How can Skillz balance increasing tournament entry fees to boost revenue against potentially reducing player participation in competitive mobile games?

Introduction

Balancing tournament entry fees and player participation is a critical trade-off for Skillz in the competitive mobile gaming space. This scenario involves weighing increased revenue potential against the risk of reduced player engagement. I'll analyze this trade-off by examining key metrics, designing experiments, and providing a data-driven recommendation.

Step 1

Clarifying Questions (3 minutes)

• Business Context: I'm thinking revenue growth is a key priority. Could you share how significant tournament fees are to Skillz's overall revenue model?

Why it matters: Helps quantify the potential impact of fee changes Expected answer: Tournament fees contribute 60-70% of revenue Impact on approach: Higher percentage would justify more careful experimentation

• User Impact: Based on player behavior, I assume there are different user segments. Can you provide insights into the distribution of casual vs. hardcore players?

Why it matters: Different segments may react differently to fee changes Expected answer: 20% hardcore players generate 80% of revenue Impact on approach: Would focus on retaining high-value players while growing casual base

• Technical Feasibility: Considering our platform capabilities, is it possible to implement dynamic pricing for tournaments?

Why it matters: Allows for more nuanced fee adjustments Expected answer: Yes, but requires significant development effort Impact on approach: Would consider phased rollout or simpler initial implementation

• Resource Allocation: Given the potential impact, I'm curious about our ability to support this initiative. What resources are available for implementation and monitoring?

Why it matters: Determines the scope and timeline of potential changes Expected answer: Limited engineering resources, but strong analytics team Impact on approach: Would prioritize data analysis and gradual implementation

• Timeline Pressure: Considering market dynamics, how urgent is this revenue growth initiative?

Why it matters: Influences the aggressiveness of our approach Expected answer: Moderate pressure, aiming for impact within 2-3 quarters Impact on approach: Would balance short-term gains with long-term sustainability