Two Essays on Mobile App Success: Empirical Analyses of Retention and Monetization in Mobile Games

Abstract

and (3) the balance of skill and challenge. The essay also investigates the impact of competition as an important source of challenge. The empirical result shows that challenge and the balance have significantly positive impacts on IAP consumption. Skill does not show a significant effect on IAP consumption. Competition also has noticeable positive impact on IAP consumption. The dissertation research makes key contributions to the IS literature by highlighting two key managerially and theoretically important findings related to mobile gaming apps: (1) hedonic gratification and social gratification are key drivers of high retention probability and (2) the levels of challenge, the balance of skill and challenge, and competition are substantial factors to increasing IAP consumption. It is also expected that the finding will contribute for business practitioners to provide effective ways for extending user retention and effective monetization in mobile gaming apps.

The market growth of mobile applications (app) is remarkable, as they are becoming more important to the global economy. Among the various categories of mobile apps, mobile gaming apps have an enormous number of users and earn high revenue. Many new games are released and then disappear quickly, and mobile game users do not stick with particular games for long. Thus, business practitioners mainly focus on user acquisition, retention, and monetization, because those factors are essential for long-term profitability. Mobile gaming also gains plenty of attention for academic researchers, but there is still limited understanding of the drivers of retention and monetization, and the business implications. Regarding this lack of knowledge, this research aims to make a contribution for academic researchers, as well as business practitioners, to capture the motivators on user retention and purchasing behaviors in mobile gaming apps by analyzing a large-scale game log dataset. The research is organized into two related and distinct studies. The first essay empirically investigates key factors influencing user retention in mobile gaming apps based on the uses and gratifications theory. This theory explains why people decide to continuously use a certain app among many alternative apps to satisfy their different needs. This essay focuses on three categorizes of gratifications - (1) hedonic gratification

(2) utilitarian gratification

and (3) social gratification - based on the key tenets of the uses and gratifications theory. The empirical results of duration analysis show that hedonic gratification and social gratification have significant positive impacts on user retention, but the effect of utilitarian gratification is significantly negative on user retention in the mobile gaming app. The second essay empirically investigates key factors of in-app-purchase (IAP) consumption, one monetization method, using the key tenets of flow theory. The key tenets are: (1) skill

(2) challenge