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Businesses cannot predict the future, so they must use probabilistic models, especially for budgeting. If you could build a magic crystal ball telling you if th
by vladd 15y ago
Businesses cannot predict the future, so they must use probabilistic models, especially for budgeting. If you could build a magic crystal ball telling you if the following gamer who signs up is going to end up: a) spending $1000 in virtual currency over the next 3 years OR b) tell to his network of 20+ friends about the game OR c) use tons of resources, no payments and no promotion..., THEN lots of companies would be in your debt.
The behavior that you described has been put into a basket by Zynga and mixed with the statistical behavior of average gamers in order to create their business model, where they assume that X millions of advertising and Y millions in R&D and SysOps bring Z millions in revenue, preferably with Z > X + Y.
90% of gamers are non-paying and probably do little in terms of word of mouth promotion, so they just pull these averages downwards. But, as long as, on average, Z > X + Y, everything is ok for Zynga. Because it's the only way in which they can operate without a crystal ball.