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iGaming Glossary

What is ARPPU (Average Revenue Per Paying User)?

ARPPU, or average revenue per paying user, is a key metric in the iGaming and broader gaming industries used to measure the average amount of revenue generated from paying users during a specific period. Unlike ARPU (Average Revenue Per User), which includes all users (both paying and non-paying), ARPPU focuses exclusively on the revenue derived from users who make payments, providing a more targeted understanding of monetization effectiveness.

How does ARPPU work?

To calculate ARPPU, you divide the total revenue generated by the paying users by the number of paying users over the given time frame. The formula is as follows:

ARPPU = Total Revenue from Paying Users ÷ Number of Paying Users

For example, if your platform earns $50,000 from 1,000 paying users in a month, the ARPPU would be $50. This metric highlights the spending behavior of your paying audience and helps businesses understand how much each paying user contributes to their overall revenue.

Why is ARPPU important?

ARPPU is crucial for iGaming operators as it provides insights into user behavior and helps gauge the effectiveness of monetization strategies. While ARPU offers a broad perspective on revenue per user, ARPPU focuses on the segment of users that directly contributes to the revenue, making it an essential metric for evaluating payment models and premium offerings.

Key use cases for ARPPU include:

  1. Evaluating monetization strategies: Helps assess the success of payment models like subscriptions, microtransactions, or premium features.
  2. Understanding user segments: Identifies high-value users and tailors offerings to maximize their engagement and spending.
  3. Informing product development: Guides the creation of features and services that appeal to paying users.

Industry benchmarks for ARPPU in iGaming.

ARPPU benchmarks can vary significantly based on the region, platform type (mobile, desktop), and game category (casino, sports betting, or poker). However, typical ranges for ARPPU in the iGaming industry are:

  • Mobile Casino Games: $50–$150 monthly ARPPU
  • Sports Betting Platforms: $30–$100 monthly ARPPU
  • Social Casinos (free-to-play): $5–$20 monthly ARPPU

These benchmarks are influenced by factors such as user acquisition strategies, in-game offerings, and the prevalence of high-value users or “whales” in the paying user base.

Comparing ARPPU with ARPU and LTV.

ARPPU vs. ARPU:
While ARPPU focuses solely on paying users, ARPU considers all users, including non-paying ones. For example, if a platform has an ARPU of $5 but an ARPPU of $50, it indicates that paying users are a small but highly lucrative segment.

ARPPU vs. LTV:
LTV (Lifetime Value) measures the total revenue a user generates throughout their engagement with the platform, considering retention rates and user churn. ARPPU is a short-term metric, offering insights into current monetization, while LTV provides a long-term perspective on user value.

Strategies for increasing ARPPU without sacrificing player satisfaction.

Read more: What is gamer engagement?

1. Offer meaningful in-game rewards:

  • Ensure that paid features or items provide tangible benefits, such as improved odds, exclusive content, or faster progression.
  • Introduce limited-time offers or seasonal promotions to create urgency and incentivize spending.

2. Develop tiered pricing options:

  • Provide multiple pricing tiers for premium features or subscriptions, allowing users to choose according to their budget and preferences.
  • Implement VIP programs for high-value players with exclusive perks, such as personal account managers or tailored bonuses.

3. Focus on personalization:

  • Use data-driven insights to offer personalized recommendations, such as game suggestions or promotions tailored to a user’s preferences.
  • Segment paying users into categories (casual vs. high spenders) and design offers accordingly.

4. Maintain a fair and transparent experience:

  • Avoid overly aggressive monetization strategies that can alienate users or create a “pay-to-win” environment.
  • Ensure that non-paying users can still enjoy a competitive experience, reducing churn and encouraging future payments.

5. Optimize user onboarding and engagement:

  • Introduce clear tutorials or demo modes for new players to familiarize themselves with premium features.
  • Maintain high-quality customer support to resolve payment-related queries promptly and build trust.