Average Revenue Per User (ARPU)
What is 'Average Revenue Per User'?
Average Revenue Per User – more commonly known as ARPU – is one of the primary ways companies with large numbers of subscribers measure the average revenue they receive per customer.When it comes to online gaming
, this term refers specifically to the revenue generated by one player per specific unit time - generally a week, month or year, depending on the organisation and how they choose to record costs.
'Average Revenue Per User' Explained
To calculate ARPU, companies must first define a time period they wish to assess and ascertain the total revenue accumulated during that particular period. Once they have done this they can then definitively determine the number of users active during that specified time.This then provides a crude awareness of how much each consumer is worth to the company. Of course, some people will be worth more, and some will be worth less. ARPU is an analysis starting point; companies can then commit to assessment in greater detail if they wish to gain a more comprehensive understanding of who their most valuable customers are.When gaming companies make the decision to track revenue via the ARPU route, they are nearly always choosing to assess the income they garner from each individual user so as to better appreciate who earns them the most, who earns them the least, and why this may well be the case.When a business is able to take a granular look at its operations and gain deep insight into where the majority of its money is coming from, they become far better equipped to plan for the future. ARPU offers foresight because it ensures that business planners can implement change in a way that targets specific audiences based on past behaviours.Similarly, if one part of the operation – a particular game, for example – is not performing well, then the company will have the evidence they require to cull the game, or to improve it so that is becomes more financially advantageous.