Blog

Diversity is good in all aspects of life – in the workplace environment, in the gene pool, and even in business models.

On the latter topic, we spend a lot of time both internally and with our clients discussing and implementing best practices, and it was in the course of one such discussion that the concept of diversity really hit home.

The client in question had seen a slight drop in subscribers. We were initially puzzled that their overall revenues were up despite this subscriber drop, when we remembered that they also generated revenue from add-on microtransactions. Sure enough, the revenue from existing subscribers buying additional items via microtransactions exceeded the lost revenue from those who unsubscribed, proving the old axiom that your loyal customers are willing to pay even more than what you charge them. We investigated this trend across our client base and found that hybrid business models like the one above can add between 8-10% to the average revenue per user (ARPU).

We have two upcoming conversations on business models. On Wednesday, Jeremy Nusser discusses free and freemium to kick off our Fall 2010 Webinar series. Next week our CEO, Gene Hoffman, talks on a panel at the NY Games Conference about payment models that work. We encourage you to join the debate.