🕹️ The Data to Keep You Playing
Clean air? When a group of Norwegians built a reactor to soak up CO2 from the air, a US startup’s Estonian deep-tech founder answered with these weird light towers that do the same thing plus then convert the CO2 into fuel. Great to see the green race going.
In this Open Letter:
- Game on: Enabling new ways to build in this $300bn industry.
- Home Affairs Premium, Wooden Spaceships & chuck all your cards.
- Growth unlocked: How they funded their next expansion phase.
- The future of last-mile deliveries in SA: The results are in.
- Lonely building your startup? Join SA’s only tech founder community.
Together with:
Did someone forward you this email? Join South Africans reading The Open Letter by signing up here.
TRENDING NOW
Bringing Data-Driven Decisions to Your Gaming
Mobile gaming is a big deal.
Around the world, there are more than 3 billion mobile gamers, with mobile games contributing about half of the $300 billion total gaming market size – more than consoles & PC games combined.
And they’re not just playing free games…
Player spending hit $41.2 billion in the 1st half of 2022, with massive mobile games like Diablo Immortal and Pokémon GO pulling in $100 million each in just 8 weeks and 2 weeks respectively.
Whilst it is a big industry, games are mostly B2C, which means lots of work and money to get the word out there. And it’s expensive…
Building in Hard Mode
The thing about gaming is it’s infinitely harder to create a profitable game with a lifespan anywhere near as long as most other tech products – ask any founder why they’d switch from B2C to B2B any day.
Why? Modern games are mostly online, and a large amount of people expect them to be free. So, to make the game successful, you need a large number of players (online games only work well when enough people are playing), but you also need to make money, which most games do by offering in-app purchases. Finally, you have to balance the game to make sure the free players are still enjoying it. It’s complicated.
And the complexity is taking its toll. 2023 was a blood bath for the gaming industry, as shown in the mobile gaming platform SuperScale’s white paper:
- 32% of mobile game studios had major layoffs in 2023
- 27% permanently downsized
- 24% almost shut down
- 29% had to cut their user acquisition budget
- Some sectors report 62% job losses
- And 40% started outsourcing development and publishing
Why?
- 83% of games die within 3 years
- 47% of games die within the first year
- 17% die in 6 months, while 76% of games hit peak revenue in 1 year (and then it’s downhill from there).
Remember that the next time you complain about how hard it is to monetise your 1 tech product – building SaaS software is a bit less complicated…
The cost and complexities
But it’s not only in game design and development where things are complex. The fact is, it often takes an enormous amount of money to have a chance at success with a game. How much? Well, at one point, Candy Crush was spending $1M per day on marketing.
Keeping track of the return on investment (ROI) can get very complicated, especially when you are dealing with freemium games that have in-app purchases.
- Gamers from certain demographics (or cohorts) spend more on in-app purchases than others, leading to higher revenue.
- The cost to market to different cohorts varies.
- It changes over time (some cohorts play the game longer and spend more, others spend more over shorter periods, etc.).
The challenge? Constantly iterate to ensure the margin is as high as possible by adjusting where you spend your marketing money based on evidence from previous campaigns and some predictive analytics.
The local team revealing the map…
A cohort-based forecasting tool, Kohort, helps game studios forecast future events or trends with a much higher degree of accuracy, optimising and balancing marketing spending to help the specific game get better ROI on spend.
It works by categorising users by segment (sharing common characteristics like gender, country, age, platform, etc.) and cohort (a group of players who installed the game on the same day) to give game developers a more accurate view of players’ behaviour in the game. Basically, it tracks and reports if a specific ad results in a player with a specific demographic spending more or less than their average gamer on in-app purchasable content.
Then Kohort uses Machine Learning to produce extremely accurate forecasts should the current targeting and campaigns continue.
Before in-app purchases became popular, this problem didn’t exist, and we love how South Africans are pouncing on this opportunity. We’re watching this space…
CHECK THIS OUT
Enabling Growth: It’s the Little Things that Make or Break You
When Capetonian co-founders Theresa Ward and Edwina Butterworth set out to make their mark on the security systems industry, they thought their biggest battle would be against gender norms in this male-dominated space.
They were wrong…
The good news is their play worked and they grew their company Manyene Holdings from just 2 people in 2018 to 50 by 2024.
The bad news is the cost of such rapid growth depleted their cash flow and Theresa and Edwina battled to get financing with any of the traditional banks.
It’s an all-too-common story in South Africa, where 62% of SMEs struggle to access funding – making it the No. 1 barrier to growth in SA.
Fortunately, Theresa and Edwina found a lifeline…
With Lula, they got their approval within 24 hours or less.
Yet it is that easy, get access to a capital facility or capital advance of up to R5m from Lula.
IN SHORT
Some titbits to drop at the braai tonight…
🌍 African Tech Fund. A new $250 million startup fund specifically for African tech companies is in the works. Tech accelerator Startupbootcamp, British-East African business tycoon Ashish Thakkar’s Mara Group and Blend Financial Services will target startup hubs in South Africa, Nigeria, Kenya, Ivory Coast and Egypt.
🪵 You wooden believe it. Japan’s Kyoto University and Sumitomo Forestry, have launched a new CubeSat made primarily from wood. Named after the Latin for “wood”, LignoSat consists of the scientific internals encased in a wooden box, with solar panels on the outside, and caught a ride on SpaceX’s latest Falcon 9 launch.
🧙 One ID to rule them all. South Africans could be getting a single digital identity that can be used to consolidate everything from your ID number, tax number, and medical aid number. This as Home Affairs is considering Home Affairs Plus — an expedited document processing and home delivery service for your NB Home Affairs docs. *Not really called Home Affairs Plus. Yet…
⚡️Instant Cross-Border Money. FNB has partnered with BankservAfrica to enable immediate processing of low-value payments within the Common Monetary Area of SA, Namibia, Lesotho and eSwatini.
😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with your own fractional CFO for less with OCFO, the easiest way to manage your finances with Xero and 12 more vital startup tools & services.
BUILDING TOGETHER
Happening over at The Open Collab
In the last few days alone, in our online community, we…
- Met for our first LIVE (in-person) Office Hours with good coffee in two locations: Stellenbosch and Cape Town. ☕
- Supported and celebrated our EdTech members making big plays at Injini EdTech this week.
- Ran into a whole bunch of familiar faces at Innovation City's startup speed dating — The Open Collab peeps are everywhere these days!
- Helped Gustav find the IoT dev connection he needed for his next steps.
- Started looking for a unique WhatsApp solution for Corne — this could be big.
- Getting ready for the next Product Masterclass with Roger Norton today.
Thinking about joining The Open Collab?
- Supercharge your network in the SA startup landscape — get that introduction, get that customer, or meet that partner.
- Get feedback on your products, services and/or offers from others who have built and are building their own products right now.
- Join all our online and in-person events for free!
- Exclusive 1-on-1 sessions with startup consultants.
SA’s only dedicated tech startup and scale-up founder community.
HAPPENING SOON
Upcoming Events
Join us today (Friday 8 Nov) at 12:00 for the second in a 3-part series with The Open Collab exclusive Product Series. Want to learn what it’s about? Watch the video on IG below…
Instagram post by @theopenletterza
8 November 2024 — Product Masterclass: Part 2: How to keep shipping truly great products, fast — Join The Open Collab community to attend for free.
14 November 2024 — TechSafari is coming to Cape Town! Join Caleb and team for a memorable night at Yoco to talk all things Tech and Startup in Africa. Get tickets here. Use OL20% code to get a sweet 20% off!
12-14 November 2024 — Cape Town: Africa Tech Festival: Including AI Summit and so many tech must-sees — remember you can get a limited free pass, or get access to everything by applying for a startup pass early.
15 November 2024 — Sales Masterclass: Part 2: How to spot opportunities to increase conversion rates — Join The Open Collab community to attend for free.
6 December 2024 — AMA with Alan Knott-Craig: After our LinkedIn Live with Allan, you voted to an Ask Me Anything session — Join The Open Collab community to attend for free.
View all our upcoming events here.
WHAT YOU SAID
Special delivery…
We asked about the future of last-mile, and drones are the way…
🟩🟩🟩🟩🟩🟩 🕹️ Drones. (40%)
🟨🟨⬜️⬜️⬜️⬜️ 🤖 Autonomous Robots. (16%)
🟨🟨🟨🟨🟨⬜️ 👩🌾 Trading with others once we’re living in post-apocalyptic, self-sufficient compounds brought about by today’s US election. (37%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🖨️ 3D printing what you need. (3%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🚀 Supplies every 6 months to Elon’s Colony. (3%)
⬜️⬜️⬜️⬜️⬜️⬜️ 💡 No, wait, I have a better idea... (3%)
Your 2 cents…
Haha, Barry – ja it could feel a bit like trading in the Wild West. 🎩
Good point, Henry! Airspace security qualms keep us grounded (literally). 🚀
Ah, welcome home, sir! 😂