retention, daily/monthly active users (DAU/MAU). Devtodev has some good materials on this topic. It would help you know why your players are paying and how successful is your game.

All right, your mobile game has been successful in your home market, so you want to bring more joy to new players and earn a little money in other markets.

Half the world in a single click
To publish your game on global markets, you simply have to check the box and the app will become available in 124 countries. But is it worth it? Why worry about localization and culturalization if the majority of users can play even if the app is in English?

Keep in mind that players, most likely, will be unhappy with an app missing localization. Without a doubt, they will write about it in the comments and leave lower ratings than they otherwise would have. At least, according to Google Play Console Help.

Sure, you will see growth in downloads and revenue, but it will lower the ratio of revenue to downloads and the app’s overall score in stores.

We have collected data on how missing localization affects the key metrics of a game.

A localized version is fast, recoupable and immediate

The preferable choice is to publish games already with localization.

First, ASO (App Store optimization) experts believe that decriptions and screenshots in the user’s native language positively affects ASO indicators.

Second, localization will give you the unexpected bonus of a large number of free reviews from other countries. Several developers have told us that, for example, users from Arabic countries are generous with positive reviews and at least one of the developers we surveyed is using this lifehack to increase the rating of their game.

It’s so nice when all game’s indicators grow. And, although our study indicates that localization does not lead to a significant increase in the number of installations, it does, however, substantially increase the revenue-to-download ratio.

Correlation between revenue and localization in Japan according our study (Sources: Statista, NewZoo, SteamSpy).

Correlation between revenue and localization in Germany  according our study (Sources: Statista, NewZoo, SteamSpy).

Correlation between revenue and localization in Russia  according our study (Sources: Statista, NewZoo, SteamSpy).

Localization market selection

How do you choose in which markets to publish your game when your budget is limited? While there is  no universal answer to this question, there are some key points to consider.
1. Language markets are not countries.

 

A remarkable 80% of mobile game revenue in 2018, according to projections from analytic companies Newzoo and Statista, will come from the markets in the Top 6 (Russian should enter the Top 6 in 2018) and only 10% of revenue will come from markets not included in this list.

Remember that English isn’t the only language in the USA, that Spanish is spoken outside of Spain, and that it’s best to use Mexican Spanish for Latin America.

2. Along with a market’s size, you may want to consider the difficulties of entering it. For example, there are censorship risks and special cultural characteristics in China, South Korea and other countries. Pay attention to the return on traffic and user preferences, as well as monetization specifics, promotion and the presence of popular local app stores.
3. EFIGS+CJK is not a panacea for the mobile app market. Different language combinations can be effective when localizing various game genres.

In our study, we examined the attractiveness of mobile markets for publishing mobile Role PGs (role-playing games), in regards to their return on localization investment (ROLI). We used a hypothetical RPG game with 40,000 words as a reference point.

The localization return for countries was calculated as the ratio between the difference of  using the following formula:

ROI=(Revenue-Localization costs-Marketing costs)/(Localization costs)
 

The formula accounts for the added cost of localization, meaning the difference in revenue from localized and non-localized versions is included in the segment.

These results demonstrate that some countries are more likely to produce good revenue. In addition, localization raises the chances on average of doubling your income.

 

Will I definitely recoup my localization expenses?

All theory is gray, my friend.
But forever green is the tree of life.

J. W. von Goethe, “Faust”

It turned out that our client had begun using localization as a form of promotion before we learned to identify the market’s attractiveness. Apart from that, our case slightly contradicts our statement at the beginning of this article. The developer did not attract additional traffic or account for the return on marketing.

We calculated ROLI for half a year:

Data for the end of 2017 was used for the evaluation and it did not account for revenue from advertising in the free game version. You can read about the case on Medium.
But now we would recommend a different language set. Regardless, localization was one of the few tools with an average return that exceeded 100% in six months.

Conclusions:
1. Monitor key metrics.
2. Localize your application.
3. Allocate a budget for the right languages (ask your localization expert for advice).
4. Estimate the return on localization.