For Kakao Entertainment's mobile games, should we focus on increasing in-app purchases or growing the overall user base through free-to-play features?

Introduction

For Kakao Entertainment's mobile games, we're facing a critical trade-off between increasing in-app purchases and growing the overall user base through free-to-play features. This decision will significantly impact our revenue model, user acquisition strategy, and long-term growth. I'll analyze this trade-off by examining our product ecosystem, key metrics, and potential experiments to inform our decision.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking our game portfolio might have a mix of genres and monetization models. Could you provide an overview of our current top-performing games and their revenue split between in-app purchases and ad revenue?

Why it matters: Helps understand the current balance and identify which games might benefit most from each strategy. Expected answer: A mix of casual and mid-core games with varying IAP/ad revenue ratios. Impact on approach: Would tailor recommendations based on game types and existing monetization success.

• Business Context: Based on our current growth stage, I'm assuming we're looking to balance immediate revenue with long-term user growth. How does this trade-off align with our fiscal year objectives and investor expectations?

Why it matters: Ensures our strategy aligns with overall business goals and stakeholder expectations. Expected answer: Pressure to show revenue growth but also demonstrate increasing user engagement and retention. Impact on approach: Would influence the weight given to short-term vs. long-term metrics in our decision-making.

• User Impact: I'm thinking different user segments might respond differently to IAP vs. free features. Do we have data on the conversion rates and lifetime value for various user cohorts?

Why it matters: Helps identify which user segments are most valuable and how they might be affected by each strategy. Expected answer: Higher-value users more likely to make IAPs, but free features crucial for user acquisition and engagement. Impact on approach: Would inform targeting strategies and feature prioritization for different user segments.

• Technical: Considering the potential for increased server load with more free users, how scalable is our current infrastructure?

Why it matters: Ensures we can support user growth without compromising performance. Expected answer: Current infrastructure can handle moderate growth, but significant scaling might require investment. Impact on approach: Would factor in potential technical costs and timelines for each strategy.

• Resource: I'm assuming we have separate teams for monetization and user acquisition. How are our development resources currently allocated between these areas?

Why it matters: Helps understand our capacity to execute on either strategy effectively. Expected answer: Resources are somewhat balanced but could be reallocated if needed. Impact on approach: Would influence the feasibility and timeline of implementing each strategy.