Garena Free Fire has become one of the most successful F2P mobile games of all time.
Some highlights:
Launched September 2017 on mobile before Fortnite
Achieved 1 billion downloads by December 20211
Set a record of over 150M daily active users in August of 20212
$4.33B life-of-product gross revenue through the end of 20213
Analyzing Free Fire In Extreme Depth
Thomas Baker and Eva Grillova from the consulting firm Naavik have produced a super in-depth market research report deconstructing Free Fire.
Naavik has graciously offered their premium research report for free starting today. Download it by clicking the report image above.
In an insightful conversation with both Tom and Eva we drill into several important topics related to Garena Free Fire:
Secrets to success
SEA organization
Competitive landscape & product differentiation
Garena localization strategy
Monetization scheme
Analyzing the 30%+ decline in 2022
Impact of Free Fire Max
Long-term outlook
🎧 Listen on Spotify, Apple Podcasts, or Anchor
Host:
Joseph Kim. CEO at LILA Games
Speakers:
Thomas Baker. Consulting Partner at Naavik. Former lead game designer at EA on Real Racing 3.
Eva Grillova. Game Design Consultant at Naavik. Former game designer at Socialpoint and Wooga.
Let’s take a closer look at some of the topics discussed.
How Did Garena Free Fire Succeed?
Eva:
“One of the biggest cornerstones in this whole success story is definitely targeting mobile before anyone else did it. They started developing the game probably around the same time when Fortnite started. And by the time everyone was just looking at PC and mobile came way later. When Garena was building Free Fire, it was intentionally aimed at mobile and it was intentionally aimed at low-performing devices, which is something we will be talking about over and over again because it's a huge part of the story.”
“Garena managed to serve markets that were completely underserved and completely under the radar for a long time. I'm sure there was an intention to build a game for these low-end devices. It reaped a huge harvest in countries like Brazil or Mexico, in Southeast Asia recently also, or until recently, also in India. So that was definitely intentional.”
“Before this, no one really, especially in the West looked at these markets, right? Garena is sort of known for being very innovative and looking into what they can offer that no one else has offered yet. They started as a digital publishing platform in 2009 and they brought together certain aspects that I don't think were offered at the time, like community, chat, ability to just push a button and play your favorite games they were working for. They had a deal with Tencent, with Riot. They were distributing games like Counterstrike in Southeast Asia.”
“There's a lot of this knowledge that they accumulated over the years and now they were using it. And there are actually a lot of people that have these low-end devices all over the world. They wanna play something.”
Tom:
“That mobile-first design mentality clearly had benefits in terms of scaling down to low-end devices, but they also brought that to bear when it comes to things like control scheme, gunplay, the amount of bullet drop, the recoil on the weapons, the amount of auto-aim, and auto-tracking of targets.”
“So they thought pretty hard about how to take shooters, which is in terms of inputs, it's a complex genre, and how to adapt that really effectively to the input method that's native to mobile as a platform.”
“They have adapted the controls first and foremost. But they also did a lot to the player count, for example, is 50, which is half of your conventional battle royale which necessarily leads to shorter round times, which is better for mobile. It also means that the maps don't need to be as large, which means the assets are smaller, which means they don't take up as much memory. So it's less of a threat to the stability of the device. And it also doesn't take up as much space just in storage. So people are more likely to be okay downloading it in the first place and then more likely to leave the app sitting around on their device when they're looking for free space.”
“So there's a wide variety of benefits to be had just from that half player count decision. [It] had all sorts of benefits further down the track. It's that kind of thinking that they brought to bear that really shows that they were targeting mobile players who tend to want shorter sessions. They want it to resolve in a manageable amount of time because they're not sitting in front of their TV or whatever gaming [console], they're on public transport or sitting at home.”
Localization Strategy
Eva:
“The expertise Garena gained while they were operating games like Counterstrike in Southeast Asia is that there are different countries, different cultures, which have different requirements. And they really leverage this with Free Fire.”
“The most shining example is Brazil. They also got fairly lucky there. Free Fire really spread incredibly, like the peak DAU in Brazil was 28 million players in a country with a population of 210 million.”
“Running local esports [showed] we have a community and we’re just going to cater to it as much as we can.”
“Also in Brazil, it became this dream based on the social-economic factors. It became this dream of: ‘I can become an influencer. I can become rich.’”
There's a certain underserved population when it comes to games, but also the population, which is poor. There's this dream of getting out of that. For a long time in Brazil, this was the dream of becoming a soccer star. Like that's a very national-wide dream. And at some point, this got replaced by becoming a Free Fire influencer or a Free Fire star.
“I've seen service from the favelas, like which games do you know? And 100% of the audience would name Free Fire and potentially no other game. This is the kind of impact they caught on and it was huge.”
Tom:
“And beyond that, getting local streamers, and celebrities to endorse the game, building up that profile with people that region is familiar with and already cares about. I'm pretty sure that this hyper-localized mentality was brought to bear on each region.”
“So they're each kind of their own separate silo in terms of the talent that's used to support the game, but also in terms of the cosmetics and the live events that are promoted in each region. There's content that is specifically catering to each given culture that ties into real-world cultural events that are specific to that area.”
“That's the kind of thing that makes people feel like this is a game that understands them, it gives them more marketing beats to hook into when they're promoting the game and running UA. Obviously, it's the kind of thing that you only have the privilege of being able to do when you already have a big budget and a big team, but you also have to have the foresight and the organizational capacity to actually execute that strategy successfully and think to do it in the first place as well.”
Monetization Scheme
Tom:
“I described [Free Fire’s monetization scheme] as being in the Goldilocks zone and what I meant by that is the competitive advantage that you can pay for is sufficiently large and appealing that it's worth paying for, but not so great that it actually undermines the integrity or fairness of the competition. So not too little, not too much.”
“For example, when you buy a weapon, any given weapon will be better than its base version, but not obviously significantly better. It might be like, I don't know, 20 - 40% better.”
“It's not like you can upgrade guns and have this massive vertical progression where you can see that your gun X is three levels higher than this other person's gun X. So when you buy a variant of a weapon, they add a couple of things that benefit it. Like might be a rate of fire, bullet drop reduction, and they might reduce the damage. So it's better, but it's not like roundly better. It's not categorically superior. It's something of a side upgrade, but it is obviously the superior option and that has all sorts of benefits.”
“First of all, it kind of tempers the sense of pay to win which is a good thing.
The other thing is it means that they can have many different versions of the same weapon for sale and different versions might be preferable for different players or in different circumstances, or different maps, different modes. So that's useful as well because that means that they can not just sell you an upgraded blah. They can sell you different upgraded blah.”
“Beyond that, once you get into a round, there's only so much chance that you'll actually find one of the weapons that you have paid for. So just because you have half of the weapons in your inventory of say 50 guns might be these paid semi-upgraded variants, it's the luck of the draw.”
“‘Orthogonal utility’ is having different uses in different circumstances. Just because you have a fully stacked SMG, and if you pick that up and then you encounter someone out in the open and they have a default sniper rifle, then they're probably gonna take you out.”
“So, there are many subtle ways that you can pay for an advantage, but they don't all combine to collectively increase your chances of winning in any given encounter. But they're beneficial enough that they're seriously worth considering.”
And then there's this separate layer to it which I found really interesting which is the temporary nature of a lot of the power that you can pay for. Temporary cosmetics are also a big part of what the game does. It's not unusual, certainly not unusual in Korean games, have been around for a while. It is certainly more prevalent in Free Fire. And the fact that the power that you pay for is also given a time limit means that just because you bought such and such thing a week later, you no longer have access to it. So. They, they can afford to charge you a small amount for something that's quite useful. But then you'll kind of essentially have to subscribe to that power, uh, on an ongoing basis, if you want to consistently leverage and, um, and increase your chances of winning.”
Free Fire’s Decline
Since August of 2021, Free Fire has been on a steady decline. Based on data.ai (an analytics and data provider) estimates we can see that revenue has fallen from peak (in August 2021) to trough (June 2022) by over 78%:
data.ai estimates about $15.3M in weekly net revenue for the week of Aug 22-28, 2021.
Free Fire drops to an estimated low of $3.3M in weekly net revenue for June 12-18, just last month.
Note, however, the spike coming towards the end of June. Hopefully, Garena is making a comeback!
Why has Free Fire declined so rapidly?
Eva:
“By the time we were releasing the report, the decline started to be tangible, but it was unclear how it's gonna continue. So now we are a half year later and it's very tangible. It's very visible. So like for instance, in Brazil, the game is falling off.”
“When we were looking into the numbers and into how different markets performed, one thing that was very, very interesting was that actually, it was clear from the start that Garena tried to capture Southeast Asia. They tried to capture LATAM and they definitely succeeded there. But one of the side effects of developing for low-end devices was also capturing a huge Android base in the United States.”
“When you look at the ratio of devices used for PUBG, it's gonna be more or less half-half (iOS vs. Android), maybe slightly higher for iOS even. But for Free Fire, it's like five to 10% of iOS users. And then the rest is like this overwhelming mass of Android users.”
“Interest from the United States about Free Fire only happened with COVID. There's a very clear trend… At the time of writing the report, a third of all revenue was coming from the United States while only 2% of all players were coming from there.”
“This is sort of risky because first, it's in a market which is unknown to Garena.
Like they know how to operate on their own turf. They know how to operate in Southeast Asia, but this felt way more accidental. And one of the things that speak for like maybe Garena not expecting that was that. English-speaking eSports tournaments only happened for the first time in April 2021.
So while they were like running eSport tournaments for three years already in India, in Brazil, serving the English-speaking audience came way later.”
“You asked what factors contribute to this… I think a big chunk is really that players are sort of like wasted, right? They're tired of the game or they're not playing it anymore, which we can see in DAU, but also in lots of countries.”
“In Southeast Asia itself, the decline has been also fairly tangible. All the decline sort of copied themselves. The worldwide peak was last August and then things start sort of falling off.”
Tom:
“There are some macro trends at play in its decline. There's the COVID hangover factor where like everything that involved being able to socialize online blew up in 2020, 2021 that can't possibly persist. What goes up must come down.”
“Battle Royale itself as a genre, you know, has burned very brightly for a while now. But it's on a steady decline as a whole.”
“There's one other game-specific aspect that we haven't talked about beyond the probability that this pay-to-win component is biting them now, which is the game has been so incredibly heavily updated the live events that they run, the complexity that they inject into the game on a monthly basis in terms of varied micro meta games in terms of season-specific gameplay. They're absolutely thrashing the live ops and that is, on one hand, admirable, but, we did an analysis of reviews and it became evident that there is an increasing number of players complaining about instability, about data loss, about loss of performance.”
“So, essentially I think what's going on is, they are running so fast that they are tripping over themselves, that you can only be so robust with your QA. You can only shove so many new assets into the game without some of it basically causing trouble and tech debts mounting up.”
“It doesn't matter how cool or interesting or fresh your game is from week to week, month to month. If it doesn't work or you lose all your sweet cosmetics or your profile data that's an instant game killer that could cause a heavy spender to churn immediately if they lose their stuff.”
Big Walk and Orbitals both sound like great co-op picks, especially for a week when you wanted something more relaxing. I’m curious, have you checked out Free Fire OB55 yet, and what do you think of the new version?